The KCCU Blog
What’s the Best Way to Use a Home Equity Loan?
Q: With interest rates falling and home prices rising, it seems like a great time to tap into my home’s equity using a home equity loan. What’s the best way to use these funds?
A: A home equity loan can be a fantastic way to source extra funds during a falling-rates environment. Tapping into your home’s equity, or the positive difference between what is owed on a home and its current value, will give you the funds you need for a large expense with no additional strings attached.
With interest rates on a Kellogg Community Credit Union Home Equity Loan as low as 4.250% APR*, the repayment plan is always affordable. If approved, you’ll receive the funds in one lump sum.
Here are three forward-thinking uses for a home equity loan:
1. Home improvements
One of the most popular uses for home equity is for . These can be as major as adding a 1,000-square-foot extension to your home, as minor as replacing old carpet with new hardwood flooring or anything in between.
Using your home’s equity for home improvement projects is a smart choice. For one, the money you put into the renovations acts as an investment. If you choose improvements that increase your home’s value, you can make back the money you spent or even see a return when you sell your home.
It’s best to go for improvements that add lasting value to your home instead of blowing big bucks on superficial remodeling projects that may look dated just a few years down the line.
2. Debt consolidation
Another popular use for a home equity loan is to consolidate high-interest debt. Paying off multiple debts at high interest rates can be cumbersome and difficult to manage. Worse, the heavy interest rates mean more of the borrower’s money goes toward the lender and less goes toward paying down the principal of the debts. Using a home equity loan to consolidate debt to a single and no-interest or low-interest loan can slash a pile of debt by several thousands of dollars and help shorten repayment time by several years.
3. College education
When interest rates are falling, funding a college education through a home equity loan instead of a high-interest student loan can be a smart choice. Similarly, homeowners struggling to meet their student debt payments without defaulting on the loan might want to use their home’s equity to pay off the debt quickly and replace it with a more manageable low-interest loan. It’s important to note that paying off a federal student loan with home equity might not be the best choice, as these loans are sometimes eligible for partial or complete forgiveness..
Before you take out a home equity loan
A home equity loan can provide homeowners with the funds they need for a home improvement project, to get their debt under control, pay for their college education or other expenses and large purchases. However, before taking out a home equity loan it’s important to run the numbers so you are sure you can easily meet the regular loan payments. Otherwise, you risk defaulting on the loan and losing your home.
If you’re ready to take out a home equity loan, look no further than Kellogg Community Credit Union. Our rates and terms are always competitive. Visit us online or give us a call at 269-968-9251 to get started on your loan application today.
* APR = Annual Percentage Rate and is valid as of 9/2/20. Rates are subject to change without notice. Subject to credit approval and other conditions. Rates may vary based on term. Equal Housing Opportunity.
Protect Yourself from Scams
Here at Kellogg Community Credit Union, our biggest priority is your financial wellness. To help keep you safe, we’ve made this guide about recognizing and protecting yourself from scams.
Five ways to spot a scammer
1.They ask for detailed information before agreeing to process an application.
2. They insist on a specific method of payment.
3. They send a check for an inflated amount to a seller or “employee,” and then ask the victim to mail them the extra money. Of course, the original check will not clear.
4. You can’t find any information about the company the caller allegedly represents.
5. You’re pressured to act now.
Who are the targets?
Here are some of the most common targets of scams:
- The unemployed. If you’re job-hunting, don’t respond to emails offering you a “dream position” you never applied to have.
- The aging. Older people often spend lots of time online. They can also be less aware of the dangers lurking there.
- Children. Children will more readily share information with strangers, which can then be used to steal their identity.
What do scams look like?
These are some of the most common scams:
- Cyberhacking. Hackers gain remote access to your computer-and personal information.
- Phishing scams. Scammers bait you into sharing personal information, which they use to hack your accounts or steal your identity.
- Mystery shopper. A bogus company will “hire” you to purchase an item in a store and then report back on the experience. Before you get started, though, you’ll have to pay a hefty fee, which you’ll never see again.
- Job offers. Scammers “hire” you for a position and then scam you by sending you an inflated check, as detailed above.
- Sweetheart scams. A scammer pretending to be an online lover will con you into sending them money and gifts or sharing personal information.
- Fraudulent investments. Scammers reach out to victims with information about lucrative investments that don’t exist.
10 ways to protect yourself from scams
- Never share personal information online
- Don’t open unsolicited emails. If you do, do not click on any links in them.
- Never send money by insecure methods to an unknown party.
- Protect your devices by using the most current operating systems, choosing two-factor authentication and using strong, unique passwords for every account.
