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At a time of economic uncertainty and fluctuating inflation rates, savers and investors are increasingly seeking stable and practical strategies to preserve and grow their wealth. One such strategy gaining traction is the use of laddering certificates, a dynamic approach that offers a blend of liquidity and inflation protection. Laddering certificates can serve as a valuable tool in an investor’s arsenal, particularly in times of rising inflation.

Understanding Laddering Certificates

Laddering certificates involve the strategic division of an investment into multiple certificates with staggered maturity dates. Instead of depositing a lump sum into a single certificate, investors allocate funds across certificates with varying terms, typically ranging from a few months to several years. As each certificate matures, the proceeds are reinvested into new certificates with longer durations, thus creating a continuous cycle or “ladder” of investments.

The Benefits of Laddering

One of the primary advantages of laddering certificates is their ability to provide both liquidity and inflation protection. By staggering the maturity dates, investors ensure a steady stream of cash flow as certificates mature at regular intervals. This feature grants investors the flexibility to access funds without incurring early withdrawal penalties, unlike traditional long-term investments.

Moreover, laddering certificates offer a built-in barrier against inflation. As inflation lessens the buying power of money over time, investors risk seeing the real value of their investments diminish. However, by spreading investments across certificates with different maturity dates, investors can adapt to changing economic conditions. In periods of rising inflation, maturing certificates can be reinvested into new certificates with higher interest rates, thus offsetting the effects of inflation and enhancing overall returns.

Taking Advantage of Current Certificate Rates

Certificate rates are notably higher in the current economic climate due to elevated interest rates. The Fed has repeatedly raised interest rates to combat inflation, leading financial institutions to offer more attractive rates on certificates. Thereby, this provides an appropriate time for investors to capitalize on higher yields by allocating funds toward laddering certificates.  

Such is the case with Benchmark FCU’s current “Certificate Special,” which offers investors short-term certificates with high returns. Boost savings with a rate of 4.50% APY* for three months, a 4.60% APY* for six months, or a 4.75% APY* for 12 months at Benchmark FCU. Tap to view current Benchmark certificate rates for varying terms. By investing in certificates now, investors can lock in favorable rates and establish a solid foundation for their financial portfolios. As inflationary pressures persist, the benefits of laddering certificates become increasingly apparent, providing investors with a reliable means of preserving wealth and achieving long-term financial goals.

Implementing a Laddering Strategy

Implementing a laddering strategy requires careful planning and scrutiny of factors, including investment objectives, risk tolerance, and market conditions. Investors should assess their liquidity needs, income requirements, and investment timelines to determine the optimal ladder structure.

A typical laddering approach may involve dividing investments equally across certificates with staggered terms, such as three months, six months, one year, and possibly even two years. As each certificate matures, the proceeds are reinvested into new certificates, maintaining the ladder’s continuity.

Additionally, investors should monitor interest rate movements and economic indicators to make well-thought-out decisions regarding the timing and duration of certificate investments. Investors can adjust the ladder can be made to capitalize on changing market conditions and optimize returns over time.

A Strategic Approach to Growing Savings

In an environment marked by inflationary pressures and economic uncertainty, laddering certificates offer a strategic solution for investors seeking stability and growth. By diversifying investments across certificates with staggered maturity dates, investors can benefit from both liquidity and inflation protection. Taking advantage of Benchmark FCUs “Short Term Certificate Special” today can help you accomplish this goal. 

With certificate rates currently elevated, now is an opportune time for investors to embrace laddering strategies and secure higher yields. Adopting a dynamic approach to investment management can help you navigate evolving market conditions and build a resilient financial future. Laddering certificates represent not just a sound investment strategy but a pathway to financial security in an ever-changing economic landscape.

Read more about investing in certificates in our blog, “Maximizing Preparedness: How to Build a Fund with Certificates” or tap to see the features of a Benchmark certificate. 

Disclaimer

*APY = Annual Percentage Yield. Yield is subject to change at Credit Union’s discretion without prior notice. Early withdrawal penalties may apply.

 

Benchmark Federal Credit Union is proud to be named the Title Sponsor of the 225th Birthday Parade to be held by the Borough of West Chester on Sunday, April 21, 2024, beginning at 1pm.

West Chester’s 225th Birthday Parade will feature a colorful display of floats showcasing the heritage of West Chester, as marching bands fill the streets with spirited melodies. Community groups, local businesses, and other organizations will display their West Chester pride with festive decorations, balloons, and plenty of birthday cheer.

“We’re ready to make history together, as we commemorate 225 years of West Chester borough during a day that is sure to create lasting memories for years to come,” said Daniel J. Machon, Jr., President and CEO of Benchmark Federal Credit Union, the only federal credit union to serve Chester County exclusively.

Incorporated in 1799, the historic streets of West Chester are filled with more than 75 restaurants and 65 boutiques that prompted the Philadelphia Inquirer to call West Chester “one of the world’s most perfect small towns.” The borough’s growing population of nearly 64,000 people is in the heart of the Brandywine Valley, just 45 minutes from Center City Philadelphia and 30 minutes from Wilmington.

