Posts Tagged ‘refinance’

The Truth is: ARMs Differ and Can Have Great Value.

ARMHome buyers often focus on obtaining the lowest possible rate on a 30-year loan, but most mortgage loans are used for only three. Cash out transactions for improvements, additions, repairs, weddings, tuition and major purchases occur with great frequency. If you think you might refinance for any reason anytime in the next seven years, read on. 

Lower Rates, Flexible Terms – Today, most Adjustable Rate Mortgages (ARMs) are “hybrids.” They start out at a fixed rate for the first 3, 5, 7 or even 10 years. During this time, you save on interest cost, and even though your payment is less, you still pay more toward principal. 

Inside Information – Lenders give you a discounted rate up front because they know the rate will float with the market later on. If you sell your home or refinance again prior to that happening, it’s their loss. You have the advantage here because you control the timing of your next step. 

Managed Risk – One way to prepare for the possibility of a higher rate and payment later is to pay extra principal each month to reduce your balance faster. If the rate ultimately adjusts up, your balance will be lower and the payment change will be less as a result. As well, you would already be accustomed to paying more. 

The Bottom Line – A fixed rate loan provides the certainty that it will never change. A hybrid ARM provides a guaranteed savings but for a limited period of time. The best way to decide is to balance your expectations for using any particular loan with the peace of mind that can come from being assured of stability, even if your time frame changes. 

Either way, we’re here to help you explore the pros and cons and to come to a conclusion that’s uniquely right for you.

Whether you are purchasing or refinancing a home, call us now at (626) 799-0882 or 1-800-445-PFCU to get started on the best mortgage loan solution for you.

 

Let Your Pink Slip Help You Get Out of the Red

Your pink slip could be your ticket to lower rates!

Many people have worked hard to get their cars paid off and still have plenty of miles to go before they need a new vehicle.  It’s a great feeling to have that pink slip in hand!  But, if one still has credit card payments or other unsecured debt, money may be slipping away.  If you are in that position, why not let your pink slip work for you?

While mortgage rates are at historic lows, many people with good credit can get even lower rates with a loan against their vehicle.  At PFCU, for example, our best rate can be had on new or used vehicles for up to 60 months, and there is no pre-payment penalty, so if things change you can react easily.  Consolidating higher interest debt with a car loan can help your credit score, too.   But be careful.   These loans, which are often referred to as “Car Title Loans” or “Pink Slip Loans”, are offered by a score of predatory lenders, but they are actually the same car loans your credit union has always offered!  Isn’t it great to know you can get a fantastic rate without all the fees at a credit union known and loved in the community like PFCU?  You can even apply right here, right now!

There are a few things to consider when determining if refinancing a vehicle with a clear title makes sense. 

  1. What is the value of the car?  Is it an older vehicle?  PFCU will finance up to 100% of Kelly Retail Bluebook value of cars 2003 or newer, although the rate on model years 2003-2004 is a bit higher.  
  2. How is your credit?  In most cases, your rate will be determined by your credit score.  Applying for a loan is quick and easy, and your loan officer will be able to tell you what your rate and payment will be.  A peek at your credit card statements will show how much you are paying toward interest every month, and they generally indicate how long it will take to pay off the balance if you just make the minimum payment. It can be very discouraging to make payments month after month with little reduction in the principal. An auto loan is usually amortized to pay off completely in two to seven years.  Remember how you paid off that car once?  You can do it again! 
  3. When do you plan to get a new car?  A good practice when paying off a car loan is to put the amount of the former payment into a savings account for maintenance and repairs, and ultimately for a down payment on a new car.  If you haven’t done that, you will need to make sure you can cover maintenance and have the means to get a new car when the time comes.  Chances are, by paying off your credit cards with a car loan, you will lower your payments each month.  Perhaps you can start by putting the difference away into a savings account earmarked for car expenses, whether it’s maintenance or repairs on your current vehicle, or a down payment.  
  4. Get Gap coverage and Mechanical Breakdown Insurance.  The Gap will pay off your loan if your car is stolen or totaled and you owe more than it’s worth.  Plus, with ours you even get $1,000 toward a new car! 

 Mechanical Breakdown Insurance will help you manage repair costs so there are no surprises.  It’s like the extended warranty you get at the dealer, but MUCH less expensive.

To summarize, refinancing a vehicle with a clear title is something to explore.  Call one of our friendly loan specialists and we can help you determine if it makes sense for you right over the phone.  Your pink slip might get you from red ink to black sooner than you think.