The decision making-process when deciding between renting and buying can seem fraught with possible land mines and trip-wires. There are hundreds of rent and mortgage calculators out there to try and help you navigate the battlefield. To try and help you make the best decision for you and your family let’s take a look at a few “intangible” things that may not be included in those calculators.
Fluctuating rent costs
Michigan has seen pretty steady economic growth over that last few years, while cost of living stays relatively stable. But if you want to live in a growing, popular area you may have to face aggravating rent increases whenever you renew your lease. Grand Rapids rental rates have increased an average $500 in four years, over $100 a year. A mortgage may seem daunting, but at least you can be guaranteed a fixed cost year to year. In fact, Grand Rapids ranked third in the nation in 2015 for economic growth and stability, along side cities like Denver and Houston. But home prices have stayed relatively steady, increasing only seven percent since 2014, rather than the 12 percent increase seen for a one-bedroom rental in 2015. Kalamazoo’s rental and housing markets are more stable, rental costs have only increased two percent in three years, while home values grew about six percent last year.
Bad at Saving? A mortgage might force your hand
It can seem like a stretch, but try and think of paying off debt as increasing your savings. Imagine you purchase your dream home at 35 with a 30 year mortgage. Come your 65th birthday and you’re ready to retire, now you’re looking at payment-free housing (excusing insurance and taxes). Or you can sell and enter your golden years with a nice pile of cash. You can achieve the same thing if you’re diligent about saving every month in addition to paying your rent and expenses, but savings accounts aren’t protected and locked up in physical assets. So the question to ask yourself is if you can keep your hand out of the cookie jar for the next 30 years?
So maybe instead of a mortgage or a savings account you want to protect your future with investments. The return on stock market investments is greater than a mortgage, but the gains are taxable in ways mortgage interest and home sale profits are not. The first $250,000 in profit from the sale of a home is tax-free. That amount doubles to $500,000 if you sell as a married couple.
So far this all seems to be a pretty ringing endorsement for home-buying right? Well, here’s a positive mark for renting: sudden maintenance costs. Your rental rate will have maintenance costs built in by your landlord, so if your refrigerator dies neither of you will be in a financial lurch to pay for the replacement. However, mortgages do not account for the unpredictability of maintenance costs. There are some protections like home-owners insurance and a home warranties, but there are limitations to these kind of protections. A good rule of thumb is to be prepared to handle a sudden $1,500 to $2,000 repair or replacement on very short notice.
The decision to rent or buy your home can be a tough, personal decision with many factors to take into consideration. While there are numerous calculators (and blog posts) that offer guidance on the process, it can be very beneficial to talk with a financial professional. Our team at Consumers will always try to help you make the strongest financial decision for you.
Are you ever in the checkout line at the store and you’re next and suddenly you’re wondering if you have enough in your credit union checking account to cover your purchases? You don’t want to hold up the line by logging into your Online Banking, so what do you do? Consumers’ Online Banking Mobile App now has a fast feature for checking your balances without logging in, called Quick Balance.
Quick Balance allows you to know your balance without the hassle of having to login to your Online Banking Profile. Once set up, simply swipe down. Learn how easy it is to set up Quick Balance .
In a bold move, Google recently announced, “We’re banning ads for payday loans and some related products from our ads systems,” effective July 13, 2016. This powerful policy move highlights the availability of personal loan options that are better for consumers’ financial health.
Borrowing money can be a positive event that improves the quality of the borrower’s life. However, borrowers often feel trapped into using products like payday loans for emergency situations, not realizing they have other options. When the family car breaks down, people focus more on getting it fixed immediately than on learning how to borrow.
Consumers employees are passionate about educating members of their lending alternatives and providing access to free financial tools. Take time today to meet with us at your local office – before your next emergency. Then when you do need a loan you’ll have an option that supports your financial health.
Post by: Tim Kosak, Consumers Credit Union
According to industry officials, student loans outstanding for current and former college attendees now exceeds $1.2 trillion. This is obviously a massive number, but what does it mean in reality? First, students graduating now have average debt loads approaching $30,000. Some, much more. It’s not unusual for us to see recent grads with $50,000 or even higher! Second, recent rulings from the largest purchasers of mortgages in the US, FannieMae and FreddieMac, have established a 1% payment calculation on student loans regardless of the actual negotiated payment. So, $50,000 in student debt = $500.00 monthly payment. Third, once loans come into the repayment cycle 6 months post-graduation many people are renegotiating for very small or even no payments citing extreme hardship. The interest clock keeps ticking however, adding to the balance every month!