Volunteer opportunities and sponsorships are available. For more information, visit the WC 225th Birthday Parade website or contact the Borough of West Chester Parks and Recreation at 610-436-9010 or via email: parksandrecreation@west-chester.com.

For a 12th consecutive year, employees of Benchmark Federal Credit Union spearheaded a donation to a Chester County nonprofit in need. Recently, Benchmark FCU presented a check to Fame Fire Company of West Chester after Benchmark FCU employees raised funds and Benchmark FCU matched those contributions.

 

“We’re so proud that, year after year, Benchmark FCU’s employees take the initiative to fundraise for an organization that’s making a real difference in our community,” said Daniel J. Machon, Jr., President and CEO of Benchmark Federal Credit Union. “The spirit of giving is deeply ingrained in our culture as well as that of our home here in Chester County.”

 

Last year Benchmark FCU staff chose The Crime Victims’ Center of Chester County as its recipient. Previously, donations went to Chester County Food Bank, Friends Association, The Arc of Chester County, Family Lives On Foundation, Good Samaritan Services, Cuddle My Kids, Home of the Sparrow and Lord’s Pantry.

In the tumultuous landscape of personal finance, one steadfast principle reigns supreme: the necessity of an emergency fund. An emergency savings fund acts as a financial safety net, shielding you from unexpected expenses, job loss, or other unforeseen circumstances. While the concept of an emergency fund is widely recognized, the challenge lies in building one robust enough to weather life’s storms. One strategy gaining traction is leveraging short-term certificates to fortify your emergency fund. In this article, we’ll explore the ins and outs of utilizing certificates to bolster your financial resilience.

Understanding Certificates

Before learning the specifics of building an emergency fund with certificates, it’s crucial to grasp the fundamentals. Certificates are financial instruments offered by credit unions and other financial institutions. Unlike traditional savings accounts, certificates require you to deposit a fixed sum of money for a predetermined period, ranging from a few months to several years. In return for locking in your funds, financial institutions typically offer higher interest rates compared to standard savings accounts.

The Appeal of Certificates for Emergency Funds

While traditional savings accounts provide easy access to funds, they often yield weak interest rates, failing to keep pace with inflation. Certificates, on the other hand, offer a middle ground between accessibility and higher returns. By committing your funds for a specified period, you can capitalize on more favorable interest rates, enhancing the growth of your emergency fund over time.

Finding Short-Term Certificates with High Returns 

While it’s typically longer-term certificates that provide the best returns, occasionally you can find a short-term certificate featuring an attractive rate. Benchmark FCU is currently offering a limited time short-term certificate special that can help you with building an emergency fund. Best of all, the special higher rate can help you reach your goal faster than a low-rate savings account. Additionally, the shorter term ensures your money is there when you need it. Tap to see the special rate and learn more

Crafting Your Certificate Strategy

Building an emergency fund with certificates requires thoughtful planning and strategic decision-making. Here’s a step-by-step guide to help you navigate this process effectively:

  1. Assess Your Financial Situation: Begin by evaluating your current finances and defining how much you can comfortably allocate toward your emergency fund. Aim to allocate three to six months worth of living expenses to cover unexpected costs adequately.
  2. Research Financial Institutions: Explore various credit unions and banks to compare their certificate offerings. Pay close attention to interest rates, terms, and penalties for early withdrawal. Look for institutions that offer competitive rates without imposing excessive restrictions. Be sure to check out Benchmark FCUs short term certificate special. 
  3. Select the Right Term Length: Choose a certficate term length that aligns with your financial strategy and timeline. Shorter-term certificates, typically ranging from three to twelve months, provide quicker access to funds in case of emergencies. Conversely, longer-term certificates may offer higher interest rates but entail a longer commitment.
  4. Diversify Your Portfolio: Consider diversifying your emergency fund by staggering multiple certificates with different maturity dates. This approach, known as laddering, allows you to maintain liquidity while maximizing returns. As each certificate matures, you can either reinvest the proceeds or access the funds as needed.
  5. Stay Informed: Keep abreast of changes in interest rates and market conditions to make knowledgeable decisions about when to invest or rollover your certificates. Monitor your certificate’s maturity dates to avoid any unintended lapses or penalties.

Benefits and Considerations

Building an emergency fund with certificates offers several benefits:

  • Higher Returns: Certificates typically yield higher interest rates than standard savings accounts, enabling your emergency fund to grow at a faster pace.
  • Discipline and Commitment: By locking in your funds for a predetermined period, certificates promote disciplined saving habits and discourage impulsive spending.
  • Security and Stability: Certificates are insured by the National Credit Union Administration (NCUA) or Federal Deposit Insurance Corporation (FDIC), providing a high level of security for your deposited funds.

However, it’s essential to weigh these benefits against potential drawbacks:

  • Limited Liquidity: Unlike savings accounts, certificates restrict access to your funds until maturity. Early withdrawal may result in penalties or forfeiture of accrued interest.
  • Interest Rate Risk: If interest rates rise after investing in a certificate, you may miss out on higher returns available in the market until your certificate matures. This is not as big a risk when investing in a short-term certificate. 
  • Inflation Risk: While certificates offer stability, their fixed interest rates may not keep up with inflation over time, conceivably eroding the purchasing power of your emergency fund.

