Think fast: What's your current credit score?
If you don't know the answer off the top of your head, you're not alone. According to a recent study, more than 35 percent of Americans don't. In fact, only 2 of every 5 people can confidently report that they have the credit score necessary to successfully achieve their financial goals.
But see, that presents a problem for Idaho Central Credit Union. Here at ICCU, our mission is to help our members achieve financial success — and we can't do that if you don't have the right tools or know-how. That's why we've assembled resources that will help you with not only credit, but every stage of your financial journey.
Here are three FREE personal finance tools we've made exclusively for you, our members.
My Credit gives you the ability to check your credit report daily — with no impact to your credit score. It can notify you when your score changes, help you predict your score in the future, and show you personalized offers.
How to find it: If you're a member at ICCU, all these capabilities and more are in your eBranch Online Banking or Mobile App. You can locate it by clicking More (mobile) > Planning and Investments > My Credit.
If you're the kind of person who likes to stay on top of your credit, these features are for you. Score Analysis shows you each puzzle piece of your credit score (credit usage, inquiries, account mix, etc.) and ranks them with a letter grade. That way, you can tell which pieces you need to improve with a quick glance.
The Credit Report option reports similar information but in much more depth. This is where you'll find a full list of your accounts, inquiries, collections, and more.
Got loans? The Credit Report will show you your current balance and how much you've paid off. Got credit cards? It will show you the percentage of credit you've used for each card. (Tip: Stay below 30% credit utilization for a better credit score!)
If one of your New Year's goals is to improve your credit score, you're in luck. My Credit's Score Simulator quickly shows you how to reach your dream credit. Or, if you're thinking about making a decision that might affect your credit score, you can get a glimpse of how much it will improve or decrease your score.
Take Sadie*, for example. She has a 762 credit score and wants to see how her monthly payment activity affects that number. With the Score Simulator, she finds that if she misses her monthly payments on all her accounts for one month, her score will drop to 674, an 88-point drop. If she pays off all her credit card balances, however, she realizes her score will raise to nearly 800, which most lenders consider 'Excellent'.
Expenditures. Bleh. The word can put you to sleep if you're not careful. But businesses track their daily expenditures for a reason, and if you want to achieve financial stability, you may want to, too. Fortunately, the Financial Wellness widget in eBranch is here to make even the most monotonous tasks quick and easy while still giving you a complete rundown of both your spending and savings goals.
How to find it: If you're a member at ICCU, all these capabilities and more are in your eBranch Online Banking or Mobile App. You can locate it by clicking More (mobile) > Planning and Investments > Financial Wellness.
The Spending tab shows your monthly costs, transactions, and recurring expenses. It splits your payments into several categories so you can see what area is hurting your wallet the most.
Worried you spent too much eating out last month? We've been there. Look at the Categories section to see how much of your budget it's eaten. Not sure what subscriptions you're paying for anymore? No worries. The Recurring Expenses section shows you exactly what you pay for month after month.
This is where the Financial Wellness tool shines. The Savings Goals tab lets you set different savings goals for each savings account. Just set a due date and watch your goals progress the more you save. Voila!
If you've ever thought to yourself, "Why didn't they teach me about personal finances in school?" then you're in luck. We're here to do just that.
Idaho Central's Financial Education Center has a variety of playlists about specific personal finance topics. Each has 5–10 quick videos that explain the how-to's of, say, owning a home or growing your small business.
Can't find a topic that fits your own finance goals? The Financial Education Center lets you create your own customized playlist.
How to find it: You can access the Financial Education Center on iccu.com by clicking "Education" or "Financial Education" in the top menu(s).
Three free personal finance tools, right at your fingertips. As a member at Idaho Central, you get unlimited access to My Credit, Financial Wellness, and the Financial Education Center. These tools help individuals, like you, to take control of their financial future and provide a comprehensive approach to managing personal finances. We can't wait to see how these tools help support you on your journey to achieving financial success!
Interested in purchasing a home? Contact one of our home loan specialists to discuss your options.
Even if saving has never been your thing and money is tight, the coming of a new year is an opportunity to change old financial habits. Here are some ways to become a more efficient saver.
Budgeting helps you organize your finances so you have money left over to save each month. It may seem laborious, but budgeting doesn't have to be hard. Mobile apps cut a lot of the work and can help you track spending throughout the month.
