Loans Archives - Page 2 of 2

Why Does My Credit Score Matter?

Your credit score is an indicator of your financial wellness and responsibility. We have outlined how credit scores are calculated, why it matters and steps to take to improve your score.

How is my credit score calculated?

The three major credit bureaus in the U.S. collect and share information on a person’s credit usage with potential lenders and financial institutions. Most lenders use this information and the FICO scoring model to calculate credit worthiness. Some use the VantageScore model instead. Both scoring models look at the following factors when calculating credit scores:

The age of your credit. A longer history of credit usage boosts your score.
The timeliness of your bill payments. Chronic late payments can drastically reduce a score.
The ratio of outstanding debt to available credit. The VantageScore formula views having a lot of available credit as a liability, while the FICO formula considers this a favorable point.
The diversity of your credit. Lenders want to see that you have several kinds of open credit.
The trajectory of your debt. Are you constantly accumulating new debt, or working toward paying down your existing debt?
Your credit card usage. Financial experts recommend having several open and active credit cards to boost your score.

How does my credit score affect my life?

Here are some ways your credit can affect your life:

Loan eligibility. Lenders check scores to determine whether you will be eligible for a loan. A poor credit score can keep you from buying a house or car or getting other types of loans.
Interest rates on loans. A higher score can get you a lower interest rate on a loan, and a poor score can mean paying thousands of extra dollars in interest over the life of the loan.
Employment. Many employers look at the credit scores of potential employees as part of the hiring process.
Renting. Lots of landlords will run credit checks on new tenants before signing a lease agreement.
Insurance coverage. Most insurers will check your credit before agreeing to provide you with coverage.

How to improve your credit score

Pay your bills on time. If you find timeliness to be a challenge, consider automatic payments.
Pay more than the minimum payment on your credit cards. This shows you’re working on paying down your debt and can help improve your score.
Pay your credit card bills before they’re due. This way, more of your money will go toward your outstanding balance instead of toward interest.
Settle outstanding medical bills. These can significantly drag down your credit score.
Consider debt consolidation. If you’re paying interest on multiple debts each month, you may benefit from transferring your debt to a single credit card that offers an introductory interest-free period or from taking out an unsecured loan.

The Credit Union Difference – A Look at Loan Interest Rates

One of the most beneficial advantages we offer our members here at Olean Area Federal Credit Union is lower interest rates on loans. Let’s take a look at some of the most popular loan types and how the rates at credit unions differ from the industry average.

Auto loans

Looking for a new set of wheels? Look no further than Olean Area Federal Credit Union! With rates that fall far below the industry average, you can sign confidently, knowing you’re getting a fantastic deal.

Used Car Loan, 48 months:

Average industry rate: 5.44%APR (Annual Percentage Rate)

Average credit union rate: 3.50%APR

Used Car Loan, 36 months:

Average industry rate: 5.39%APR

Average credit union rate: 3.37%APR

New Car Loan, 60 months:

Average industry rate: 5.10%APR

Average credit union rate: 3.45%APR

New Car Loan, 48 months:

Average industry rate: 4.99%APR

Average credit union rate: 3.32%APR

You can explore current Auto Loan Rates at Olean Area FCU by clicking here.

Credit Cards

Why pay a steep interest rate on a new credit card when you can get one at Olean Area Federal Credit Union at a rate that’s nearly two points lower than the national average?

Average industry rate on new credit cards: 13.15%APR

Average credit union rate on new credit cards: 11.54%APR

Click here to discover current credit card rates offered by Olean Area FCU!

Home Equity Loans

Looking to fund a home renovation or expansion? Consider a home equity loan, or a home equity line of credit (HELOC) at Olean Area Federal Credit Union.

