Should Your Refinance Your Home Before Rates Go Up?

Mortgage rates have been historically low for years. Back in October, rates hit their lowest mark ever in U.S. history. As the economy begins recovering, though, rates are expected to start going up. All reports I have seen say rates will be higher by summer.

Every time I hear someone say this, I want to pick up the phone and call the credit union to refinance my mortgage. I’m just not sure it makes sense for us to do it.

Here’s the deal with refinancing a mortgage. Sometimes it makes perfect sense. Sometimes it ends up costing you more money. We refinanced our home about 10 years ago when rates were down to 5.25 percent APR. At the time, I was getting ready to quit my job and become a stay-at-home mom. We needed a lower monthly payment, and refinancing got us there. It also added a few years to our mortgage.

When you refinance your mortgage, there are closing costs. Usually, you can expect to pay at least one percent of your loan amount, plus any application fees, appraisal fees, title company fees, etc. When all was said and done, we paid about $5,000, but we didn’t pay it in cash. We rolled it into our loan, which put our loan amount back up to where it was when we bought our house three years prior. The lower rate lowered our payment but added years to our mortgage. That was okay back then, because our goal was to lower the payment. Today, our goal is to pay off the mortgage faster.

Did you know if you make one extra payment every year on a 30-year mortgage, you can pay off your loan in 20 years? Imagine how much faster you can pay it off if you make two or more extra payments a year. That goes back our last blog post about ongoing debt. If you took the money on a vehicle lease and applied it to your mortgage, you might be able to pay off your mortgage in half the time.

Something else to consider is the amount of principal and interest you pay on your loan in the beginning. Typically, you pay more interest in the first five to seven years of your mortgage than you actually pay on the principal loan amount. Refinancing starts that process all over again, because you’re actually closing on a new mortgage loan. We have been in our home for 12 years, and our payments have started going down on their own. I’m not sure it makes sense for us to start all over again.

Everyone’s financial situation is different. What makes sense for my family may not make sense for yours, but doing the math is sometimes complicated. If you want to know whether or not you should refinance your mortgage, call our mortgage hotline at 972.629.7897 and ask a mortgage specialist about the questions raised in this blog post. They will help you make an informed decision that’s best for your financial situation.

Keeping Up with the Jones’ May Mean a Life of Debt

A new family moved into the house behind us about a month ago. About two weeks later, an expensive looking SUV with paper tags appeared in the driveway. Several times in the past two weeks, I have found myself dreaming of what it might be like to afford a new house and a new car at the same time. Then, it dawned on me. People with new houses and new cars are usually people with new debt.

Is that a bad thing? It depends on your goals. Do plan to retire some day? Do you have any money set aside to do that? If not, debt could be sabotaging your ability to retire. Do you have a child or children that you plan to send to college some day? Are you saving any money to make that goal attainable? If not, debt may be sabotaging your ability to send your child to school.

Financial guru Dave Ramsey believes people should have no debt – not even a mortgage. In fact, he calls a FICO score (your credit score) nothing more than an “I am in debt score.” I’m not convinced buying a house with cash is realistic in this day and age, but I do think we owe it to ourselves to examine our “stuff” and see where we can shave some of that debt. Here are some things to consider.

Are you leasing a vehicle? That usually means you’re always making a car payment. When you get a loan to purchase a vehicle, it’s usually paid off in three to five years. The car can last for decades after that. I am still driving the 1997 Honda Accord I purchased in the fall of 1996. It may not have the fancy new gadgets that newer models have, but it’s in perfect condition, and it’s been paid off for well over 10 years. If I had been making payments on a lease this whole time,  that would have cost me close to $50,000. Instead, I have money to retire on.

Do you have a balance on your credit cards? That often means you’re buying things you can’t afford. Take a look at your credit card statements for the last year. Did you buy things you could have done without? A good rule of thumb is to refrain from buying something on credit if you won’t have the money to pay it off in one to three months. Now, emergencies happen, and that’s different. However, if you’re taking the money you would have spent on credit card payments and putting it into savings every month, you’ll have an emergency fund that pays interest instead of charging you interest.