Learning How to Build an Emergency Fund with Certificates

In an unpredictable world, the importance of having a solid emergency fund cannot be overstated. By leveraging short-term certificates, you can strike a balance between accessibility and higher returns, fortifying your financial resilience in the face of adversity. With careful planning, disciplined saving, and strategic decision-making, you can build an emergency fund that provides self-assurance and financial security for the future. Start today and take control of your financial well-being.

Learn more about investing in certificates on our blog, “Short-Term vs. Long-Term Certificates: Which One is Right for Your Financial Goals.” 

When it comes to financing your dream car, the interest rate on your auto loan plays a pivotal role in determining your monthly payments and the total cost of your vehicle over time. At Benchmark Federal Credit Union, we understand the importance of securing a low rate on your auto loan, and we’re here to shed light on a key factor that can significantly influence your rate: your credit score.

Understanding Credit Scores

A credit score is a numerical representation of your creditworthiness, based on your credit history. It’s calculated using information from your credit reports, including your payment history, amounts owed, length of credit history, new credit, and types of credit used. Lenders use this score to assess the risk of lending you money.

How Credit Scores Affect Auto Loan Rates

Your credit score is a critical determinant in the auto loan rate you receive. Here’s why:

  • Higher Scores, Lower Rates: Generally, members with higher credit scores are viewed as less risky, which often qualifies them for lower interest rates on loans. This is because a high credit score indicates a history of responsible credit management and timely payments.
  • Risk-Based Pricing: Many lenders employ risk-based pricing for auto loans. This means the interest rate you’re offered is directly influenced by your perceived risk as a borrower. A higher credit score decreases your perceived risk, leading to potentially lower rates.
  • Credit Score Ranges: Lenders typically categorize credit scores into ranges (excellent, good, fair, poor, etc.). Each range corresponds to different loan terms and rates. By understanding where your score falls, you can gauge the rates you might expect.

Improving Your Credit Score for Better Loan Rates

If you’re looking to secure a low rate auto loan, improving your credit score can be a game-changer. Here are some strategies to improve your score:

  • On-Time Payments: Ensure you pay all your bills on time. Late payments can significantly harm your credit score.
  • Credit Utilization: Try to keep your credit card balances low compared to your credit limits. High utilization can negatively impact your score.
  • Limit New Credit Applications: Each time you apply for credit, it can cause a small dip in your score. Apply only for credit you need.
  • Check Your Credit Reports: Regularly review your credit reports for errors. Dispute any inaccuracies you find, as these can unjustly lower your score.

Benchmark FCU’s Commitment

At Benchmark FCU, we’re committed to helping our members navigate the auto financing process with ease and confidence. We understand that everyone’s financial journey is unique, and we’re here to provide personalized advice and support to help you achieve your goals. Whether you’re starting with a less than perfect credit score or you’re aiming to maintain excellent credit, we offer a range of auto loan options tailored to meet your needs.

Conclusion

Your credit score is a powerful tool that can help you secure competitive rates on auto loans. By understanding and managing your credit effectively, you can position yourself to take advantage of lower interest rates, ultimately saving money and enhancing your financial well-being. At Benchmark FCU, we’re here to guide you every step of the way, offering the resources and support you need to secure the best possible rate on your auto loan. Ready to drive off with a great deal? Reach out to us today and let’s make it happen.

When it comes to building wealth and achieving financial stability, certificates are a popular choice among investors. Certificates offer a low-risk way to grow your money over time, with guaranteed returns. However, not all certificates are created equal, and understanding the differences between short-term vs. long-term certificates can help you make the best decision for your financial goals.

Short-term certificates typically have terms ranging from a few months to a year, while long-term certificates can have terms anywhere from several years to a decade. Each option has advantages and other considerations, depending on your investment objectives and risk tolerance. Let’s dive into the nuances of short-term and long-term certificates to help you determine which one aligns better with your financial aspirations.

Short-Term Certificates

Investors who prioritize liquidity and flexibility favor short-term certificates. These certificates typically offer lower interest rates than their long-term counterparts, but they provide quicker access to your funds. If you anticipate needing your money soon or are still deciding whether to commit to a longer-term investment, a short-term certificate might be the right choice for you.

One of the main benefits of short-term certificates is the ability to reinvest your funds at higher interest rates as they mature. This flexibility allows you to take advantage of rising interest rate environments and maximize your returns over time. Additionally, short-term CDs are less susceptible to interest rate risk, as the funds are tied up for a shorter duration.

However, it’s essential to consider that short-term certificates may provide little returns, especially in environments with low-interest rates. If you want to generate significant income or have long-term financial goals, opting for a longer-term certificate might be more suitable.