Pay yourself first
Firmly commit to making a savings deposit monthly, even if you can only afford a small amount. Do this before paying your other bills.
If you're not confident your resolution will stick or you want to simplify the process, automate your savings deposits. That way, a portion of your paycheck will automatically go to your savings account, or an amount you choose will be transferred from your checking to savings account each month. You won't miss money that was never in your hands in the first place.
Make your money work harder
Compound interest is the interest paid on the interest your money earns in an account, and it allows your principal balance to grow faster. To fully benefit from compound interest, consider opening a high-yield savings account or a certificate of deposit that offers higher rates than the average savings account.
Plug up cash drains
It's not always the big expenses that sabotage saving efforts; small expenses can add up and be a huge cash drain. To rein in spending and increase your cash surplus:
Bring in extra bucks
When trimming expenses doesn't do the trick, the only way to create enough free cash for saving is to increase what's coming in. You can:
The benefits of saving kick in very quickly and only get better with time. A solid cushion in the bank protects you during emergencies and provides the means to travel, buy a home, get an advanced degree, or pursue whatever other dreams you may have.
Interested in purchasing a home? Contact one of our home loan specialists to discuss your options.
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Buying your dream home should be one of the most joyful events, and Idaho Central wants it to be that way. Although buying a home can be stressful at times, especially when it comes to the expenses that come along with it, taking the time to budget for a new home can save you from some of the stress, making buying your dream home a dream experience as well! So, how do you budget for a new home?
When you're considering buying a new home, it's important to calculate your household income after taxes first. Calculating your household income after taxes is the first step to not only budget for your dream home, but also for your day-to-day budget. Experts recommend that your cost for housing should account for no more than 25% of your monthly budget. Taking your household income after tax into consideration will help you determine just how much home you can afford, and give you a starting point to create your savings plan.
After you calculate your household income after taxes, it's time to calculate your expenses. Expenses include savings, food, utilities, transportation, health, recreation, personal spending, charitable donations, and more. While experts recommend 25% of household income for your housing expenses, it also needs to make sense with your other expenses. Setting up a budget can help you have a good grasp of what you typically spend each month, and what you can really afford for a mortgage payment.
Private Mortgage Insurance (PMI) is often required for mortgages that have less than a 20% down payment. PMI typically costs between 0.5% and 1% of the entire loan amount. If you are able to save for a down payment that allows you to avoid PMI, it will save you on a monthly basis. Avoiding PMI helps lower the monthly payment on your mortgage, so you'll have more room in your budget for expenses or to put into savings.
After calculating your income, budgeting for all of your monthly expenses, and following the 25% guideline, you will have a good idea of how much you can afford in a monthly payment. For example, if your monthly income after taxes is $1,000, you can afford $250 in monthly housing expenses. You can also use our Mortgage Qualifier Calculator to calculate how much of a purchase price you can afford based on your monthly payment. In addition to these resources, it is important to remember that housing expenses include more than just the mortgage payment. It also includes taxes, homeowner's insurance, maintenance costs, homeowner's association fees, and so forth. For example, if you can afford a $1,000 monthly housing payment, $850 might be for your mortgage (including principal, taxes, and insurance), $50 might be for your homeowner's association fee (HOA), and $100 might be for any maintenance costs. Your realtor and loan officer will be able to assist you with this information as you shop for your dream home.
While these are some general tips on how to help you budget for your dream home, it's still important to get officially pre-approved and see how much of a loan you are able to qualify for. By getting pre-approved, you will know how much you can afford and are approved for based on your actual financial situation, and you'll be able to consider homes within that range.
It's important to remember to do your due diligence and investigate your new home. This includes hiring an appraiser and a home inspector. An appraiser will determine the value of the home and ensure that you are not paying more than it is worth. A home inspector will ensure that the foundation is sound, AC and furnace systems are functioning properly, and that the roof is safe. Some might even give you an estimated life expectancy. For example, if the inspection report shows that your roof has the potential of leaking very soon, it's important to negotiate your purchase price so you can afford to get the roof replaced or require that it is repaired before you close on the home.
Using these tips can help give you confidence in navigating the process of purchasing your dream home while making it simpler for you. Happy house hunting!
We understand that no two paths to buying a home are the same. Whether you're a first-time homebuyer or a seasoned real estate mogul, we have a variety of products and loans designed specifically to meet your needs. We offer local underwriting and fast approvals to save you time and money. We have options for down payments and additional resources like our Finally Home! online program to help guide you through the home-buying process.