Incidentally, I speak from experience. Exactly one year ago, my husband and I met with a financial planner because we felt we were drowning in debt. It took discipline, but we paid off more than $5,000 of debt in nine months. You can do it, too. Just remember, you don’t need to keep up with the Jones’. They should be keeping up with you.

Cheap Kids Clothes This Weekend in Mesquite

There are some things I am willing to spend money on. My child’s clothing is not one of them. As fast as he grows, I just don’t see the point in spending hundreds of dollars, several times a year, on clothing that he’ll only wear one season.

I’ve been a mom for nearly eight years, and I continue to be amazed at the prices retailers charge for kids clothes. I’m even more amazed that people actually let them. If you’re tired of paying $30 or more just for a pair of kids shoes, there’s a sale in Mesquite this weekend you may want to check out.

Just Between Friends (JBF) is a consignment sale held in Dallas twice a year, featuring maternity clothing and lots of stuff for kids – clothes, shoes, toys, furniture, etc. I have personally shopped a JBF sale, and the quality of clothing is fantastic. When my son was a toddler, I bought him a brand new, never worn, embroidered Nike sweatshirt for $5. That same sweatshirt retailed for nearly $50 in department stores.

You can literally walk out of a JBF sale with an entire child’s wardrobe and spend less than $100. Where else can you shop this cheaply and find such great quality? I know consignment is not for everyone, but don’t let that word fool you. JBF has very strict standards for the quality of garments it allows people to sell. Everything there is clean, like new and extremely inexpensive.

This is not a garage sale. Everything is hung on racks according to size and gender. There’s no rummaging required, and there are no sales people there. Consignors drop off their items earlier in the week. They don’t stand by their stuff and convince you theirs is better than the next booth. You shop JBF like you would shop any retailer. You’ll just pay less – a lot less – when you shop JBF. On Sunday, the last day of the sale, everything left is half price.

The JBF sale in Mesquite starts today, Thursday, March 24^th and runs through Sunday, March 27^th, at the Mesquite Rodeo Exhibit Hall. There is a $3 admission fee today only. All other days are free. You can get more information here.

If you have shopped a JBF sale, put your comments here so other members can benefit from your savings.

Going Green on a Budget

Have you ever noticed that eating healthy can be a lot more expensive than eating foods full of fat and preservatives? It’s the same way with going green. Cleaners packed full of harmful chemicals are a lot cheaper than their natural alternatives. BPA-free containers usually cost more than regular plastic containers. Even energy efficient appliances come with a bigger price tag.

Most people I know want to be more environmentally friendly, but when budgets are limited, so is our commitment to the green movement. In her book entitled Shift Your Habit, Elizabeth Rogers details a number of relatively simple changes that could save an estimated $1,000 a year in utility costs for the average American family.

• Switching to a low-flow shower head that only puts out 1.5 gallons per minute can save up to $135 a year.
• Compact fluorescent and LED light bulbs save about $100 a year.
• Programmable thermostats can save up to $250 a year when set correctly.
• Sealing cracks and gaps around doors and windows can save $120 a year.
• Changing dirty air filters every three months can save $80 a year.
• Solar landscaping and porch lights can save $185 a year.
• Shade trees on the east and west sides of your home will enable you to use less air conditioning, saving you as much as $110 a year.
• Replacing grass with landscaping that doesn’t require as much water can save $80 a year.
• Programming sprinklers to water the yard before the sun comes up can save $20 a year.

These changes also conserve thousands of gallons of water, thousands of kilowatt hours and as much as 25 percent of your home’s energy. That’s good for our budgets and our environment.

Of course, these changes may cost you some money upfront, so budget accordingly. Shower heads, light bulbs, weather stripping, new air filters and even solar lighting can be affordable on their own, but the cost can add up if you buy them all at one time. As long as we are moving in the right direction, every change is a good change.