Short-Term Certificates with Higher Returns

If you do your homework, you may find a short-term certificate advertising a higher interest rate. Such is the case with Benchmark FCU’s short-term certificate special.  Investors will benefit from a great rate on a 3-month or 6-month term. Tap the link above for complete details, or visit a Benchmark FCU branch near you

Long-Term Certificates

Long-term certificates offer the potential for higher returns and can benefit investors with long-term financial objectives. These certificates typically come with higher interest rates than short-term options, rewarding investors for locking in their funds for an extended period. This is only sometimes the case, as seen in Benchmark’s short-term certificate special mentioned above. 

One of the key advantages of long-term certificates is the ability to shield your savings from fluctuations in interest rates. By locking in a rate for a more extended period, you can protect your investment from potential decreases in interest rates over time. This can provide peace of mind and stability, especially in uncertain economic climates.

Moreover, long-term certificates can be practical tools for achieving specific financial goals, such as saving for your retirement or funding a large purchase or a child’s education. By committing to a longer-term investment horizon, you can benefit from the power of compounding and potentially accumulate significant wealth over time.

However, it’s essential to recognize that long-term certificates come with a trade-off in terms of liquidity. Accessing your funds before the maturity date of a long-term certificate may result in penalties or forfeited interest. Therefore, it’s crucial to assess your financial situation and ensure that you won’t need the funds for the duration of the certificate term.

Choosing the Right Option: Short-Term vs. Long-Term Certificates

When deciding between short-term and long-term certificates, it’s imperative to consider your financial goals, risk tolerance, and time horizon. Ask yourself the following questions:

  1. What are my short-term and long-term financial objectives?
  2. How much liquidity do I need?
  3. What is my risk tolerance?
  4. What is the current interest rate environment?
  5. Am I willing to lock in my funds for an extended period?

By carefully assessing these considerations, you can make a well-educated decision that aligns with your unique financial situation.

In conclusion, both short-term and long-term certificates offer distinct advantages and considerations for investors. Short-term certificates provide flexibility and liquidity, while long-term certificates offer the potential for higher returns and stability. With Benchmark FCU’s short-term certificate special, you can enjoy the best of both worlds. 

Ultimately, choosing between the two depends on your financial goals, risk tolerance, and investment timeline. By understanding the distinctions between these options, you can make the right decision to help achieve your financial aspirations.

For more financial information and tips, read our blog “Money Makeover: Strategic Financial Resolutions for a Prosperous 2024”. 

You are about to embark on one of the biggest investments of your life and the mortgage specialists at Benchmark Federal Credit Union would like to help you navigate through the long process of purchasing your first home. Knowledge is power when buying your first home and our Home Buyer’s Guide will provide all of the information you need. From knowing if you are financially prepared and understanding the first steps to selecting the right professionals to help along the way and being fully prepared to close the deal. At Benchmark Federal Credit Union, we want to help you realize the dreams of owning your first home. There are many things you will need to do to prepare before your home search even begins. Here are some important considerations to help you along the way.

Are you financially ready to purchase a home?

The first-time home buying process all starts with this important first question, can you afford to buy a home? If you believe you can, then it’s time to determine how much you can afford. An affordable mortgage will be determined by your income, your budget (income vs. expenses), and the total you have saved for a down payment. A mortgage lender can help determine a mortgage amount in your range and start you on the important process of mortgage pre-approval. You can also find various mortgage calculators online at the Benchmark Federal Credit Union Mortgage Center to help you determine monthly payments based on various mortgage amounts, rates, and terms. You can find current rates; as well as sign up for our rate watch.

Understanding your credit score

Your credit score will also come into play when preparing to purchase your first home. You may not have focused much on your credit history in the past, but now it’s an important factor in realizing your home-buying goals. A higher credit score means a better loan rate; as well as a better chance of getting approved for your mortgage loan. Even a small rate difference on a mortgage loan can make a significant impact over the life of the loan. Your credit score can determine whether or not that is a positive impact or negative, depending on the rate you qualify for.

First, request a free copy of your credit reports from each of the three major credit- reporting agencies – Equifax, Experian, and TransUnion – one time each year. Once you receive your reports, review them carefully. You will want to check for any incorrect information or other errors. If you find any errors, be sure to report them to the individual credit reporting agencies. Next, it’s important to understand how your credit score is determined. Five important factors are weighed in varying amounts when determining your score. They include:

Payment history – 35%

Outstanding credit balances – 30%

Length of credit history -15%

Credit mix – 10%

New credit – 10%

So obviously from the breakdown above, paying your bills on time and keeping your outstanding balances down plays an important part in your credit score. Credit scores usually range from 300-850. According to Experian, a credit score of 700 and above is considered good, while credit scores under 620 are considered low. Higher scores show lenders that you are a good credit risk and are responsible with paying off your debt. If your credit score is on the low side, a focus on improving it now can mean the difference between being approved or denied for a mortgage loan.