Contact one of our home loan specialists to discuss your options - and find out about our first-time homebuyer programs - today!
You're about to move into your new home! It's important to do a walk-through to make sure everything is as promised. How do you go about it, though? You've never owned a home before, and you're afraid you'll do it wrong or miss something important.
Don't worry. Our real estate agents will be there to help you through it. In the meantime, here's a checklist of what you're looking for on your final walk-through.
What to Bring
Make notes and take pictures of everything you find. Discuss it all with your real estate agent. If there are any problems or discrepancies, you and your agent can bring them to the seller together and get them sorted out before you move in.
Whether it's your first home or your 50th, there are plenty of Boise homes for sale that can meet your needs. Contact us to help you find the right one for you, and ensure that it meets your standards, every step of the way.
In July, the average 30-year fixed-rate mortgage fell below 3% for the first time in history.1 And while many have rushed to take advantage of this unprecedented opportunity, others question the hype. Are today's rates truly a bargain?
While average mortgage rates have drifted between 4% and 5% in recent years, they haven't always been so low. Freddie Mac began tracking 30-year mortgage rates in 1971. At that time, the national average was 7.31%.2 As the rate of inflation started to rise in the mid-1970s, mortgage rates surged. It's hard to imagine now, but the average U.S. mortgage rate reached a high of 18.63% in 1981.3
Fortunately for home buyers, inflation normalized by October 1982, which sent mortgage rates on a downward trajectory that would bring them as low as 3.31% in 2012.3 Since 2012, 30-year fixed rates have risen modestly, with the daily average climbing as high as 4.94% in 2018.4
So what's causing today's rates to sink to unprecedented lows? Economic uncertainty.
Mortgage rates generally follow bond yields, because the majority of U.S. mortgages are packaged together and sold as bonds. As the coronavirus pandemic continues to dampen the economy and inject volatility into the stock market, a growing number of investors are shifting their money into low-risk bonds. Increased demand has driven bond yields—and mortgage rates—down.5
However, according to National Association of Realtors Chief Economist Lawrence Yun, "the number one driver of low mortgage rates is the accommodating Federal Reserve stance to keep interest rates low and to buy up mortgage-backed securities." According to Yun, "we will see mortgage rates stay near this level for the next 18 months because of the significance of the Fed's stance."6
How do low mortgage rates benefit current homeowners?
Low mortgage rates increase buyer demand, which is good news for sellers. But what if you don't have any plans to sell your home? Can current homeowners benefit from falling mortgage rates? Yes, they can!
A growing number of homeowners are capitalizing on today's rock-bottom rates by refinancing their existing mortgages. In fact, refinance applications have surged over the past few months—and for a good reason.7 Reduced interest rates can save homeowners a bundle on both monthly payments and total payments over the lifetime of a mortgage.
The chart below illustrates the potential savings when you decrease your mortgage rate by just one percentage point. When it comes to refinancing, the bigger the spread, the greater the savings.
Estimated Monthly Payment On a 30-Year Fixed-Rate Mortgage
Be sure to factor in any prepayment penalties on your current mortgage and closing costs for your new mortgage. For a refinance, expect to pay between 2% to 5% of your loan amount.8 You can divide your closing costs by your monthly savings to find out how long it will take to recoup your investment, or use an online refinance calculator. For a more precise calculation of your potential savings, we'd be happy to connect you with a mortgage professional in our network who can help you decide if refinancing is a good option for you.
How do low mortgage rates benefit home buyers?
We've already shown how low rates can save you money on your mortgage payments. But they can also give a boost to your budget by increasing your purchasing power. For example, imagine you have a budget of $1,500 to put toward your monthly mortgage payment. If you take out a 30-year mortgage at 5.0%, you can afford a loan of $279,000.
Now let's assume the mortgage rate falls to 4.0%. At that rate, you can afford to borrow $314,000 while still keeping the same $1,500 monthly payment. That's a budget increase of $35,000!
If the rate falls even further to 3.0%, you can afford to borrow $355,000 and still pay the same $1,500 each month. That's $76,000 over your original budget! All because the interest rate fell by two percentage points. If you've been priced out of the market before, today's low rates may put you in a better position to afford your dream home.
