Category: Home Equity

When Should I Do It Myself and When Should I Leave it to the Pros?

Q: Which home improvement projects can I tackle myself, and when should I leave it to the pros?

A: It’s tempting to want to do everything yourself, but it isn’t always the best choice. Here’s how to know when to do it yourself and when to hire professionals.

Home improvement projects you can probably do on your own

  • Cosmetic improvements.This includes painting, wallpapering, wood staining, installing adhesive carpet tiles and replacing the hardware on cabinets and drawers. Check out tutorials on YouTube for useful tips, tricks and hacks.
  • Minor plumbing jobs.Almost anyone can snake a clogged toilet, and most people can handle fixing a minor faucet leak or changing a shower head. Maybe even installing a toilet. Again, YouTube is your best friend when it comes to DIY adventures.
  • Minor electrical work.You can probably install new light fixtures and change your light switch plates without much issue.
  • Install tiles.Think a new backsplash for your kitchen, new tiles for your bathroom floors and walls, and new floors for your kitchen and foyer.

Six questions to ask before tackling a project on your own

  1. Have I done a project like this before? If this isn’t your first time doing a project like this, you can probably handle it now.
  2. Do I have a reliable resource to turn to with any questions that may arise? It’s best to be prepared in case you run into trouble mid-project. Get that contractor friend on speed dial!
  3. Will this project involve any structural framing? It’s best not to tackle projects that involve cutting through walls without professional guidance.
  4. Will this job involve any electrical, plumbing or HVAC work? If your project involves cutting through pipes and wires, it’s best to call in the pros.
  5. Do I have the resources to complete this job? Make an estimation of how much the job will cost you in time and money before you begin.
  6. Will this job risk personal injury? Don’t risk your safety on a project that should really be left to the pros.

Paying for a home improvement project

A home improvement project can be expensive. Consider tapping into your home’s equity through a home equity loan or a home equity line of credit with Olean Area Federal Credit Union to help you pay for the project. Call, click, or stop by today!

All You Need to Know About HELOCs

If you’re a homeowner in need of some cash, look in your own home. You can tap into your equity through a home equity line of credit, or a HELOC. Let’s take a look at HELOCs and why they can be an excellent option for cash-strapped homeowners.

What is a HELOC?

A HELOC is a revolving credit line letting homeowners borrow money against the equity of their home, as needed. Since it’s backed by a valuable asset, a HELOC will generally have a lower interest rate than unsecured debt, like credit cards.

Once you’ve been approved, you can borrow as much or as little as needed during a period of time known as the draw period. That time window generally lasts five to 10 years.

How much money can I borrow through a HELOC?

The amount of money you can take out through a HELOC will depend on your home’s total value, the percentage of that value the lender allows you to borrow against and how much you currently owe on your home.

Many lenders will only offer homeowners a HELOC that allows the borrower to maintain a loan-to-value (LTV) ratio of 80% or lower.

Is every homeowner eligible for a HELOC?

Like every loan and line of credit, HELOCs have eligibility requirements. Exact criteria will vary, but most lenders will only approve homeowners who have a debt-to-income ratio of 40% or less, a credit score of 620 or higher and a home with an appraised value that is at minimum 15% more than what is owed on the home.

How do I repay my HELOC?

Some lenders allow borrowers to make payments toward the interest of the loan during the draw period. When the draw period ends, the borrower will make monthly payments toward the principal of the loan in addition to the interest payments.

For many borrowers, though, repayment only begins when the draw period ends. At this point, the HELOC enters its repayment phase, which can last up to 20 years. During this time, the homeowner will make monthly payments toward the HELOC’s interest and principal.

In lieu of an extended repayment phase, some lenders require homeowners to repay the entire balance in one lump sum when the draw period ends.

How can I use the funds in my HELOC?

There are no restrictions on how you use the money in your HELOC. However, it’s generally not a good idea to use a HELOC to fund a vacation, pay off credit card debt or to help you make a large purchase. If you default on it, you risk losing your home, so it’s best to use a HELOC to pay for something that has lasting value, such as a home improvement project.

If you’re a homeowner in need of some extra cash, consider taking out a HELOC through Olean Area Federal Credit Union. Call, click, or stop by today to get started!

What do I Need to Know About Debt Consolidation?

Q: Help! I’m drowning in debt! I’ve heard about debt consolidation, but what do I need to know before moving ahead?

A: Debt consolidation is the process of moving multiple high-interest debts into a new loan or line of credit.

Here’s what you need to know about debt consolidation.

What are the benefits of debt consolidation? 

Saving on interest payments. Moving your debts to a new loan or credit line with a low interest rate can translate into big savings.

One monthly payment. Say goodbye to scrambling to keep track of and make all your monthly payments!

Fixed payment timeline. How does knowing when you’ll be debt-free sound?

Boost your credit score. Amp up your score with a balance transfer or loan.

What are the disadvantages of debt consolidation? 

May stretch out the payment timeline. More time in debt? No thanks.

Won’t eliminate irresponsible spending habits. You won’t turn into a budgeting beast just because you’ve relocated your debt.

Lower interest rate may not last. Many low- or no-interest credit cards only offer these features as a temporary promotion. Once time is up, the high interest rates hit. Ouch!