Five Home Buyer’s Guide tips for improving your credit score

  1. As we stated above, review to make sure your credit reports are accurate. Inconsistencies are not uncommon, so be sure there are no mistakes on your report that are resulting in a lower score. If you do have any incorrect information, report it to the credit reporting agencies to request it be removed.
  2. Pay your bills on time all the time. As we’ve shown, payment history is one of the most important factors in determining your credit score. On time payments every month will help to improve your score. Set payment due date alerts for yourself, or better yet, set up automatic bill pay with your credit union. Keep in mind that delinquent payments can remain on your credit report for years, so prompt payment is always important.
  3. Lower your credit utilization ratio. If your credit card balances are more than 30% of your limit, your credit score may be suffering, even if you are paying your bills on time. Your debt to credit ratio is another big factor in determining your score. You can improve this by paying down your loan and credit card balances. It’s better to pay down the debt rather than moving it around. It also helps to keep the cards open after you pay them off, as it will add available credit to lower your debt to credit ratio.
  4. Work to build a strong credit history. The age of your accounts definitely matters when borrowing money. Lenders like to see a long history. If you have a short history, there’s not too much you can do quickly. One possibility is to become an authorized signer on the credit card of a family member or close friend with a stellar credit history. The longer your positive credit history, the better your score. Length of history is another reason we suggest keeping credit cards open, rather than closing them. You don’t need to use them but having them open for a long period of time helps to improve your length of history. As you establish your credit, charging smaller amounts on different cards and paying them off on time every month can also enhance your payment history.
  5. Finally, have a good credit mix. Lenders like to see a good mix of debt, which can include bank and credit union credit cards, retail credit cards, as well as vehicle or other installment loans. Improving your credit takes time, but it will be worth it in the long run. If your credit score is low, you may want to delay your home search until you can improve it a bit. Talking with a Benchmark Federal Credit Union Mortgage Lender can help you determine if you should wait. Keep in mind, paying off your outstanding debt and making all monthly payments on time can make a big impact on your score. You may see an improvement faster than you think.

Mortgage down payment

The amount of a mortgage down payment varies from lender to lender and may also depend on your credit score and income; among other factors. It also may be much lower if you qualify for an FHA loan, which is a mortgage that is insured by the Federal Housing Administration. The percentage of down payment required is a question you can ask mortgage lenders as you are comparing loans from Benchmark Federal Credit Union and other lenders. Obviously, the more you have saved for a down payment, the less you have to borrow. This will give you a better chance of loan approval; as well as a lower monthly payment. We hope you’ve been saving towards your home purchase goals, but if you haven’t, there’s no time like today to begin.

Start by reviewing your monthly budget and searching for ways to save. This can include eliminating unnecessary expenses, so think before you spend. That weekend getaway or fancy new car you give up may mean achieving your down payment goals much faster. Once you’ve found where you can save each month, open a dedicated savings account and have money direct deposited each pay period into that account. Consider a Benchmark Federal Credit Union Money Market Account or Certificate of Deposit for a higher interest rate. There are a wide range of share certificate terms available. Keep terms in mind as you are investing your money. If you know you are only saving for 1 year, then don’t invest in a Certificate with a longer term.

Most importantly, don’t touch your down payment savings for anything other than your down payment. Click here to see various options for saving at Benchmark Federal Credit Union. When you apply for your mortgage, you are going to have to show the source of the funds for your down payment. Keep record of your savings, so you can show where your funds will be coming from.

Time to shop around for mortgages

You need to begin the mortgage search before you begin the home search. You’ll want to compare at least three or more lenders, including Benchmark Federal Credit Union. Speak to your credit union representative and other lenders to compare rates, terms, and fees. When you compare quotes, be sure you are taking all factors into consideration. The lowest rate is not always the best deal as fees can vary greatly.

Get a pre-approval letter

It’s important to get pre-qualified for a mortgage before you begin looking for your new home. Pre-approval is simply an evaluation by a lender that determines if you qualify for a loan, and if you do qualify, the maximum amount the lender would be willing to lend. Mortgage pre-qualification helps you to determine the range of a home you can afford; as well as any obstacles for approval. A best practice is to get pre-approved before you start shopping for a home. Having a pre-approval letter is also a great negotiating tool when it comes time to purchasing your house. You will have an advantage over other buyers who haven’t taken the time to secure a pre-approval.

Comparing Mortgage Types

Understanding the distinctions between conventional loans, government-backed loans, and the dynamics of fixed-rate and adjustable-rate mortgages (ARMs) is crucial for making informed decisions. Let’s look at the nuances of each, weighing the pros and cons to guide you toward the mortgage that aligns with your unique financial goals.

Conventional Mortgages

Conventional mortgages stand as the cornerstone of home financing, not backed by any government agency. They are offered by private lenders, such as Benchmark FCU. For those who meet the criteria, conventional mortgages provide a straightforward and widely accepted path to homeownership.

Pros:

  • Flexibility in terms and down payment options.
  • No upfront mortgage insurance premiums, unlike some government-backed loans.
  • Potential for quicker loan approval and processing.

Cons:

  • Stricter eligibility criteria.
  • Interest rates may be slightly higher for certain borrowers.

Government-Backed Loans

Government-backed loans, including FHA and VA loans, are insured or guaranteed by government agencies, offering accessible options with lower down payment requirements.