Home Equity Loan, 5 years, up to 80% of the home’s value:

Average industry rate: 5.21%APR

Average credit union rate: 4.65%APR

Home Equity Line of Credit, up to 80% of the home’s value:

Average industry rate: 5.05%APR

Average credit union rate 4.56%APR

Home Loans

When you apply for a home loan at Olean Area Federal Credit Union, you’ll enjoy personalized attention throughout the loan process, quick, professional service and interest rates that beat the industry average no matter what kind of mortgage you choose.

30-Year Fixed-Rate Mortgage:

Average industry rate: 3.79%APR

Average credit union rate: 3.71%APR

15-Year Fixed-Rate Mortgage:

Average industry rate: 3.36%APR

Average credit union rate: 3.23%APR

5/1 Year Adjustable Rate Mortgage (ARM):

Average industry rate: 3.79%APR

Average credit union rate: 3.28%APR

3/1 Year ARM:

Average industry rate: 3.74%APR

Average credit union rate: 3.26%APR

1 Year ARM:

Average industry rate: 3.61%APR

Average credit union rate: 3.48%APR

Discover current mortgage rates offered by Olean Area FCU by clicking here.

Unsecured loans

When you need a bit of extra cash for a reason that doesn’t fit neatly into any other category, consider taking out an unsecured loan at Olean Area Federal Credit Union.

Average industry interest rate on fixed 36-month personal/unsecured loans: 10.21%APR

Average credit union interest rate on fixed 36-month personal/unsecured: 9.28%APR

You can find out about your unsecured loan options by calling an Olean Area FCU lender at (716) 372-6607, or by filling out the “Contact Us” form.

What School Doesn’t Teach You About Money

With the new school year either here or just around the corner, it’s time to fill your shopping carts with No. 2 pencils, protractors and all the goodies the kids will lose by the second day of school. If they’re headed off to college, it can be even more exciting. But, instead of needing you to replace their pens on day two, your college-aged child will probably be calling to ask for money by then.

It’s such a ritual that, at this point, many of us don’t really question it. But how much do our kids actually know about money? You might want to only include the lessons you taught them, because their school probably didn’t teach them much at all.

Common core and other national guidelines don’t include requirements for teaching budgeting skills, how to balance a checkbook, or even explanations of basic concepts such as credit, loans or mortgages. Basically, the last time your children learned about money at school, it probably involved finding out how many apples and oranges they could buy in some middle school math word problem.

We talked to some credit union members about the lessons they want to pass on to their kids, and below you’ll find some of our favorite lessons to teach your kids.

Pay yourself first

No one else is going to make you a financial priority, so don’t make them your financial priority.

If you want to know if you can afford something, check your budget. When you have to check your checking account, you can’t afford it.

If you reconcile your accounts every month, you’ll have a pretty good idea how much is actually in each account. Plan ahead. Make a budget. Execute the plan by sticking to that budget.

Take risks while you’re young

You can afford to be more aggressive with your retirement and college funds while you have plenty of time to make it back up, so don’t be afraid to push those funds a little bit. That said, not saving for retirement is not a risk. It’s just a bad idea.

Make sure the Joneses are keeping up with you

It’s easy to get lost trying to compete with your peers and almost as easy to ignore those consumer pressures entirely. But what about the third option? Instead of ignoring their financial situation, check in every now and then to see if they need help. Our communities are better when we care about each other.

Whether your kids are in diapers or their kids are wearing them, it’s never too early or too late to teach financial literacy. Make sure you’re instilling the right lessons, and check back in with Olean Area Federal Credit Union, because we’ve always got plenty of resources for young people to learn the lessons they aren’t getting in math class.

Should I Buy a House During a Pandemic?

Q: I’d planned to buy my first home this spring — and then the coronavirus changed everything. Should I forget about my plans, or can I buy a house during a pandemic?

A: The coronavirus outbreak that has swept through the world has given rise to dozens of financial questions. No one can say when this pandemic will end, or the lasting impact it will have on the economy. Experts can only look at past economic crises in an attempt to predict what the financial future will look like in the United States.