- Choose the strongest privacy settings for your social media accounts.
- Keep yourself in the know about the latest scams
- Educate your kids about basic computer safety and privacy
- If you have elderly parents, talk to them about common scams and teach them to protect themselves.
- If a government agency or a company calls and asks you to share personal information, tell them you’ll contact them on your own.
- Never accept a job or pay for a purchase or service without researching the company involved.
Covid-19 Back to School Guide
This year, back-to-school season is all about getting ready for a school year that promises to be unlike any other. Here’s our guide to helping your child prepare for the new school year in these unconventional times.
Talk to your child about what to expect
The more your child knows about the dynamics of the upcoming school year, the better off they’ll be. As the situation evolves, and you learn more details about the year’s schooling, speak to your child about what to expect.
Create a back-from-school protocol to keep your home safe
If your child will be going back to school full-time, or even partially, it’s important to establish a sanitizing ritual for them to adhere to when they walk through the front door after school each day.
“When children return from school, they should immediately wash their hands,” advises board-certified pediatrician Dr. Candice W. Jones. “Once at home, at the very least, they should remove clothes/shoes and place them in the laundry, or in a designated safe place for disinfecting. A shower would be great but is not absolutely necessary.”
Zoom in on remote schooling
Dr. Linda Carling, an associate research scientist at Johns Hopkins University, shares these tips for helping children succeed at remote learning:
- Encourage movement. Squeeze in some stretching breaks throughout the school day and pencil in larger chunks of time for longer exercises.
- Reduce distractions. Create a distraction-free zone for your child’s learning to help boost their focus.
- Adjust your schedule as needed. If possible, adjust your own schedule so you can be on hand to help your child with their remote learning as necessary.
- Provide immediate positive feedback. Each time your child successfully follows instructions, provide immediate and positive feedback.
Prepare for Mask-Wearing
- Modele positivity. Though you may find it difficult to wear a mask yourself, you can help your child build up a positive attitude about mask-wearing by talking to them about how your mask is keeping you and others safe.
- Practice mask-wearing at home. This will help your child grow accustomed to wearing a mask and help to ensure your child is wearing it correctly.
- Find the Right Fit. Make mask-wearing easier for the sensory child by finding the most comfortable style, whether that’s a classic ear-loop mask, a bandanna-style covering or a neck gaiter. Extenders or button headbands can also be a welcome relief for irritated ears.
- Make if Fun. Make masks enjoyable by choosing a child-friendly pattern. You can go with these adorable bear face masks from Amazon, have your child design their own mask on Etsy, choose an extra breathable and lightweight mask from Athleta or pick out a mask featuring your child’s favorite movie character from Disney.
How to Spot a Counterfeit Bill
Printers and software have gotten better, so counterfeit money has gotten harder to spot. Here are eight simple ways to detect it along with what to if you find some!
Counterfeiting is on the rise
The coronavirus pandemic has brought with it a wave of scams, with no signs of slowing down. These scams are also producing a surge of counterfeit bills into circulation. Using cutting-edge technology, scammers create bills that look just like the real thing to the untrained eye.
Unfortunately, once counterfeit bills are passed, their new owner can become liable for passing them on to someone else.
In an effort to combat the reach of counterfeit bills, the Secret Service and the U.S. Treasury have added several identifying features to legitimate dollar bills to help citizens and business owners determine whether they are authentic.
The Real Deal - 8 Things to Look For
Here are eight things to check for when determining if a bill is the real deal.
1. A hologram of the face image on the bill
When held up to the light, the hologram on the bill should match the face on the front of the bill. Scammers will often bleach a lower denomination bill and try to pass it off as a bill of a higher denomination — but they can’t change the interior hologram. So, if the $100 bill is really a counterfeit bill created from a $5 one, holding the bill up to the light will reveal the face of Abraham Lincoln, and not Benjamin Franklin, who appears on authentic $100s.
2. A thin vertical strip of text spelling out the bill’s denomination
Holding the note up to the light will also display this sign of authenticity on genuine bills.
3. Color-shifting ink
All new-series bills, except for fivers, were designed with this trick: If you tilt the bill back and forth, the numeral in the lower right hand corner will shift from green to black and back to green again.
The watermark of the bill can be seen in an unprinted space to the right of the portrait when the bill is held up to the light.
5. Security thread
Also apparent when the bill is held up to light, the security thread is a thin strip running from the top of the face on the bill until its bottom. The security strip is positioned to the right of the portrait on $10 and $50 bills, and to the left of the portrait on $5s, $20s and $100s.