Pros:

  • Lower down payment requirements.
  • FHA loans cater to lower credit score borrowers.
  • VA loans offer exclusive benefits for eligible veterans and military personnel.

Cons:

  • FHA loans may have mortgage insurance premiums.
  • VA loans are exclusive to veterans and military personnel.

Fixed-Rate Mortgages

Fixed-rate mortgages offer borrowers a steady and predictable journey through the world of homeownership. With a fixed interest rate that remains constant over the entire loan term – typically 15 to 30 years – homeowners benefit from consistent monthly payments. The security of unchanging rates shields them from market fluctuations, providing financial stability and facilitating budget planning.

Pros:

  • Predictable monthly payments for the entire loan term.
  • Protection against interest rate volatility in the market.
  • Long-term stability and peace of mind for homeowners.

Cons:

  • Initial interest rates may be higher than those of some adjustable-rate mortgages.
  • Limited short-term affordability compared to certain adjustable-rate options.

Adjustable-Rate Mortgages (ARMs)

Adjustable-rate mortgages present a dynamic approach to homeownership. Unlike fixed-rate counterparts, ARMs start with lower initial interest rates, often lasting for a set period (introductory period) before potentially adjusting periodically based on market conditions. This initial affordability can be enticing for those planning to sell or refinance before the adjustment period kicks in, but it comes with a risk of increased payments in the future.

Pros:

  • Lower initial interest rates, offering short-term affordability.
  • Potential for decreased payments if interest rates decline.

Cons:

  • Uncertainty with potential interest rate hikes after the initial fixed period.
  • Higher risk for payment increases, impacting long-term budgeting.

As you navigate the landscape of conventional, fixed-rate, and adjustable-rate mortgages, consider your financial goals, risk tolerance, and anticipated homeownership timeline. Each option has its own unique characteristics, offering a spectrum of choices to align with your specific needs. Seeking guidance from mortgage professionals at Benchmark FCU can provide valuable insights, ensuring that your home financing choice aligns seamlessly with your long-term goals.

5 Home Buyer’s Guide tips for comparing mortgage loans

  1. Interest rate – A lower rate may mean a lower monthly payment. Ask lenders how long the rates quoted are good for. Ask whether they are fixed or adjustable. Compare the pros and cons of fixed rates vs. adjustable rates. Adjustable rates may look better at first, but they generally come with a higher risk. They can fluctuate over the term of your loan.
  2. Terms – Typically mortgage loans are for 15 or 30-year terms, however other terms are available. Although a 30-year term will give you a lower monthly payment, you will pay more over the life of the loan.
  3. Monthly payment – Does the payment fit your budget? This is an important and may determine the term and amount of your loan.
  4. Points & Fees – Points are fees that are usually linked to the interest rate. You may pay points upfront to lower your interest payments over the course of a loan. You may or may not pay points, depending on the lender. Mortgage fees can vary considerably from lender to lender. Mortgage closing costs could include a variety of fees. Here are some examples: appraisal fees, home inspection fee, credit report fee, document preparation fee, loan origination fee, and title fees. As you can imagine, these fees can add up quickly. When comparison-shopping for a mortgage loan, you’ll want to consider and compare the total cost of all fees.
  5. Down payment – Ask about the lender’s requirement for a down payment; as well as any special mortgage programs they may offer, such as FHA loans. As you research and compare mortgage loans, it’s important to select the best mortgage for your individual needs and your long-term financial plans. Be sure to review your written loan estimate carefully. Once you’ve compared mortgage quotes and have selected the best loan it’s time to get a written “rate lock” and apply for pre-approval. Your rate lock will be for a certain period of time.

Apply for your mortgage pre-approval

We can’t stress enough that the best time to get pre-approved for a mortgage is before you start searching for a house. If you’ve followed all of our suggestions above, it’s time to apply for mortgage pre-approval. Your lender will require various documents to verify income and assets. They will consider your credit score, debt and cash available for down payment, and closing costs. After an examination of your finances, the lender will give you a written confirmation of an amount they are willing to lend.

Experts typically recommend your monthly mortgage payment be no more than 28% of your monthly gross income. This percentage may change based on other debt you owe. Pre-approval is not a guarantee that you will get the loan and is conditional. Major changes in your financial situation after pre-approval, may change your loan eligibility. Pre-approvals are also not indefinite. They are only valid for a limited period, so be sure when you are seeking pre-approval that you are ready to begin your search.

Selecting the right real estate agent

You will begin by compiling a list of qualified buyers agents to interview. You should first seek referrals from family and friends; as well as those realtors you know with an excellent reputation in the area. You want a realtor with a proven track record of success with homebuyers. An experienced realtor can make the process of searching for a home much easier. You should seek out a realtor with access to extensive home search research; as well as many resources and contacts to assist you in your search. The ideal buyers agent will have all of the tools and knowledge needed to take you through the entire home search process, from advance search study through the closing. Their available research should include facts related to area school districts, individual neighborhoods, arts & entertainment available in specific areas, crime statistics; as well as taxes and more. Your potential realtor should be knowledgeable about the communities in which you are searching, so keep that in mind if you are relocating. It’s important to find someone you can work closely with, as you will be spending a lot of time with your realtor and you want it to be a positive experience.