On the other hand, rising mortgages rates will erode your purchasing power. Wait to buy, and you may have to settle for a smaller home in a less-desirable neighborhood. So if you're planning to move, don't miss out on the phenomenal discount you can get with today's historically-low rates.
How low could mortgage rates go?
No one can say with certainty how low mortgage rates will fall or when they will rise again. A lot will depend on the trajectory of the pandemic and subsequent economic impact.
Forecasters at Freddie Mac and the Mortgage Bankers Association predict 30-year mortgage rates will average 3.2% and 3.5% respectively in 2021.9,10 However, economists at Fannie Mae expect them to dip even lower to an average of 2.8% next year.11
Still, many experts agree that those who wait to take advantage of these unprecedented rates could miss out on the deal of a lifetime. It's hard to imagine that rates may drop even lower. Positive news about a vaccine or a faster-than-expected economic recovery could send rates back up to pre-pandemic levels.
How can I secure the best available mortgage rate?
While the average 30-year mortgage rate is hovering around 3%, you can do a quick search online and find advertised rates that are even lower. But these ultra-low mortgages are typically reserved for only prime borrowers. So what steps can you take to secure the lowest possible rate?
1. Consider a 15-Year Mortgage Term
Lock in a low rate by opting for a 15-year mortgage. If you can afford the higher monthly payment, a shorter mortgage term can save you a bundle in interest, and you'll pay off your home in half the time.12
2. Give Your Credit Score a Boost
The economic downturn has made lenders more cautious. These days, you'll probably need a credit score of at least 740 to secure their lowest rates.13 While there's no fast fix for bad credit, you can take steps to help your score before you apply for a loan:14
● Dispute inaccuracies on your credit report.
● Pay your bills on time, and catch up on any missed payments.
● Hold off on applying for new credit.
● Pay off debt, and keep balances low on your credit cards.
● Don't close unused credit cards (unless they're charging you an annual fee).
3. Make a Large Down Payment
The more equity you have in a home, the less likely you are to default on your mortgage. That's why lenders offer better rates to borrowers who make a sizable down payment. Plus, if you put down at least 20%, you can avoid paying for private mortgage insurance.
4. Pay for Points
Discount points are fees paid to the mortgage company in exchange for a lower interest rate. At a cost of 1% of the loan amount, they aren't cheap. But the investment can pay off over the long-term in interest savings.
5. Shop Around
Rates, terms, and fees can vary widely amongst mortgage providers, so do your homework. Contact several lenders to find out which one is willing to offer you the best overall deal. But be sure to complete the process within 45 days—or else the credit inquiries by multiple mortgage companies could have a negative impact on your credit score.16
Ready to take advantage of the lowest mortgage rates in history?
Mortgage rates have never been this low. Don't miss out on your chance to lock in a great rate on a new home or refinance your existing mortgage. Either way, we can help.
We'd be happy to connect you with the most trusted mortgage professionals in our network. And if you're ready to start shopping for a new home, we'd love to assist you with your search—all at no cost to you! Contact us today to schedule a free consultation.
This article is for informational purposes only. It is not intended to be financial advice. Consult a financial professional for advice regarding your individual needs.
Buying a house that requires renovations can be a great way to find a deal, but before you decide to move forward with an offer to purchase, ask yourself some important questions.
Can Your Budget Accommodate Renovations and Unexpected Costs?
While you are compiling costs, don't forget to add any permitting expenses. Check your local city, county, and state regulations so you can acquire the appropriate permits and order any inspections that might be required.
When you've finished estimating your budget, add 15% for unexpected expenditures and repairs required by any inspections, such as lead paint removal, mold remediation, etc. The "Murphy's Rule" of thumb is that everything takes longer and costs more than first anticipated!
Further, you'll need to check with your lender to find out whether you will qualify for a conventional mortgage or will need a renovation loan. Be sure to ask your lender about the financing that might be available to you and what type of home to include in (or remove from) your search.
How Much of the Work Can You Handle Yourself?
One way to keep renovation costs down when buying a fixer is to tackle as much of the work as possible yourself, but it's important to be realistic about what projects truly qualify as DIY. If you have experience in the contracting trades or have renovated a home in the past, you may be able to do much of the work yourself. Most people, though, will need to leave the bigger, more expensive projects to the pros. Determine how much of the work is truly cosmetic and what will require more than some new paint or carpet. Check the ego at the door to avoid getting in over your head and, ultimately, spending more money than you have in the budget – or worse, putting yourself in an unsafe situation.