6. Ultraviolet glow
You’ll need an ultraviolet light for this to work, but it’s an instant reveal about the bill’s authenticity. When held up to an ultraviolet light, $5 bills glow blue, $10 bills glow orange, $20 bills glow green, $50 bills glow yellow, and $100 bills glow red.
For yet another sign of a bill’s authenticity, you can look for tiny microprinting on the bill’s security thread, which spells out its denomination in all-caps text.
8. Fine line printing patterns
Look for very fine lines behind the portrait and on the other side of the bill as well.
What to do if you’ve been passed a counterfeit bill?
If a note you’ve been passed does not hold up to the authenticity test, and you believe it’s a
counterfeit bill, the U.S. Treasury advises the following course of action:
- Do not put yourself in a position of danger.
- You can also mail it to your nearest Secret Service office.
- Do not return the bill to the passer.
- If possible, delay the passer with an excuse.
- Take note of the passer’s physical appearance and record their vehicle license plate if possible.
- Contact your local police department or call your local Secret Service office.
- Write your initials and date in the white border area of the suspected counterfeit note.
- Do not handle the counterfeit note. Place it inside a protective cover, a plastic bag or an envelope until you can pass it on to an identified Secret Service Special agent.
Counterfeit cash can be harder to spot than you think. Don’t get stuck holding the bag! If you think you’ve been passed a counterfeit bill, and the note is missing the signs listed above, follow the advice of the U.S. Treasury to keep your hands clean.
A+ Back to School Apps
The new school year is starting soon! Whether your kids are getting ready for another round of remote schooling via Zoom or they’re packing their backpacks with face coverings and hand sanitizer for in-person schooling COVID-style, there’s at least one app to help get the year off to a great start.
Here’s a rundown of some of the most likely candidates:
myHomework (iOS, Android)
It’s not easy to keep up with assignments, projects and scheduled tests from so many different classes. Help your child stay on top of their work this year with the myHomework app. With color-coded classes to keep things organized and automatic reminders before looming due dates, the app is super-easy to use. The free version of the app includes assignment tracking, due date reminders, syncing between classes and homework widgets, while the paid version, at just $4.99 a year, offers an ad-free upgrade with file attachment support, enhanced app widgets, external calendar access, a homework import feature and more.
LaLa Lunchbox (iOS)
This adorable app makes meal planning fun again! No more arguments and frustrations about what to prepare for lunch; with your child on board, it’s easy as pie. Let your child set up a profile with a selected monster avatar, and choose a virtual meal from the LaLa Lunchbox’s food library by dropping their chosen foods into the monster’s mouth. The app will tell the parents what to buy in the grocery store so they can prepare the lunch their kid wants. Parents can also customize the food options for specific diets, and all the choices are preselected by a dietician. Meal planning, done!
Cozi Family Organizer (iOS, Android)
Between school schedules, meet-the-teacher nights, after-school activities and more, parents have lots to keep track of at the start of a new school year. The free Cozi app helps keep the entire family organized with a synced family schedule and color-coded calendar that streamlines across multiple devices. Save grocery lists and recipes on the app and keep a running to-do list on Cozi to keep on top of all your errands and chores. You can even manage a family journal on the app for the ultimate in sharing!
Bear Focus Timer (iOS, Android)
If you’ve got a little one at home who has trouble focusing on their tasks, the Bear Focus Timer (BFT) app might be just what you need. The no-frills Pomodoro-style timer is created to help the smallest of minds stay focused on their homework, chores or other activities with the help of simple schedules and white noise. You won’t find a lot of bells and whistles on this $1.99 app, but the timer allows the user to customize focus times and break times for the ultimate in productivity.
Back-to-school season can be frenzied as the family adjusts to a new routine and schedule. Let these apps help you keep calm and organized so the entire family can ace the start of the new school year.
Pick the best features for you
Q: How do I decide which features to look for in a new car, and which to skip?
A: Shopping for a car doesn’t have to be complicated. To help you out, we have created a list of key features to consider in your new car, and a list of features you can skip.
Must-have safety features
- 360-degree camera: This camera gives drivers a bird’s-eye view of the area around the car.
- Evasive steering: This feature provides additional steering support when you are in danger of colliding with another vehicle, and your own steering efforts are insufficient.
- Forward collision warning: Drivers get a visual and/or audible alert when their vehicle is heading toward a forward collision.
- Blind spot alert: This feature alerts the driver when there is an object or pedestrian in direct line of their blind spot.
- Automatic emergency braking: Stay safe with this feature, which automatically applies the brakes when it senses a vehicle in your car’s way. Some systems include pedestrian detection as well.
- Automatic keyless entry: This feature automatically unlocks a car’s doors when it senses a nearby fob.
