EPEFCU

The Purchase of a Lifetime

Everyone knows it’s a buyers market, and if you’ve even considered the thought of owning your first home, your dream might just be within reach. If you’re ready to commit to purchasing your own home but aren’t sure if you can afford the fees associated with the cost, there are a variety of first time home buying programs your family may qualify for.

 Many first time homebuyer programs require that the buyer meet income requirements, attend homebuyer education programs, and purchase a home that is within target market areas. According to nyhomes.org, a target area is an entire census tract or portion thereof which has been designated by the federal government as economically distressed.

The Texas Department of Housing and Community Affairs First Time Home Buyer Program or Bond Program 77, as it is often referred to, offers down payment and closing cost assistance for low to moderate income Texas families. Home buyer education is required, however, in order to qualify for this assistance and buyers must meet certain requirements:

•         Must meet income and purchase price requirements

•         Have not owned a home within the past three years

•         Meet the qualifying underwriting requirements of the mortgage loans

•         Use the home as the primary residence

•         Must complete an approved pre-purchase home buyers education course prior to loan closing

The City of El Paso also offers a first time home buyers program designed to help families making a gross annual income between 60%-80% of the median income for the City of El Paso. As with any other first time home buyer program there are certain restrictions that must be met:

•         Applicants must complete a Guide to Ownership course

•         Applicants must meet income requirements

•         Property purchased under this Program must be located within the geographical limits of the City of El Paso

Many low to moderate income residents living within the City of El Paso seek the help of The Housing Authority whose mission is to acquire, lease and operate affordable housing for the residents of El Paso with limited income. The HVC Program, created by the Housing and Community Development Act of 1974, is now offering qualified candidates the chance to purchase their home via the Homeownership Program. Interested candidates must have been receiving assistance for at least one year from the HCV rental program before applying. Applicants are then placed on a waiting list, time spent on the waiting list can range anywhere between 15-18 months but can be longer and is dependent on the availability of the vouchers.

There are a variety of programs designed to help assist first time home buyers with both down payment and closing costs, and not all are income based. Check with your lender before applying for a loan to make sure they offer any one of these programs.

Your dream of buying your fist home is closer than you think! Just remember that the process can be stressful, but with the right help, you’ll be in the home of your dreams in no time.  

Buying Your New Home

Buying your very own home is the epitome of the American Dream, but it’s easy to become overwhelmed if you’re a first time home buyer. We’ve put together a basic checklist with points you’ll want to consider as you walk through the home buying process whether it's your very first time, or second or third.

Before you start the search for your dream home, take some time to determine what your needs for this home will be, as well as your wants. Understand that while your want may be a 5 bedroom mansion with a state-of-the-art kitchen and a walk-in-closet with enough space to fit a parked car, your needs probably don’t call for a closet quite so big. Keep in mind that first and foremost your new place must fulfill your list of needs but not necessarily all of your wants.

Arrange your finances before you begin shopping for a home. Sit down and reassess your household budget to determine how much of a mortgage you can realistically afford. Make certain that you factor in any unexpected expenses that might arise. Remember that as a home owner you’ll no longer have the luxury of calling on your property’s maintenance man in the event that something needs to be repaired. These repairs will now be coming out of your pocket. After carefully choosing a lender, you’ll want to begin to discuss with them your options for a preapproval or prequalification. A prequalification will help you determine which homes you’ll be able to afford, and which homes you won’t.

Before you start the search for your dream home, determine which neighborhood(s) you want to live in. Spend time in the neighborhoods by driving or walking past during the daytime and at night. Visit the local area schools and nearby shops even if you don’t currently have children. Take into consideration what school district you’ll be living in as this will affect the amount of taxes you’ll be paying, some districts are more expensive to live in than others. Crime rates, transportation and zoning are important considerations when selecting a neighborhood.

Once you have received a prequalified amount from your lender and have picked out a few different neighborhoods you’d be interested in living in, find yourself a good real estate agent. Make sure to ask for references of any of the individuals whose help you enlist during the process. You’ll also need to hire a home inspector to have the home checked for termites, radon, and or any other concerns.

Once the home has cleared inspection, make an offer as soon as possible. Your real estate agent will help you determine what the best price to offer will be, but make sure to do your homework so that you’ll be aware of what the value of the surrounding homes in the neighborhood are.

Buying your new home may seem like an overwhelming endeavor, but with the right tools, it most certainly doesn’t have to cause you stress.  

 

Did you know that EPEFCU now has a brand new, in-house mortgage department? We now provide 30-year, 20-year, 15-year, and 10-year mortgage loans. For more information email us at mortgage@epefcu.org.

 

Wondering Whether to Lease?

The end of the year is fast approaching bringing with it newly released car models. These shiny new releases might have some of us thinking about trading in our old vehicle for a brand new model. When it comes to purchasing a vehicle however, there are several options for you to consider. So before you decide to buy or lease you next set of wheels find out which option is the best financial fit for you.