How Soon Do You Need to Move In, and Do You Have a Place to Stay in the Meantime?
If you have a place to stay and don't need to move into the home right away, then time may not be a major issue. If you need to move in ASAP, a fixer-upper might not be the right choice when buying a house. Depending on the level of work that needs to be done, living in the middle of a renovation with nowhere to get away from the mess can create a great deal of stress. Don't let the "romance" of creating your dream keep you from being realistic about the work it involves. The programs on television may make things look easier than they really are.
Do You Have Trusted Service Providers?
No matter how much or how little of the work you can handle DIY, you'll likely still need contractors, an architect, and other service providers to tackle key tasks. It helps to have people you know and trust – or referrals from trusted sources – when coordinating work on a fixer-upper. Having quality service providers helps keep added costs down and makes it easier to keep the project on schedule.
Do You Have a Vision for the Home You'd Like to Create?
Success with a fixer-upper depends in large part on having a plan and being able to see it through to completion. Before you begin looking at homes, do your best to have a vision of the home that you want to create. Then, as you are house-hunting, keep that vision in mind so you can avoid trying to push a round peg through a square hole. If you are set on a 2-story, looking at a single-story with plans to add on might be one bite more than you are ready to take. Again, be realistic in your expectations and plans.
A fixer-upper can be a terrific way to get a great home. Take the steps needed to protect yourself and your investment by doing your research first!
During a light week for economic data, investors remained focused on the concerning spread of the coronavirus in many regions. Mortgage rates dropped slightly to new record-low levels.
Reduced economic activity resulting from the pandemic has caused a significant decline in inflation, which has helped keep mortgage rates low. The Consumer Price Index (CPI) is a widely followed monthly inflation report that looks at the price change for goods and services.
In June, core CPI, which excludes the volatile food and energy components, was just 1.2% higher than a year ago — the same annual rate of increase as last month. This was down compared to readings above 2% during the first three months of the year.
Both Freddie Mac and the Mortgage Bankers Association (MBA) reported that average rates for 30-year fixed-rate mortgages reached record-low levels again this week, in part due to recent tame inflation data like CPI. In addition, the MBA revealed that applications to purchase a home were 16% higher than a year ago at this time, and refinance applications were a massive 107% higher.
New claims for unemployment benefits continued to decline this week after spiking dramatically due to the pandemic. During January and February, jobless claims typically were a little more than 200,000 each week. Beginning in late March, there were three weeks of readings above 6 million. Since that time, however, they have steadily dropped each week, and the latest results came in at a relatively better level of 1.3 million.
The data released over the past week revealed an unprecedented decline in economic activity resulting from the pandemic, but also indicated that recovery has already begun. Mortgage markets have been relatively quiet, and rates again ended the week with little change.
Following growth of 2.1% in the fourth quarter of 2019, gross domestic product (GDP), the broadest measure of economic activity, fell 5.0% in Q1 2020, which was the weakest reading since 2008. As bad as that was, however, it does not even come close to the expected decline for the second quarter. The Federal Reserve publishes an estimate of GDP growth, which it updates every few days based on the most recent data. On Tuesday, the Fed projected that GDP will fall over 50% during the second quarter, which is roughly in line with Wall Street forecasts. After that, early estimates from economists for the second half of the year predict sizable gains.
Despite the Fed and Wall Street's dire predictions, the more recent results have shown clear signs of a rebound. Two of the most significant reports released each month, which reflect the most current economic activity, are from the Institute of Supply Management (ISM). The May ISM Services Index rose more than expected to 45.4 from a reading of 41.8 in April. Similarly, the ISM Manufacturing Index increased to 43.1 from 41.5 in April.
The reduced economic activity resulting from the pandemic has caused a decline in inflation, which has helped keep mortgage rates low. In April, the core Personal Consumption Expenditures (PCE) Price Index, the inflation indicator favored by the Fed, was just 1.0% higher than a year ago, down from an annual rate of increase of 1.7% last month. Fed officials have stated that their target level for annual inflation is 2.0%.
Looking ahead, investors will continue watching for news about medical advances to fight the pandemic, Fed actions, government stimulus programs, and plans for reopening the economy.