- Power tailgate: This feature for pickup trucks and SUVs lets you lower and raise your tailgate with the push of a button.
- Multi-zone climate system: Family road trips are peaceful again with this feature, which allows for different climate controls throughout the car.
- Speedy USB-charging outlets: No more unbearable waits for your gadgets to power up with this super-speedy USB port.
- Heated steering wheel and driver’s seat: This one is for those frosty mornings when your car can’t get warm fast enough.
- Wireless charging pad: Just place your phone on one of these pads and it will start powering up.
- Home assist device connectivity: Some new cars allow you to use remote voice control with home assist technologies, like Alexa, for your car.
- Rear entertainment systems: This feature gives the rear seat of your car a completely separate entertainment system.
- Android Auto and Apple CarPlay: These features sync your smartphone’s interface with your car’s infotainment system for easier phone control.
Features you can skip
- Bigger wheels and thinner tires: The ride will be less comfortable, and your wheels will be more prone to damage from potholes.
- Built-in navigation systems: You know you’re going to use Waze most of the time anyway. Also, most built-in navigation systems require constant updates.
- Lane keeping assist: This feature automatically steers or brakes your car when you cross a lane marking without turning on a blinker. In real life, though, it can be annoying as you’ll often need to cross a lane marker for good reason, like moving over for an emergency vehicle.
Before you start shopping, call, click, or stop by Kellogg Community Credit Union to hear all about our auto loans.
“When should I invest?”
Every investor has asked this question at one time or another.
The answer to this question is twofold … And these two answers might surprise you.
The first answer:
Since you want to buy low and sell high, the best time to invest is when prices are low. Most investors become timid when prices are low because they fear that prices will fall even further. While this is a risk in investing, it’s also good to remember that you don’t want to buy when prices are high. It’s not that different from when you bought your house: You bought it for as low as you could and you took the risk that prices could go lower. But ideally, you bought it low because you wanted the value of your home to rise. Buying when a stock price is low means you can buy more of it inexpensively. So, if it rises, you can earn a higher profit.
The second answer:
The best time to invest is now. Remember the wise saying: “If you want a tree, the best time to plant it was 25 years ago. The second-best time is right now.” Savvy investors rarely regret investing; more often than not, they regret not investing. All too often, inexperienced investors want to “time the market” by waiting for the economy to improve before they put their money into something.
Now it is time to put the answers together: If you want to invest, forget timing the market and waiting for the economy to improve. Instead, carefully choose stocks that are priced low right now but are poised to grow (because they have strong financials and offer a good product or service).
Is there a coin shortage?
The COVID-19 Global pandemic caused an initial panic leaving store shelves empty of face masks and toilet paper. Hand sanitizer, cleaning supplies, paper towels and meat followed quickly in what was fast becoming routine for life during COVID-19. And now, the latest commodity to run in short supply is coins.
Got change? Many financial institutions, retailers and private citizens don’t.
Although we are increasingly becoming a cashless society, coins play an integral role in day-to-day commerce, and a dearth in their supply can severely impact small businesses that are already struggling to survive. There’s more than just pocket change at stake here, and if things don’t improve soon, the effect on the economy can be critical and long-lasting.
Here’s what you need to know about the most recent shortage caused by COVID-19.
What triggered the shortage?
The jangling coins in your wallet were stricken in the U.S. Mint. The Federal Reserve distributes these coins to financial institutions across the country. From there, the coins are purchased by retailers or private citizens, enter the economy and begin circulating. But now, with the pandemic upending the economy and the Mint operating at partial capacity, this chain was disrupted for months at a time.
“The COVID‐19 pandemic has significantly disrupted the supply chain and normal circulation patterns for U.S. coin,” according to a statement issued by the Federal Reserve. “In the past few months, coin deposits from depository institutions to the Federal Reserve have declined significantly and the U.S. Mint’s production of coin also decreased due to measures put in place to protect its employees.”
Federal Reserve Chairman Jerome Powell added that the massive shift to online or contactless transactions has further disrupted the flow of coins through the economy.
Even now, as large segments of the country reopen, the supply of coins is failing to keep pace with demand. Many consumers still shop remotely and those who do shop in physical stores are wary of handling germ-infested dollars and coins and are opting for contactless payment instead.
The response to the shortage
To help mitigate the fallout of the coin shortage, the Federal Reserve began to ration its coin distribution on June 15, giving banks and credit unions only part of their requested orders. The total number of rationed coins each bank or credit union will receive is determined by the institution’s history of coin orders and the capacity of the U.S. Mint to fulfill the request. The Reserve has also encouraged banks and credit unions to order only the amount of coins they need to meet short-term member demand.
