Credits and Loans
A Home Equity Line of Credit, or HELOC, is a specific type of loan that is available to most homeowners with equity. While many homeowners have likely heard about this type of loan, some may not be completely familiar with how it works.
Your Home is Your Collateral. The most important thing to understand about a HELOC is that it uses your home as collateral. Therefore if you default on this line of credit, your home may be at risk. At the same time, because your home is used as collateral, you’ll have the option to borrow more for larger items, such as home improvements and college costs among other things.
Flexible Spending with a Line of Credit. A HELOC is a line of credit, meaning that you will have a credit limit given to you based on the equity available in your home along with other underwriting criteria. The difference between a HELOC and a credit card or other personal line of credit is that you are given a “draw period” (typically 10 years) during which you can borrow or repay on that line whenever you want. Once the draw period ends, you must then repay the balance during a specified term, which is usually 10–15 years.
Possible Tax Deduction. A HELOC is one of the few credit options available where you may be able to deduct the interest you pay on your taxes. It is important that you check with your tax advisor as to whether or not you qualify for this benefit.
To learn more about how you can benefit from a HELOC through CharterBank, Click Here or call us at 800.763.4444.
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You constantly see advertisements for 0% financing. But oftentimes, it seems too good to be true. You think to yourself, “there must be a catch.” Essentially, 0% financing is when lenders allow you to purchase on credit without charging you a fee for that credit usage. There are a variety of cases when the offer is worth it, but there are some potential costs of 0% financing.
Lets take a look at some common 0% financing offers when purchasing an automobile:
0% Financing or Take the Cash Back Offer. In many auto loan 0% financing offers, the lender will present you with a scenario – You can take the 0% financing or a special cash back offer. So, the first thing you must do is figure out which option is better for you in the long run. For example, if you save $3,500 in finance charges by getting a 0% rate, but forego a $5,000 rebate, you are actually coming up $1,500 short on the deal. It’s important to take your time, ask questions and do your homework before you choose one option or the other.
Higher Purchase Price. In some instances, you’ll pay a higher price for your car or truck if you go with the 0% financing offer. If you pay a higher price for the purchase, you may be giving back some of your 0% financing savings. Before you discuss financing terms, it’s important to nail down the exact cost of your purchase. By doing this, you ensure that you are getting all the benefits a 0% financing deal can offer you.
Read the Fine Print. Fine print in any contract can be a killer. In some 0% offers, you may have a contract clause that adds fees or surcharges for late payments, or even adds an interest rate to your loan. For example, if you make a late payment or two, you may end up losing the money (and possibly even more) you saved by accepting the 0% finance offer.
Check Out the Contract Term. In many 0% financing offers, the contract term is shorter than traditional financing offers. With a shorter contract terms, you will typically encounter higher monthly payments. So if you are striving to minimize your monthly payment, you will typically want a long term loan rather than agreeing to something shorter.
In the end, 0% financing may be a good deal for you. However, you must remember to do your homework and determine the cost associated with taking the financing option. We’re happy to answer any questions you may have about this sort of financing, or auto loans in general. Simply click here or call us at 800.763.4444.
Buying a home should be an exciting time especially for first-time homebuyers. But, from finding the home of your dreams and securing financing, to actually signing on the “dotted line,” the process can be overwhelming.
Recently, the Consumer Financial Protection Bureau (CFPB) implemented two new mortgage disclosure forms and other rules to help make this process easier. Let’s take a look at what you can expect with these new rules and disclosures:
- New Loan Estimate Form. Once you’ve applied for a mortgage loan, lenders must provide you with a Loan Estimate form within three days. On this form, you will be given specific details about the loan you’ve requested, such as the loan amount, rate, term and closing costs. Also, the form is now better designed to help you understand the loan information than previous forms.
- Compare Loans. Using the Loan Estimate, you’ll have the opportunity to shop around for a more advantageous loan offer. Because these forms are standard forms, you’ll be able to compare the terms and conditions of your “estimated loan” with others easily.
- New Closing Disclosure Form. Once you’re ready to close on your loan, you’ll be given a new Closing Disclosure form, which will outline everything about your loan. The information on this form should match the information on the Loan Estimate.
- Time to Compare and Understand Information. In the past, you were only given 24 hours to review the documents prior to closing. Now, the new rules mandate that a lender give you three days between getting your Closing Disclosure form and actually committing to the loan. During this time, you have the opportunity to review the information provided, compare it to the Loan Estimate, and ask any questions you may have.
To learn more about the new mortgage rules, or to view the new forms, visit www.cfpb.gov. Additionally, if you have specific questions about the mortgage loans available at CharterBank, click here or call us at 800-763-4444.