How does your family go green on a budget? Leave a comment hear so we can continue the conversation.

Don’t Forget to Deduct Health Care Expenses on Your Tax Return

Have you done your taxes yet? I usually start about now and finish in the 11^th hour. As a small business owner, I have to gather more information than the average person, and it’s something I pretty much loathe ever year. But, it’s a necessary evil, and I’ve learned a lot over the past six years. For example, medical expenses can be a valuable deduction.

I’ve told this to many people in the past, and I often get the same response. They say, “I don’t go to the doctor that much.” Or, “I don’t take prescriptions.” Well, I am fortunate that I don’t have to go to the doctor much, either, but every two weeks, my husband’s company takes money out of his paycheck so we can have health insurance. That adds up fast, and that’s not the only deduction you can take.

If you wear eyeglasses or contact lenses, that can be a deduction, as well as your contact solution. If you’ve had lasik surgery, that can be a deduction. Has your doctor ever prescribed an over-the-counter allergy medicine or nasal spray. A prescription makes it a medical necessity, which means it can be deducted. Even weight-loss procedures and meetings could be deductible if they are deemed medically necessary.

Here are some others you don’t want to overlook: 

• Expenses and mileage to and from medica/dental visits/procedures
• Dental procedures and teeth cleaning
• Co-pays for doctor visits
• Medical expenses not covered by insurance
• Costs to buy or rent crutches, wheelchairs, walkers, hearing aids, dentures, etc.
• Some remodeling costs associated with medical needs, like adding handicap accessible ramps, widening entry ways for wheelchairs, etc.

Read IRS Publication 502 for detailed information on deductible medical expenses.

Now, you can only deduct the portion of medical expenses that is more than 7.5 percent of your adjusted gross income. If your medical expenses are, say, 10 percent of your adjusted gross income, 2.4 percent of that is deductible. Trust me. It still can make a big difference, and you should take every allowable deduction you can get. This is your money we’re talking about. You should keep as much of it as the government will allow you to.

Also remember that NCU is not licensed to give tax advice. If you think you have legitimate medical expenses, be sure to discuss them with the person preparing your tax return, or check with the online service you use to prepare your own taxes.

What are some deductions you have overlooked in the past? Share them here so others can benefit from the conversation. And by the way, taxes are not due until April 18^th this year.

More Spring Break Specials

As soon as we posted the last blog of ideas for entertaining your kids during Spring Break, I started receiving e-mails from all kinds of entertainment venues offering special pricing for this week. In some cases, these prices are significantly lower than normal, so take advantage of them if you can.

Amazing Jakes

I told you about this place in the previous blog, but it had not yet released its Spring Break pricing. Here it is, and it’s a pretty good deal. For just a few dollars more than the 3-hour package, you get all-day food and play.

Main Event

All you can play bowling, laser tags, billiards, glow golf, rock climbing, bocce ball and gravity, all March long, Sundays through Fridays. The cost is $15.95 per person, 9 a.m. to 4 p.m., or $17.95 per person, 5 p.m. to closing. See all details here. Main Event has locations in Grapevine, Lewisville, Frisco and Plano.

Adventure Landing

Get four hours of unlimited miniature golf, go-karts, laser tag & bumper boats for one flat price. Find the details on this and other special offers here.

Shenaniganz

Unlimited bowling, laser tag and black light mini golf, plus a $10 game card for $19.99. Off good Monday through Friday, 10 a.m. to 2 p.m. They recommend you get there early, because last week, they sold out every day – sometimes by 11:30 a.m. See the offer here.

I hope you can enjoy one or more of these discounts. Whatever you do this week, have a safe and fun-filled Spring Break.

Entertaining the Kids During Spring Break

You want to do something fun with the kids for spring break, but traveling out of town just isn’t an option? Here are some fun things to do right here in Dallas/Fort Worth that will entertain the kids and provide a little bit of family fun.