The Federal Reserve is working together with the Mint to ramp up production of new coins and to lift supply allocations in the near future.
The impact of the shortage on the economy
The severity of the shortage first came to light in mid-June, when banks in Tennessee were notified that they’d only receive a small portion of their weekly coin order from the Federal Reserve.
In a virtual hearing on June 17, Rep. John Rose of Tennessee told Powell that the banks in his district, having received only part of their weekly coin order, would likely run out of change by the end of the week, or might need to round up or down if they run low.
“In a time when pennies are the difference between profitability and loss, it seems like it might be a bigger concern than the announcement from the Fed would indicate that it is,” Rose said.
The shortage can have devastating effects for retailers who won’t receive their complete requested orders of coins from their bank or credit union, Rose said. Without the means to provide adequate change for their customers, small business owners can be forced to round up or down, leading to significant losses in revenue and in customers.
A temporary shortage
The Federal Reserve believes the coin shortage is only temporary and that it will resolve itself in the near future.
“As the economy reopens, we’re seeing coins begin to move around again,” Powell said.
However, the dearth in available coins is still a reality that can be felt in all sectors of the economy. As a consumer, this means that you may feel the impact of the shortage when paying cash at brick and mortar stores; the clerk may not be able to provide you with accurate change. Kellogg Community Credit Union currently has access coin for our members who need it; however as supply chain changes occur, we may experience intermittent or temporarily coin shortages.
Finally, if you have spare change lying around at home, you may want to deposit it or exchange it for paper currency to help KCCU close the gap between our coin supply and demand
Travel Safe this Summer
Summer is here, and many Americans are itching for a vacation. But is it possible to travel safely right now? Is an airplane really a flying Petri dish to be avoided until the pandemic blows over? Can you take a road trip if it means making rest stops in three different states?
So many questions — but we’ve got answers! Here’s how to enjoy your getaway this summer without compromising on your health and safety.
Check your health
Before heading out to any destination, give yourself a mental COVID-19 screening. Have you been running a fever above 100.4? Have you recently experienced shortness of breath or deep coughing? Do you have reason to believe you’ve been exposed to coronavirus in the last week? If you answer yes to any of these questions, the CDC recommends you stay home.
Check local laws at your destination
Even as some states are seeing a decline in new COVID-19 infections, the virus continues to rage across the country and many states are currently peaking. To help curb the spread, some local governments have enacted strict quarantine laws for visitors entering their state from places that are experiencing a surge in new infections. There are also discrepancies among individual states regarding general coronavirus laws, such as those related to face coverings and public gatherings.
Check the local laws at your destination before setting out on your trip. Also recheck them as you travel since the situation is fluid and laws are constantly changing. It’s also a good idea to familiarize yourself with the rules at rest stops you’ll visit along the way. You can look up COVID-19 regulations around the country here.
At first glance, an airplane can seem like a flying tube of germs, but that’s not entirely true.
“Many people think they get sick on an airplane, but the reality is that the air quality on an airplane is actually really good — high amounts of clean outdoor air and all recirculated air pass through a HEPA (High Efficiency Particulate Air) filter,” says Joe Allen, an assistant professor and director of the Healthy Buildings Program at Harvard T.H. Chan School of Public Health.
HEPA filters refresh the circulated air every two to three minutes, and can effectively block more than 99% of airborne microbes.
That travelers are more likely to pick up the virus while waiting in line at airport security, at the boarding gate or in front of the luggage carousel, Allen says.
Airports and airlines are taking steps to minimize the risks of contagion with frequent intensive cleaning and sanitizing of common areas. Planes are fogged with electrostatic disinfectant that sticks to surfaces such as seatbelts, Many airlines are now distributing disinfectant wipes to boarding passengers, and the Transportation Security Administration (TSA) has increased the size of hand sanitizer bottles permissible to bring aboard a plane from 3.4 ounces to 12.
Despite these extra measures, it’s best to continue following standard COVID-19 precautions. Face coverings should be worn at all times, as per CDC recommendations, and it’s a good idea to wipe down high-contact surfaces, like tray tables and armrests. As always, proper hand hygiene should be observed.
Some states — but not all — have lifted restrictions on hotels and vacation rentals, thereby permitting them to welcome guests again; however, many travelers are understandably wary. To reassure them, several big-name hotel chains are rolling out new programs and procedures, such as Hilton Worldwide’s CleanStay program which features frequent cleaning and contactless check-in. These extra precautions make a hotel stay safer.