Leasing a vehicle basically means that you are borrowing the vehicle from a company for a certain amount of time. When your lease is up, you are then given the option to buy the car or turn it back in. According to the Federal Reserve Board, most leases run anywhere from 2-4 years.

When leasing, you may be responsible for your first month’s payment, a security deposit, taxes, registration, and a capitalized reduction. According to leaseguide.com, “capitalized reduction” or “cap cost reduction” is any down payment or trade-in that decreases the amount being financed.    

In contrast, when purchasing your vehicle, you will be responsible for your down payment, taxes and registration.

Leases are more appealing to some because your monthly payment is typically lower than what you might be paying if you were purchasing the vehicle. Still, paying a little more every month could pay off big in the long run.

If you decide to forego the lease route and purchase your vehicle, you can look forward to the day when you give your last car payment, boosting your equity and lowering your monthly expenses. Owning your own vehicle gives you the freedom to drive as many miles as you’d like or customize it to fit your preferences.  

On the other hand, leasing a vehicle significantly affects your freedom to do what you’d like with your car. Remember that because it is a lease, you are essentially borrowing the vehicle for 2-4 years. Leasing companies usually have strict standards as to how they’d like their vehicle returned.

When leasing, you will be given a limit as to the number of miles you are allowed to drive, exceeding this limit can mean paying costly fees. Additionally, leasing a vehicle means you don’t have the freedom to personalize your car, such as tinting your windows because it must be returned in like new condition. Many leases hold you responsible for excessive wear and tear. You can also count on having a car payment until you decide to get out of the lease cycle and make the commitment to purchase a car.

In short, remember that when determining whether to buy or to lease, consider how long you plan to keep your vehicle, how many miles you drive per year and whether or not you plan on customizing your new car.

The bottom line: consider leasing if you typically keep a vehicle for 2-3 years anyway, if you don’t drive long distances and if you don’t have any or little money for upfront costs. Otherwise, purchasing a vehicle could be the smarter route. It will save you a significant amount of money if you choose to keep your vehicle long after you give your last monthly payment.

 

Do you prefer to purchase or lease you vehicle? Please share your thoughts in our comments, we would love to read them!

Uncovering the Difference Between Debit and Credit Cards

Although it may seem like light years ago, there was a time when cash was the common form of payment. These days it’s rare to find someone in a grocery line pulling currency out of their wallet.

According to an article on the New York Times website, credit cards have been around since the 1950s, and debit cards were introduced in the mid-1970s. By 2006, there were 984 million bank-issued Visa and MasterCard credit and debit cards in the United States alone.

Today, both debit and credit cards provide a safer and faster alternative to cash. Approximately 12 percent of all retail noncash payments are made through the use of debit cards. That’s five times greater than the number of payments made by using a debit card just five years ago, according to the Federal Financial Institutions Examination Council.

While used interchangeably, debit and credit cards should never be confused with one another.

Unlike credit cards, debit cards are linked to your checking account so that every time you make a purchase, the full amount is deducted from your account. This feature is convenient in that it reduces the probability that you will overspend.

When using a debit card that is linked to your bank account, you are usually asked if you would like to use your card as a “debit card” or a “credit card.” The difference here is that when you process your debit card as a “debit” transaction, you will be asked to input a four digit pin number and your purchase amount will be immediately withdrawn from your account.

On the other hand, opting to have your debit card processed as a “credit,” transaction will usually require your signature and delay the time it takes for the merchant to pull the money form your checking account.

Alternatively, credit cards allow the user to essentially borrow money to make a purchase, and then pay back the lender at a later time. However, delaying your repayment will cause interest to be added to the amount you owe, so that dress you bought on sale with your credit card may end up costing you more than you think. For instance, if you have a credit card balance of $1000, and it takes you three years to pay off your credit card, you will really have paid $1247.95, according to a loan calculator on bankrate.com.

One advantage of credit cards over debit cards is the protection against any disputed charges. According to the Fair Credit Billing Act, your credit card issuer can withhold payment from a retailer if you should decide to dispute a purchase. Make certain that you are aware of the billing cycle and due date, find out if there are any penalties for not using the card. If the credit card issuer is offering a special promotional interest rate, find out how long the special rate applies.

If you are looking to apply for a credit card, make certain that you understand the terms and conditions of your card, be aware of any fees you may incur and your interest rate, keep in mind that the credit card issuer may raise your interest rate after the card has been opened. Additionally, keep in mind that these regulations may vary once changes implemented by the Federal Reserve go into effect later this year.

Remember, just because you qualify for a $5000 Visa card does not mean that you should go out on a shopping spree the minute the card arrives in the mail. Use your debit and credit cards wisely so as not to get caught up in the debt cycle.

Do you prefer plastic or cash? Tell us! We want to hear about your experiences and find out which method works best for you and why.