Five Home Buyer’s Guide tips for finding a skilled realtor

  1. Ask others for recommendations.
  2. Look for a local realtor who is part of a larger team and has access to the tools you need for a successful home search. This includes access to resources such as home inspectors and other professionals you may need along the way.
  3. Do some background research. Be sure they are properly licensed and credentialed. Do an online search for reviews; as well as any complaints or disciplinary actions.
  4. Ask for several references and speak to clients who have worked directly with the realtor.
  5. Interview each of your prospective realtors to test his/her knowledge of the real estate market in general, the home buying process, and the geographic area. Ask about their negotiating skills and ask them to give you specific examples. Ask about their availability. You want to know your realtor is responsive and can dedicate the time needed to help you find the right home. You may also want to meet others in their company who you may be working with. Most importantly, don’t just settle on the first realtor you meet, be sure to interview multiple agents, so you have something to compare.

Determine your housing needs and wants

Your mortgage pre-approval will have given you a good idea of your budget range. In addition to your budget, there are many other things you will need to communicate to your realtor for them to effectively help you in your home search. Other considerations include the number of bedrooms and bathrooms you need. This will include everything from a specific city or neighborhood to a school district, access to public transportation, commute time, and size of the house. You will have a list of your minimum requirements, such as a large yard for children and pets, a certain number of bedrooms or bathrooms, or perhaps a certain school district.

Then you may have a wish list, which may include a home with a pool, an ultra-modern kitchen, a home in close proximity to shops and restaurants, a large open floor plan, or huge master bedroom. Every homebuyer has specific things they are looking for, so it’s best to prioritize them. Your realtor will be able to help you with a questionnaire that will give them an idea of your exact wants and needs. Again, prioritize your list and specify your must haves vs. other wishes in a new home. Communication between you and your realtor will be key to you successfully finding a home that fits your needs.

Let the home tours commence

By now, both you and your realtor will have done your homework and there will be a list of homes that fit your specifications to begin to look at. In addition to looking through each home, walk and drive through the neighborhoods. You will want to get a better idea of the type of neighborhood and the other homes. You won’t want your home to be the nicest home in a run-down neighborhood.

When looking through a home, be sure there is enough room if you have a growing family. Are there enough bedrooms and bathrooms? Is the yard big enough? Do you like the floor plan? Does it need a lot of repair work, such as a new roof? Don’t be afraid to take photos as you go through a home, you will be looking at many and want to compare after the fact. Once you narrow your search, go back for a second or even a third visit. You will want to be absolutely sure the home you choose is right for your family. Ask your realtor to gather all of the costs associated with the home, such as cost of utilities, homeowners insurances; as well as taxes and any other fees. This will help you to determine if the home really fits your budget.

It’s time to make an offer

Let the negotiations process begin. This is where the negotiation skills of your realtor come in, so hopefully you hired a realtor who is a great negotiator. Have your realtor do a bit more research to prepare for negotiating and help to determine your offer price. What are the housing trends in the area, how have other homes been selling, how long has this home been in the market, is it in need of major repairs? These are all questions to answer before negotiations begin. It’s also helpful to know exactly why the seller is selling. Is there a divorce or major life change? Is there a job relocation? Are they empty nesters that have decided to downsize? Have they grown out of the home and are upgrading? The answers may help you to determine if they are anxious to sell and more apt to be open to negotiating. On the other hand, if the seller is in no hurry, they may not be as willing to negotiate.

Once the negotiations are complete and your offer is accepted, you will sign a contract and provide a small amount of cash in the form of a deposit. Your offer will be conditional upon a home inspection and financing. You will have a specified amount of time to complete your due diligence on the property, which includes home inspections.

Home Inspections

You will have a limited amount of time to have professionals inspect the home. A home inspector will check the safety of your new home; as well as any need for repairs. They will focus on the structure, construction, and mechanical systems; as well as alert you to any repairs needed or major problems found. It’s not the inspector’s job to determine whether you are overpaying for the house, only to look for any problems there may be with the home. An experienced realtor with many contacts will be able to help you find an experienced home inspector. You can also seek recommendations from co-workers, family, and friends.

You may also want more than one home inspector if there’s something in particular you are worried about. Generally, a home inspector will check the electrical system, plumbing, waste disposal, water heater, insulation and ventilation, HVAC systems, water source, foundation, structure, doors and window, roof, and more. Some of the problems your home inspector(s) will look for include lead-based paint in older homes, wood damage, which can be a sign of termite problems, asbestos, mold, and any other potential problems or structural defects. A pest inspection or termite inspection is usually performed separately. You may also want to have separate inspections for things such as a problem with the water system or the presence of asbestos, mold, or radon.