If you’re still feeling unsure about spending a night in a hotel or a vacation rental, but your travel plans necessitate an overnight stay, come prepared. Pack a generous supply of cleaning wipes that have an EPA-approved disinfectant, and scrub all high-touch surfaces at the hotel room or rental. This includes all door knobs, faucets, remote controls, light switches, countertops and more.
Lots of vacationing Americans are choosing to travel by car this summer instead of taking to the skies, assuming this mode of transportation is safer than air travel. What many neglect to realize is that by stopping at rest stops in several states, a traveler may come in close contact with hundreds of other travelers while in a germ-infested area.
If you have plans to hit the road, travel safely. Pack lots of disinfectant wipes and an alcohol-based hand sanitizer. Mask up at all rest stops, and don’t forget to keep your distance from other travelers. Use toilet seat covers when available, and wipe down other high-touch areas, like sink faucets, before using. When purchasing takeout food, use contactless payment. Wash your hands vigorously when you’ve finished, and scrub them with sanitizer for an extra measure of protection.
Once you’ve arrived at your vacation destination, continue to play it safe. The CDC recommends maintaining a 6-foot distance from other visitors while at an attraction, avoiding crowded parks, wearing a face covering at all times and washing hands with soap and water for at least 20 seconds after using the restroom, before eating and after blowing your nose, coughing or sneezing.
The open road is calling! Before you head out on your summer getaway, though, don’t forget to pack the face coverings, hand sanitizer and disinfectant wipes. Play it safe for a truly memorable summer.
COVID Scam Alert
1. The fake cure scam. Scammers are peddling bogus cures and vaccines. If you’re offered a drug or vaccine to fight coronavirus — especially by a company you’ve never heard of — you’re looking at a scam.
2. Phishing emails from the “World Health Organization” (WHO). Scammers are sending out emails which appear to be from the WHO, but are really an attempt to get you to share personal information.
3. Fake charities. Everyone wants to help those stricken by the virus, but be sure to check out the authenticity of a charity before making your donation.
4. Malicious websites. Scammers have set up websites full of information on COVID-19 with the intention of gaining access to your device. Don’t download any links or open attachments from non-reputable sources.
5. Fake funding scams. Criminals invent a “research team” supposedly on the verge of discovering a cure for COVID-19 — they just need your donation. Of course, all funds donated to this alleged team will go directly into the scammers’ pockets. Only donate to verified causes.
Is it a good time for a HELOC?
If you’re looking for some extra money to use for a home improvement project, debit consolidation, family vacation, college tuition, new appliances, furniture or other major purchases consider tapping into your home’s equity. One great way to do this is by opening a home equity line of credit, or a HELOC. Let’s take a closer look at HELOCs and why they can be an excellent option to get the cash you need.
What is a HELOC?
A HELOC is a revolving credit line allowing homeowners to borrow money against the equity of their home. The HELOC is like a second mortgage on a home; if the borrower owns the entire home, the HELOC is a primary mortgage.
Given that a HELOC is a line of credit and not a fixed loan, borrowers can withdraw money from the HELOC as needed rather than borrowing one lump sum. This allows for more flexibility than a fixed home equity loan and is especially beneficial for borrowers who don’t know exactly how much money they’ll ultimately need.
Borrowers withdraw funds (aka “draws” or “advances”) from the HELOC during a set amount of time that is known as the “draw period”. At Kellogg Community Credit Union, we allow borrowers to draw from their HELOC for the first 5 years. The first 5 years will be interest-only payments. There is no set amount that has to be withdrawn every time; however, the first advance has a minimum of $500.
How do I repay my HELOC?
When the draw period ends, some lenders will allow borrowers to renew the credit line and continue withdrawing money. Other lenders require borrowers to pay back the entire balance due, also known as a “balloon payment.” Still others allow borrowers to pay back the loan in monthly installments over another set amount of time, known as the “repayment period.” Repayment periods are generous, lasting as long as 20 years.
KCCU offers all those options:
- Renew the credit line
- Pay back the entire balance
- Pay back during the “repayment period”.
How can borrowers spend the money?
While home improvement projects are popular uses for HELOCs, borrowers are free to spend the money however they please. Some other uses for HELOCs include debt consolidation, funding a wedding, dream vacation or paying for large purchases and even paying for college expenses.
Is everyone eligible for a HELOC?
Like every loan and line of credit, HELOCs have eligibility requirements, which help lenders determine the applicant’s financial wellness and responsibility. Most notably, the borrower must have a minimal amount of equity in the home. You can contact a member service representative at KCCU to help you determine your HELOC eligibility.
How much can I borrow with a HELOC?
HELOC amounts vary along with three criteria: the value of your home, the percentage of that value the lender allows you to borrow against and the outstanding amount on an existing mortgage.