Consumers’ has taken a common-sense approach, looking to employment history and prospects for increasing income and the ability to service the debt over an extended period of up to 20 years. These terms are available through the loan servicing company by refinancing the numerous loans into one single obligation. This lower payment can result in the ability to qualify for one of Consumers’ portfolio options like our 3% Solution. In many cases, a low-down payment offering with a fixed interest rate means you can buy for less than what you are paying in rent!
Over the past couple of days, several members have received calls stating their MasterCard has been closed or blocked. The phone number is showing as restricted, and the call is entirely automated. The member is being asked to enter their card number and other information. These calls are not coming from Consumers or our fraud team, and they should not be acknowledged by the member in any way.
Consumers will never ask you to to provide your full card number, and we do NOT have automated calls for fraud. If you have any questions please contact us at 1-800-991-2221.
Today’s Friday Focus was written by guest blogger Lynne J. Johnson, CMO, Consumers Credit Union. Thank you, Lynne!
It’s Friday, and for many of us that means pay day. Time to jump up and down with joy, right? For some, pay day is another day to worry about our finances and think to ourselves, “I barely made it. What if I face even a minor emergency?” It’s scary stuff.
Working in the financial industry, we listen to our members (and colleagues) talk about their everyday life. In everyday life, events can happen that take us off course and make us stumble with our finances. In these moments, when asking for help is what we need the most, we often hide our problems instead. Sometimes we even hide it from ourselves, which is the biggest stumble of all.
Let’s make this clear: Money is NOT Scary. Money is manageable, and at Consumers, we teach people from all walks of life how to be financially healthy. Helping our members in this way is what we do best.
As we enter the week of Halloween, we’d like you to take a minute and ask yourself if you are scared of money. If you are, come in and talk with any one of us. We aren’t vampires… we won’t bite. We aren’t clowns… we won’t laugh at your situation. We aren’t ghosts… we won’t disappear without offering assistance. Our member service team is made up of people who have the same questions about money that you do. You can come into our office on the spur of the moment, call us to set up an appointment, or send us a Facebook or Twitter message. Connect the way you want to connect and we will get the right people in the room to listen and help you succeed.
Maybe you want to purchase your own haunted house. We can help with that. Perhaps you’d like to be able to buy the most expensive treats for the trick or treaters. We can help with that. It could be that your grey-haired “wig” is now your REAL hair, and you need retirement advice. We can help with that. Or maybe you just want some “witches brew” from our office (aka Coffee) and need a pointy listening ear. We can help with that too.
Christmas carols, stockings hung by the fire, time to celebrate with friends and family—we love the holidays! Unfortunately, so do fraudsters, and as budgets get tight this time of year, scammers often ramp up their efforts.
Don’t get scrooged by holiday fraud attempts, which come in many guises. Beware of situations such as these:
Phone, Text, and Email Scams
Fraudsters often pose as legitimate service providers asking for your account information. Such attempts are known as “phishing” (by email) or “smishing” (by text). They may route you to a fraudulent website where you are to fill in your personal details.
Don’t be fooled! Consumers will NEVER contact you over the phone, by text, or by email asking you to provide personal information such as account numbers and Social Security numbers. If you receive a request over the phone or online from someone asking you to provide such information, do not give it to them. Instead, contact us at 800.991.2221 to report the issue.
Craigslist and Secret Shopper Scams
These scam attempts tend to target victims who are out of work, looking for more work, or otherwise in a tight financial situation—in other words, those who can’t afford to be a victim of fraud. Mystery shopper or secret shopper schemes may be advertised online or the scammer may target individuals by mail or email.
In one version of these scams, a member will receive a check with a letter asking her to use the funds to make purchases at a certain store in order to participate in the secret shopper program, keep some of the money as reimbursement for the time involved, and wire the excess back to the sender.
In another, a member receives a check with a letter asking him to cash it, keep a certain amount of the money, and send the rest back via Western Union or another wire transfer service in order to secretly evaluate the service provided by the wire transfer company.
Or a member responding to a job posting on Craigslist may receive notification that she got the position and that her “future employer” is sending her a check to cover moving expenses. The check will be larger than that amount, so the “employer” will ask to have the extra wired back.
In all of these cases, the checks will turn out to be fraudulent. If they are not identified as such before the victim sends money to the scammer, he or she will have lost whatever amount was sent.
The best way to protect yourself from these sorts of fraud attempts is to ask questions. We urge members to consider the following before replying to an online ad or transferring funds to someone you do not know personally:
Does the reward or payment make sense for the task involved?
Am I sending money to someone (or a business) that I was previously unfamiliar with?
Am I being asked to return money via wire transfer, Western Union, or other methods?
Does the offer sound too good to be true?
As with any suspected scam attempt, please alert us to the issue so that we can assist you in preventing a loss. Call us at 800.991.2221 or stop by any of our offices to speak with a member service representative.