Let’s explore the mid-pandemic housing market and the wisdom of purchasing a home during a time of economic instability

The home sales of February 2020 were the strongest they’ve been in the country since 2007, topping 5 million sales. Factors, like falling interest rates and a booming economy, contributed to the thriving housing market. But two months later, experts are already seeing a sharp decline in buying.

This downturn has likely been triggered by the economic devastation caused by the outbreak, including widespread job insecurity, thousands of shuttered businesses and millions of employees on leave from work.

The decrease in home sales is also likely due to practical reasons. When people are worried about their health, it’s difficult for them to think about purchasing a new home. Meeting with potential sellers, real estate agents and looking at properties is also complicated when trying to maintain social distancing.

A dwindling housing market does not automatically mean this isn’t a good time to buy a house. In fact, times of financial uncertainty generally lead to falling mortgage rates and the ease of credit qualifications. Mortgage rates have already reached a record low of 3.13 percent in the beginning of March, prompting some buyers to rush into new home purchases.

Some market experts also believe the coronavirus pandemic will cause an eventual spike in home sales as buyers, fearing a recession, will want the stability and control that homeownership brings.

Before you jump into a home purchase at this time, you may want to consider the following factors:

How stable is your income? If you have reason to believe you might be laid off soon, you may want to hold off on your purchase.
How long do you plan on living in this home? If you plan on selling within the next few years, you may come out at a loss due to a falling housing market and an unstable economy.
Will you have savings left after buying a home? As the economy heads toward a probable recession, this is not the best time to be without a savings cushion.

If you can afford the purchase, and your income isn’t threatened by the economic instability, the favorable interest rates and looser qualifications during this pandemic can make it a good time to buy a new home.

All You Need to Know About Home Loans

If you’re in the market for a new home, you’ll likely need to take out a home loan or mortgage. Let’s take a closer look at home loans and the application process.

What is a home loan?

A home loan enables you to buy a home without having to pull all the cash directly from your pocket at the time of purchase. You’ll need to make a down payment, which is typically between 3.5-20% of the home’s value, along with closing costs and some other fees. The lender will finance the rest. You’ll then repay the loan, along with interest, generally over the course of 15 to 30 years.

Are all home loans alike?

There are several kinds of home loans, each with its own attributes. Here are three common types:

1. 30-year fixed-rate mortgage. The interest rate on this 30-year mortgage remains fixed despite any changes to the national rate.

2. 15-year fixed-rate mortgage. This fixed-rate mortgage will only last 15 years. Monthly payments will be higher, but the overall interest paid on the loan will be much lower.

3. Adjustable-rate mortgage (ARM). An ARM will give the borrower a lower interest rate in the early years of the loan, followed by a gradual rate increase over the rest of the life of the mortgage.

What do I need to know before applying?

To qualify for a mortgage, you’ll need to prove you are financially responsible and you can afford the monthly mortgage payments.

The primary way lenders gauge your financial responsibility is through your credit score. This number tells lenders how you’ve handled your past debts. Most lenders will grant a home loan to borrowers with a score of 650 or more. To boost yours, pay your bills on time and keep your credit card usage to a minimum. A higher score will help you get approved and will net you a lower interest rate on your loan.

Another factor in determining your eligibility is your debt-to-income ratio (DTI). Lenders want to know how big your collective outstanding debt will be in relation to your income if you receive the home loan. Most lenders allow a maximum DTI of 36%.

When should I apply?

It’s a good idea to start the mortgage process before you begin house hunting. Your lender will let you know whether you can expect to be approved for a loan and will provide you with an estimate of how much house you can afford. At this point, you can also ask for a pre-approval letter, which confirms you are qualified for a mortgage and shows sellers you’re a serious buyer.

How do I apply?

To apply for a home loan at Olean Area Federal Credit Union, contact a representative to help you get started. Make sure to have all of your financial documents in order.