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5 Steps to Take Before Making a Large Purchase

Have you been bitten by the gotta-have-it bug? It could be a Peloton bike that’s caught your eye, or maybe you want to spring for a new entertainment system, no matter the cost. Before you go ahead with the purchase, though, it’s a good idea to take a step back and follow the steps outlined here to be sure you’re making a decision you won’t ultimately regret.

Step 1: Wait it out

Often, a want can seem like a must-have, but that urgency fades when you wait it out. Take a break for a few days before finalizing a large purchase to see if you really want it that badly. For an extra-large purchase, you can wait a full week, or even a month. After some time has passed, you may find that you don’t want the must-have item after all.

Step 2: Consider your emotions

A bit of retail therapy every now and then is fine for most people, but draining your wallet every month to feed negative emotions is not. Before going ahead with your purchase, take a moment to identify the emotions driving the desire. Is this purchase being used as a means to fix a troubled relationship? Or to help gain acceptance among a group of friends, neighbors or workmates? Or maybe you’re going through a hard time and you’re using this purchase to help numb the pain or to fill a void in your life. Be honest with yourself and take note of what’s really driving you to make this purchase. Is it really in your best interest?

Step 3: Review your upcoming expenses

What large expenses are you anticipating in the near future? Even if you have the cash in your account to cover this purchase, you may soon need that money for an upcoming expense. Will you need to make a costly car repair? Do you have a major household appliance that will need to be replaced within the next few months? By taking your future financial needs into account, you’ll avoid spending money today that you’ll need tomorrow.

Step 4: Find the cheapest source

If you’ve decided you do want to go ahead with the purchase, there are still ways to save money. In today’s online world of commerce, comparison shopping is as easy as a few clicks. You can use apps like ShopSavvy and BuyVia to help you find the retailer selling the item at the best price.

Step 5: Choose your payment method carefully

Once you’ve chosen your retailer and the item you’d like to purchase, you’re ready to go ahead and make it yours! Before taking this final step, though, you’ll need to decide on a method of payment.

If you’ve saved up for this item and you have the funds on-hand for it now, you can pay up in cash or by using a debit card. This payment method is generally the easiest, and if it’s pre-planned, it will have little effect on your overall budget.

If you can’t pay for the item in full right now, consider using a credit card with a low interest rate. Most credit card payments have the added benefit of purchase protection, which can be beneficial when buying large items that don’t turn out to be as expected. Before swiping your credit card, though, be sure you can meet your monthly payments or you’ll risk damaging your credit score.

Another option to consider is paying for your purchase through a buy now, pay later program. Apps, like Afterpay, allow you to pay 25% of your purchase today, and the rest in fixed installments over the next few months. This approach, too, should only be chosen if you are certain you can meet the future payments.

Large purchases are a part of life, but they’re not always necessary or in the buyer’s best interest. Follow these steps before you finalize an expensive purchase.

Reach Out to a Loan Officer to Talk about Your Options for a Big Purchase! 

Resources:
https://www.thebalance.com/before-you-make-large-purchases-2385817
https://www.fool.com/retirement/2018/07/23/4-things-you-should-do-before-making-a-big-purchas.aspx
https://www.thesimpledollar.com/save-money/my-strategy-for-making-large-purchases/
https://moneywise.com/insurance/home/how-to-think-through-a-big-purchase

Energy Saving Tips When Buying New Appliances

Limiting Household Appliances’ Energy Use Can Save You Big Bucks!

Ecologists are always searching for ways to save our environment. Focusing on energy-efficient appliances is one aspect of this endeavor.
washing machine and dryer

Photo Credit: http://ow.ly/SQGS30j5gio

In fact, 30% of the charges on your electric statement stem from your appliances. That’s why the government and many appliance manufacturers are replacing standard devices with new energy-saving models.
 
Is one of your appliances on the blink? Before running out to purchase a new model, consider if it’s worth contacting a technician to fix your machine. Since prices for electrical appliances have decreased over the years, it might be worthwhile to buy a new model. Besides, the costs of a new part for your old apparatus and the technician’s visit can be high.
 
Also, remember that the new energy-efficient appliances will save you money on a monthly basis.

What Does Energy-Efficient Mean?

In simple terms, this means the process that is used to make the appliance function is using less energy.
Now that you decided to go with a modern, energy-efficient refrigerator, how can you be sure you’re getting the best product at the most cost-effective price?
 
Here are some tips to guide you in your search:
 
1. Determine the total cost. The first thing to consider is the operating cost. This amount, along with the actual purchase price, should give you the real cost of the appliance.
 
2. Check the energy rating. There are several reliable rating services that provide information about appliance energy consumption. The federal government uses the Energy Star Standard sticker to inform consumers of the operating cost and the annual energy consumption of each appliance.
 
3. Select the right size appliance. Running a large machine – even the most energy-efficient one – uses more electricity than a compact one.
 