How can I consolidate my debt?

  1. Unsecured loan â€” This will allow you to pay off all your outstanding loans immediately and move your debts to one low-interest loan.

Unsecured loans usually have origination fees and other charges. Also, the interest rates on these loans can be sky-high.

As a member of Olean Area Federal Credit Union, though, you have access to unsecured loans with lower interest rates than you’ll find at most banks. 

  • HELOC â€” Use your home as collateral for an open credit line.

The drawback here is that you risk losing your home if you don’t pay up. Also, repayment terms can be upward of 10 years.

On the flip side, interest payments on HELOCs will be affordable and possibly tax-deductible.

  • Balance transfer — Move your debt to a new credit card with a low interest rate or a zero-interest offer.

The disadvantage with putting more plastic into your purse is that you may rack up a new credit card bill. Also, the low interest or no interest may not last.

As a member of Olean Area Federal Credit Union, you can take advantage of our low APR credit cards to help you get out of debt quicker.

* APR = Annual Percentage Rate. You can explore current deposit and loan rates by clicking here.

Want to learn more about debt consolidation? Call us at 800.854.6052, or click here to send us a message.

Financing a Home Renovation with a Home Equity Loan

Q: I’m doing some home renovations this spring and I’m not sure how to finance this expense. There are so many options! Which one makes the most sense?

A: As a member of Olean Area Federal Credit Union, you have several options for funding a home renovation. You can open a HELOC, or a Home Equity Line Of Credit, which is an open credit line that’s secured by your home’s value for up to 10 years. You can also fund your renovations with an unsecured loan or use your credit cards.

One of the best ways to fund a home renovation, though, is by taking out a HEL, or a Home Equity Loan. Let’s take a closer look at this popular loan option.

What is a home equity loan? 

A home equity loan is a loan secured by a home’s value. When homeowners open a HEL, they will receive a fixed amount of cash in one lump sum. Most home equity loans have a fixed interest rate, a fixed term and a fixed monthly payment.

What are the advantages of a home equity loan? 

The primary benefit a HEL has over other loans is its fixed interest rate. This means the loan will not be subject to increasing interest rates and borrowers know exactly how much their monthly payment will be for the entire term of the loan. Also, the interest paid on a home equity loan is often 100% tax-deductible (consult your tax adviser for details).

Another benefit of the HEL is its repayment plan. Borrowers will be making payments toward the loan’s principal and interest throughout the term. At the end of the loan term, the entire balance will be paid in full.

Are there any disadvantages to taking out a home equity loan?

While a home equity loan offers the funds needed to cover a home improvement project with an affordable repayment plan, it’s important to know about every aspect of a HEL before applying.

Obtaining a HEL could potentially include closing costs. It’s best to find out if there are any fees and, if so, how much these fees will amount to before applying for the loan.

Also, when taking out a home equity loan, borrowers will receive their funds in one shot. This makes a HEL a great option for homeowners who know exactly what kind of work they will do on their homes. However, if they only have a vague idea about the renovations they want to do and how much they’ll cost, they may end up borrowing an insufficient amount.

Finally, borrowers will need to make a monthly payment on their loan throughout its life. Before taking out a HEL, be sure you can afford the payments.

Call, click, or stop by Olean Area Federal Credit Union to learn more about home equity loans and to start applying for your loan today.

What Do I Need to Know About Today’s Real Estate Market?

Q: What do I need to know about today’s real estate market?

A: Trends and stats in real estate are constantly changing, especially during the unstable economy of COVID-19. Here’s what you need to know about the real estate market today.

Is it a buyer’s market now? 

Pickings are slim for homebuyers right now, giving sellers the upper hand and driving up prices for buyers. Low supply also means homes are on the market for less time than they would likely be in other years.

If you’re in the market for a new home right now, it’s best to be prepared to change some of the items on your list of must-haves into nice-to-haves.

What does low inventory mean for sellers? 

An uneven balance of supply and demand that favors sellers means homeowners looking to sell may be able to get a higher price for their home than anticipated.

Is home equity up? 

According to the NAR , home prices have swelled to a national median of over $300,000. This makes it a great time to sell a home.

If you’re selling your home, it’s a good idea to work with an experienced agent to ensure you’ll get the best possible offer for your home.

If you’re planning to buy a home in this market of increasing home prices, work out the numbers and determine how much house you can afford before starting your search.

Are interest rates still low? 

Interest rates reached record lows in 2020 and economists are predicting  that low rates will continue through 2021.

For buyers, this helps make homes more affordable; however, it’s important not to let a low interest rate make you think you can afford a home with a price tag that’s really outside your comfort zone.

What do I need to know if I don’t plan to buy or sell a home soon?

According to Freddie Mac , equity will likely continue rising in 2021. You may want to monitor how much your home is worth this year since you may change your mind about selling. Similarly, this can be a great time to tap into your home’s equity with a home equity loan or line of credit from Olean Area Federal Credit Union. You can easily explore our home equity loan rates by clicking here, and our line of credit rates by clicking here.

If you’re interested in purchasing a home this year, check out our Mortgage Loan options, contact us for current rates, or click here to start applying for a loan today!

Video Banking