Amazing Jake’s

Located in Collin Creek Mall, Amazing Jake’s is the closest thing you get to an amusement park – indoors. There’s laser tag, miniature golf, go carts, a rock climbing wall, video games, games that earn tickets for prizes and an all-you-can-eat pizza, pasta, salad, dessert bar. Save money when you buy tickets online, or sign up for their e-mail specials before spring break starts, and you’re almost certain to receive promotional price code by e-mail for Spring Break.

Six Flags

Six Flags over Texas is open daily March 12-20. Get discount tickets here. The username is: NCUDALOT. The password is SixFlags9.

Dollar Movie – Starplex Cinemas, Mesquite

See movies that just left the expensive theaters but haven’t gone to DVD yet. Movies are $1.25 before 6 p.m. and $1.75 after 6 p.m. On Tuesdays, all movies are $.50, all day. There is an upcharge for 3D. The theater also has $1 hot dogs. This theater is almost next door to a Neighborhood Credit Union branch. Tangled or Megamind anyone?

BounceU – Bounce and Art Camp, Carrollton

                 Plano location –open bounce, no camp

Create and Bounce is an art camp for children ages 4-12 that combines art projects with structured physical activities. Children will work on a different fun art and craft project each day. Bounce U also brings in special guests, like traveling pet shows, magicians, etc. Each session is three days from 9:30 a.m. to 2:30 p.m. The Carrollton location also has an open bounce schedule, including Spring Break Open Bounce, March 15 -17, 10:00 a.m. to 1:00 p.m. - $7/child.

Gatti Town Pizza

All you can eat pizza/pasta/salad buffet and 6,000 square feet of midway games and prizes.

Cavanaugh Flight Museum

The Cavanaugh Flight Museum restores and displays historically-significant, vintage aircraft. Rides in warbirds are also available for a hefty sum and must be scheduled in advance. (I actually gave my husband a ride in a biplane warbird for his 40^th birthday. He said it was worth way more than I paid for it).

Frontiers of Flight Museum

See vintage aircraft and modern-day passenger planes. There’s also a kids area with a small theater that plays Jay Jay the Jet Plane movies, has a few coin-operated rides and has a flight tower climbing structure.

Grapevine Vintage Railroad

Steam down the tracks in a vintage steam engine from the 1800s. Trains run daily to the Forth Worth Stock Yards and back during Spring Break.

Auto Loan or Home Equity Loan? You Decide

If you’re looking to finance a new vehicle, you have more choices than you might think. Auto loans are the typical way to go. Home Equity loan can provide tax benefits.

Most people don’t realize they can use a home equity loan to buy a car, and why would they? Auto Loans are quick and easy, and they usually offer lower rates than a home equity loan. Plus, you’d have to live in your house for quite a while before building enough equity to make a large purchase like a car.

That’s where the home equity loan comes in handy, though. If you’ve lived in your home long enough to have that much equity, there’s a good chance you’re not paying much interest on your mortgage loan anymore. Your mortgage may even be paid off completely. When that happens, you lose the tax benefit that comes with your mortgage.

A home equity loan comes with a similar benefit. In most cases, if you itemize on your tax return, the interest you pay on your home equity loan is tax deductible. Of course, we are not equipped to give you tax advice, so you’ll need to check with your tax advisor before you do anything. The other advantage of using a home equity loan to fund your vehicle is the length of terms. Most auto loans go up to about five years. The terms on a home equity loan are considerably longer. That could help keep your monthly payments down if you’re on a limited or fixed income.

Auto loans also have their benefits. When you get your auto loan at Neighborhood Credit Union, and you shop our participating dealers, you can close your auto loan right at the dealership. Home Equity loans are not as flexible in that regard. You must close a home equity loan at the credit union and take the check to the dealer. And, like I mentioned earlier, auto loan rates tend to be lower than home equity loan rates. If you get the tax advantage, it pays for itself. If you don’t get the tax advantage, you’re usually better off with an auto loan.