4. Look for economy choices. Many dishwashers and washing machines offer a variety of different cycles. If you find one with an economy cycle, you’ll save money when you only need to wash a small load of clothes or dishes.
 
5. Stay Simple. When it comes to choosing a refrigerator, go easy on the add-ons. Top-to-bottom fridge/freezer models are more energy efficient than side-by-sides. Features like water dispensers, ice-makers and auto-defrost use lots of extra electricity. This holds true for self-cleaning ovens, too.
 
6. Contact your utility supplier for the latest ways to save on utility charges. With today’s smart devices, appliances can be programmed to use less energy at certain times of the day.
 
7. Check out your home. Hire a home assessor to identify ways you can save on your overall energy and water costs.
 
8. Comparison shop. Never buy the first model you see. Household appliances are not cheap, and to find the most energy-efficient one at the best price, you’ll need to comparison shop. Don’t pay for the name in a specific model; compare the details of each machine.

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Why Do I Need To Get Preapproved For A Loan?

 
Q: I’m in the market for a new home, and everyone I talk to, from friends to financial advisors, suggests I get preapproved for a mortgage before I start house hunting. Why is this so important?
house with sold sign

Photo Credit: http://ow.ly/MP2m30gxTCA

 

A: You’re actually on the receiving end of great advice. When looking to take out a large loan, whether it’s for purchasing a home or buying a car, having that preapproval in hand before you start your search is crucial.

Depending upon the type of loan, the process of getting preapproved for a loan can take time. The lender will begin by asking for your financial history and other personal information. If you have a co-borrower, the lender will need this information about them as well.
 
You’ll be asked to provide your Social Security Number (SSN) and for permission to allow the lender to access your credit report. If the information you provide is satisfactory, as is your credit report, the lender will begin constructing the details of your loan. When they have determined how large of a loan you will be eligible for, they will grant you a preapproval letter. The letter will also detail your estimated interest rate on the loan, though that will sometimes also depend upon the specifics of your purchase, such as the year and condition of a car or appraisal on a home.
 
Having your preapproval letter will shorten the loan process significantly when you’re actually ready to take out the loan. However, that is only a small benefit of getting preapproved before you start “shopping.”
Here are some other advantages of getting preapproved for a loan:

1.) You’ll know what you can afford

Your preapproval will tell you exactly what you can afford. This way, you’ll avoid being disappointed later when you have your heart set on a certain home only to be told you can’t swing it financially. Knowing how large a loan you’ll qualify for will simplify your search and get you into your new home or car sooner.
Be sure to calculate other monthly costs, such as property taxes, home insurance and increased auto insurance rates when determining the actual amount of money you’ll need to shell out each month.

2.) Don’t get taken for a ride

Picture this scene at a car dealership:
 
Salesperson: So, you’re here to buy a new car! What are you looking for?
You: Well, I want something with a smooth ride and –
Salesperson: Got it. And how much of a monthly payment can you afford?
You: Weeelll, I think I can swing up to $200 a month, but I’d rather something closer to $150 if you —
Salesperson: Step right this way please! Let me show our new line of Camrys at just $205 a month! They have the most luxurious feel and the ride is smooth as butter!
 
What happened here is, quite simply, a salesperson looking to make the most money out of a customer. When you’re unsure about how much you can spend, the dealer will capitalize on your uncertainty and try to sell you a car that just barely skims the maximum amount you’ve decided you can afford.
 
Also, when you name a monthly payment you can manage, the dealer will work with that number instead of talking about the price of the car. They may try to inflate the payment with charges and fees just because they fit within your named payment amount.
 
In contrast, when you show up at the dealer with a preapproval in hand, the salesman will have to show you cars with price tags that fit within your loan amount.
 
Don’t get taken for a ride; get your preapproval before you set foot in the dealer shop!

3.) Be taken seriously

A car dealer will take you a lot more seriously when you wave that preapproval in their face, since having that information in hand shows you’re ready to buy.
 
When purchasing a home, the same rule holds true. A realtor will be able to assist you more efficiently when you know exactly how much house you can afford. They may also give you better service since you’re showing that you’re serious about buying a home. In fact, many realtors refuse to show homes to buyers who don’t have a preapproval in hand.

4.) Know you have financing you can trust

When you show up at the car dealership with a preapproval from your credit union, you know the deal is in your best interest. Many auto shops have access to several financing options and they’re almost always going to put customers into financing options that are in their own wallet’s best interests.

5.) Purchase your dream home

A preapproval makes you a valuable customer. It also helps you stand out from the pack. If you’re looking to buy a home in a competitive market, you may be competing with several other buyers for the same house. Having your preapproval will give you a leg up on bidding wars. A seller will be more eager to work with someone who’s already started the mortgage process. You can end your search sooner with a preapproval!
 
In the market for a new home or car? Don’t forget to call, click, or stop by 705 Federal Credit Union to hear about our fantastic rates on mortgage and auto loans!

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