For example, if you have a $300,000 home with a mortgage balance of $175,000 and your lender allows you to borrow against 85% of your home’s value, multiply your home’s value by 85%, or 0.85. This will give you $255,000. Subtract the amount you still owe on your mortgage ($175,000), and you’ll have the maximum amount you can borrow using a HELOC, which is $80,000.
What are the disadvantages of a HELOC?
A HELOC is secured by your home’s equity, which places your home at risk of foreclosure if the HELOC is not repaid. Before opening a HELOC, it’s a good idea to run the numbers to get an idea of what your monthly payments will look like and whether you can easily afford to meet them.
If you don’t plan to stay in your home for long, a HELOC may not be the right choice for you. When you sell your home, you’ll need to pay off the full balance of the HELOC.
A HELOC can be a great option now
HELOCs have variable interest rates, which means the interest on the loan can fluctuate over the life of the loan. This variable is based on a publicly available index, such as the U.S. Treasury Bill rate, and will rise or fall along with this index, which is currently near historic lows. The low rates make it an excellent time to take out a HELOC with manageable payback terms
Are you looking to tap into your home’s equity with a HELOC? Call, click, or stop by Kellogg Community Credit Union today to get started. Our low rates and generous terms make a Kellogg Community Credit Union HELOC a great choice to get the money you need.
Reset Your Online Banking Password
If you are unable to recall your online banking password or you've tried the wrong password too many times and become locked out, this video is for you! You can easily recover your online banking password without waiting for help from the credit union.
Home Appraisal is Key
Each party in a home sale transaction has an agenda. The seller, naturally, wants to sell the house for as much as possible. But the buyer hopes to negotiate a lower price. Individual needs skew each person's perception of what a property is worth.
Enter the real estate appraiser—a professional who can determine the value of the property, but who has no vested interest in the sales transaction. The hallmark of a good appraisal is that it's independent, objective, and impartial.
In a real estate transaction, the lender hires the appraiser. The appraiser's task is to determine whether the property has sufficient value to secure a loan.
Confusion sometimes surrounds the roles of appraisers and home inspectors, which are totally different functions. An inspector, hired by the prospective home buyer, scrutinizes a house inside and out, from the roof to the basement floor, to search for any structural or mechanical problems.
An appraiser, hired by the lender, aims to develop an overall impression of a property and its market value. The appraiser walks through a property, looking at it through the eyes of a typical prospective buyer.
The final step that goes into an appraisal is to compare the property with similar ones in the neighborhood that recently have sold. What did these get in the marketplace?
A seller or buyer who feels the appraiser's evaluation missed the mark can ask that the appraiser reconsider. The seller would go through the real estate agent to make that request; the buyer would approach the lender.
But anyone questioning an appraiser's opinion ought to have hard facts to back up his or her argument. After all, the appraiser is the one who is likely to be the most objective about the property's value. All parties benefit when appraisers are allowed to do their job, without interference.
If you're considering purchasing a house, Kellogg Community Credit Union can help. Stop by or call 800-854-5421 today. Or, visit us on the Web at kelloggccu.org. Looking for a real estate agent? Consider one of our preferred realty partners
Quarantine Boredom Busters for Kids
30 Fun Activities for Families
- Build a pillow fort or indoor tent
- Pretend the floor is hot lava and step only on pillows, paper etc.
- Build a toothpic tower, bridge or house
- Get crafty - for ideas and inspiration Pintrest has you covered!
- Create and decorate your own board game or card deck
- Scavenger hunt
- Paper airplane challenge
- Tresure hunt - hide pennies, beads, or other "treasures" outside in the sandbox or yard for the kids to find
- Minute to win challenge, such as cup stacking, marshmallow on a spoon race, and more ideas
- Bucket or laundry basket Skee Ball
- Bake something together
- Balloon tennis (construct rackets out of paper plates and wooden kitchen spoons)
- Make a family time capsule and bury it outside
- Create a scrapbook together
- Make a cookbook of your favorite family recipes. Let the kids illustrate it
- Plan a treasure hunt complete with map and clues
- Make homemade playdough (see recipe) or slime (see recipes)
- Nerf gun war
- Wash the dog (ok, this one might not necessary be "fun", but its a great time to give Fido a refresh)
- Make cards to mail to friends and family
- Invite people to a virtual party using online meeting tools (ie Skype)
- Hide and Seek
- Throw a birthday party for your child's favorite stuffed animal
- Get outside and have a campfire complete with s'mores
- Build an obstacle course using items around the house to jump over, climb through etc.