Neighborhood offers both types of loans. Consider us when you purchase your next vehicle.

Check Your Credit Report FREE Three Times a Year

Did you know you can get three free credit reports each year? You get one from each of the three major credit bureaus. You just have to go to annualcreditreport.com and request them, but don’t request them all at one time. Space them out every three or four months so you have continuous monitoring of your credit report. When you request them online, you can access them immediately.

A lot of people never do this. To be honest, I’m a little behind on monitoring my own credit report. The only reason I pulled it up this week was because I have a loan coming up for maturity. I wanted to be sure my credit was still good before I attempted to refinance. I’m so glad I did, because I found a negative credit item that was incorrect.

A few months ago, a collection agency reported me delinquent on my account with a utility company I haven’t used for probably two years or more. The report said I was delinquent as of a few months ago. I disputed the item online and it was deleted from my credit report. I’m lucky it wasn’t something more serious.

People have their identities stolen all the time without even realizing it. Monitoring your credit report for suspicious activity is one way to keep tabs on that. If someone is opening credit cards or checking accounts or even renting apartments in your name, you’ll know it by monitoring your credit report. If collection agencies are making false claims at the expense of your good name, you’ll know it by monitoring your credit report. If a lender reports a late payment that you actually paid on time, you’ll know it by monitoring your credit report. These are all things that can impact your credit negatively and prevent you from getting loans when you really need them.

The only thing I don’t like about the free report is the absence of a credit score. That’s really a crucial piece of the credit puzzle. Your credit score is the first thing lenders look at when deciding whether or not to loan you money. If you want the score, too, you’ll have to pay for it. The cost is roughly $8 to $10, but Experian is actually offering credit scores for $1, for a limited time. If you really want to know your credit score, this is the cheapest way to obtain it. If you plan to borrow money anytime soon and your credit is questionable, it’s worth the $1 to find out what your chances are of getting that loan.

If you’re not checking your credit regularly, do yourself a favor and access one now at annualcreditreport.com. This is the best way to protect your credit and your good name.

Preparing Your Budget for The Gasoline Price Hike

Is anyone else concerned about the quickly rising gas prices? Media reports indicate the price will be $5 per gallon by the end of the summer. At $3 a gallon, it’s costing me $50 just to fill the small tank in my Honda Accord. I cannot imagine how families driving oversized SUVs will be affected when the price per gallon nearly doubles. I still have bad memories of the crippling affect it had on my budget the last time gas got to $4 per gallon.

There’s more to consider than just gas prices. I don’t know about you, but my three highest electric bills of the year come during the summer months. My family, like most, also likes to get away at some point during the summer. I also have the added expense of summer camp and other activities for my child. That’s a lot of added strain on a family budget.

Here are some ways to prepare your budget now so you have some breathing room when you really need it.

Figure out how much more you will need each month and start putting it aside now. If there’s nothing to put aside, really look at your budget to see what you can cut. Are you buying or brown bagging lunch every day? Do you eat out often? Do you make your own coffee in the morning or are you paying a premium for that golden cup of Joe? Look at things like cheaper mobile phone plans, monthly internet plans, the cable bill, etc.

Consider downsizing to a smaller, more fuel efficient vehicle now. Bear in mind that it might not make sense if you have to add a loan payment to your budget. If you can make an even exchange or even sell your current vehicle at a profit, that would be ideal.

Start shopping powertochoose.org for a utility provider that can lower your electric bill this summer.

If you commute to work, discuss the possibility of telecommuting one or more days a week. If that’s not possible, check to see if your employer subsidizes or pays outright for DART rail passes as an employee benefit. You might also consider carpooling with a co-worker who lives nearby.

Figure out how you might earn some extra money. Take extra shifts at work if possible. Take an extra part-time job. If you are a stay-at-home mom, think about watching a few kids this summer for parents who have to work.

What else can you do to save money and prepare your budget for the gas price hike? Leave a comment hear and continue the conversation.