- Learn a new skill with online tutorials, such as: Knitting for Beginners, How to Juggle, or Start an Indoor Mason Jar Herb Garden
- Watch old home movies or look at old photograhs
- Clean out your closests for items to sell come garage sale season
- Journal your experience for a historical record
- Get outside! Go for a nature walk, birdwatch, rock hunt, whatever
These resources can help keep kids brains active and engaged while schools are closed.
- Tour a Museum...virtually - Virtual Museum Tours
- Khan Academy - School schedules
- Brainpop - You can request free account access while schools are closed.
- ABCMouse.com (offering free membership to school districts during this time. Check with your child's school or them to apply if they are not currently on board)
- Adventureacademy.com (offering free membership to school districts during this time. Check with your child's school or them to apply if they are not currently on board)
- Comic Generator
- Michigan eLibrary
- Sumdog Math - free during school closures
- Reflex math
- EPIC digital library - free trial available
- Discover Kalamazoo Coloring Pages
Student Loan Changes During COVID-19
With unemployment levels rising and many employers cutting work hours, lots of college grads are now struggling to meet their student loan payments. Thankfully, the federal government has passed legislation to ease this burden. Unfortunately, though, many borrowers are confused about the terms and conditions of these changes.
Here’s all you need to know about the changes to student loan debt during the coronavirus pandemic.
All federal student loan payments are automatically suspended for six months
As part of The Coronavirus Aid, Relief and Economic Security Act (the CARES Act) signed into law on March 27 all federal student loan payments are suspended, interest-free, through Sept. 30, 2020. If borrowers continue making payments, the full amount will be applied to the principal of the loan. The suspension applies to all federal student loans owned by the Department of Education as well as some Federal Family Education Loans (FFEL) and some Perkins loans. Students do not have to take any action or pay any fees for the suspension to take effect.
Additionally, during the suspension period, the CARES Act does not allow student loan servicers to report to the credit bureaus borrower nonpayments as missed payments. Therefore, the suspension should not have a negative effect on borrowers’ credit scores.
If you’re not sure whether your student loan is federally owned, you can look it up on the Federal Student Aid (FSA) website. Be sure to have your FSA ID handy so you can sign in and look up your loans. You can also call your loan servicer directly to clear up any confusion.
Contact information for federal student loan servicers:
- CornerStone: 1-800-663-1662
- FedLoan Servicing (PHEAA): 1-800-699-2908
- Granite State — GSMR: 1-888-556-0022
- Great Lakes Educational Loan Services, Inc.: 1-800-236-4300
- HESC/Edfinancial: 1-855-337-6884
- MOHELA: 1-888-866-4352
- Navient: 1-800-722-1300
- Nelnet: 1-888-486-4722
- OSLA Servicing: 1-866-264-9762
- ECSI: 1-866-313-3793
Suspended payments count toward Public Service Loan Forgiveness and loan rehabilitation.
Public Service Loan Forgiveness (PSLF) is a federal program allowing borrowers to have their student loans forgiven, tax-free, with the stipulation that they work in the public sector and make 120 qualifying monthly payments. A disruption of these 120 payments can disqualify a borrower from the program.
According to the CARES Act, suspended payments will be treated as regular payments toward PSLF. This ensures that borrowers who have been working toward these programs will not lose the progress they’ve made toward loan forgiveness.
The same rule applies to individuals participating in student loan rehabilitation, during which borrowers with defaulted student loans must make nine out of 10 consecutive monthly payments to pull their loans out of default. The U.S. Department of Education will consider the six-month suspension on payments as if regular payments were made toward rehabilitation.
Some states and private lenders are offering student loan aid for struggling borrowers.
If your student loan is not federally owned and you are struggling to meet your payments, there may still be options available, such as loan deferment or forbearance. If you are in need of such assistance, contact your lender directly to discuss your options.
Consider an income-driven repayment plan.
If you have an FFEL that is ineligible for suspension, you can lower your monthly payments by enrolling in an income-based repayment plan, which adjusts your monthly student loan payment amount according to your discretionary income. Other lenders offer similar plans, often referred to as income-driven repayment plans. If your salary was cut as a result of COVID-19, or you are currently unemployed, these plans can provide relief by making your monthly payments more manageable.
Employers can contribute toward employees’ student loan debt for temporary tax relief
The federal government offered temporary tax relief for employers contributing up to $5,350 toward their employees’ student loan payments. This benefit is in effect until Jan. 1, 2021 and it can be used for any kind of student debt, whether federal or private.
If you don’t qualify for the student loan payment suspension, you can try speaking with the human resources department at your workplace to find out how they can help you with your student loan debt at this time.