A basic home inspection takes approximately 3 to 4 hours and the cost varies depending on the location and size of the home; as well as the experience of the inspector. Your home inspector(s) should be professional, licensed, insured, and highly experienced. You want someone who will guarantee the inspection and is licensed to practice in your state. You should also check to see if they are affiliated with any professional inspection organizations, such as the National Association of Home Inspectors. Do a search to be sure there are no complaints lodged against them. You want to ensure you receive a thorough inspection.

Finally, be sure your inspection is independent of any inspection report the seller may have. While you are not required to be there for the home inspection, it’s a good idea to accompany the inspector. You can ask questions during the inspection and he or she can show you any defects or other problems they find. You never want to skimp on the home inspection process. It’s worth every penny you invest it in for the peace of mind in knowing your home is safe.

Depending on the report from the home inspector, you may need to go back and renegotiate a price based on any repairs that are needed or major defects found. Some realtors will suggest having the homeowners fix various problems as a condition of a purchase. In the case of a serious defect, the seller may lower the asking price or you may want to reconsider your offer completely.

Call your Benchmark Federal Credit Union Mortgage Lender

If you secured your pre-approval, you will already have a lender, and we hope it’s your local credit union, Benchmark Federal Credit Union. Now it’s time to inform them you’ve found a home. If you haven’t already done so, you may want to work out the details of the loan, such as fixed or adjustable rate and also the term of the loan. You may also have to provide more details and information, such as purchase contract and property information, additional personal information, employment history and income, assets and liabilities.

Your lender will arrange for an appraiser to visit the home and provide an independent estimate of the value of the home. The appraisal assures that you are paying a fair price for the home. The appraisal is a report that states the value of the home based on the size, condition, and the features of the home; as well as the sales price of similar homes sold recently in the area. Your mortgage application will move through loan processing and then underwriting.

Once everything has been reviewed, the underwriter will approve or reject the loan. They may also approve the loan with certain conditions, such as an explanation for a poor credit score or late payment. Once your loan is approved, the file will move on to the title company. You will work with your lender and your real estate agent to ensure that all of the relevant paperwork is completed for your purchase.

Closing the Sale

Closing is when you will actually take ownership of the home. Once your closing date is set, you will schedule a time to do a final walk through of the home. It gives you one last opportunity to be sure everything is still in good order or any necessary repairs were made. Prior to your closing date you will receive a closing disclosure which summarizes the costs and fees associated with the transaction and the amount of money you will need to bring to the closing.

Closing costs can include many different things, such as attorney or escrow fees, property taxes to cover a certain period, loan origination fee, recording fees, title insurance, first premium of mortgage insurance, any document preparation fees, among other things. Everything will be spelled out on your closing disclosure.

During the closing, all parties meet and sign all of the paperwork involved in the sale. You will have to provide proof of homeowners insurance at this time. Funds are then transferred from you and your lender to the seller and the deed is transferred to you. All closing costs are also paid at this time, which can include all fees, such as title search and insurance, appraisal and inspection, points if applicable, and any other closing costs.

Congratulations, you are a new homeowner!

For more information on the home buying process contact a Benchmark Federal Credit Union Mortgage Lender. To view mortgage loan rates and terms or apply for mortgage pre-approval or a mortgage loan, visit us online.

As we bid farewell to the old year and usher in the new, it’s the perfect time to reflect on our financial habits and set the stage for a prosperous future. While budgeting might seem daunting to some, mastering the art of managing your finances is crucial for achieving financial goals and building a secure future. In this blog post, we’ll explore practical budgeting techniques and tools across various aspects of personal finance to help you embark on a journey toward financial success in the coming year.

Learn to Budget

Learning how to budget effectively is the cornerstone of financial success. Begin by tracking your income and expenses over a given period. Tracking will give you a clear picture of where your money is coming from and where it’s going. When budgeting, allocate your income into categories such as housing, utilities, groceries, transportation, and entertainment. Be realistic, and set aside funds for savings and debt repayment. Utilizing an online budget calculator can help. The goal is to spend less than you earn and clearly understand your financial priorities.

Build Credit Wisely

Your credit score plays a significant role in your financial health. A good credit score can help you secure lower interest rates on loans and credit cards, while a poor credit score can limit your financial opportunities. Start by obtaining your credit report from one of the major credit bureaus, such as Equifax, Experian, or TransUnion

To build and maintain good credit:

  1. Make timely payments on your credit cards and loans.
  2. Keep your credit card balances low and avoid opening too many new credit accounts at once.
  3. Regularly review your credit report for any errors and dispute inaccuracies promptly.
  4. Read Benchmark’s tips for improving your credit score to learn more.

Save for a Rainy Day

Life is often unpredictable, and surprise expenses can arise at any time. Building an adequate emergency fund is a critical aspect of financial planning. Plan to set aside three to six months’ worth of living expenses in a savings account that is easily accessible. This savings vehicle will act as a financial safety net, providing peace of mind and protection against unforeseen circumstances, such as medical emergencies or sudden job loss. Tap to learn how to maximize your savings with a high-yield account

Plan for Retirement

It’s never too early to start planning for retirement. Take advantage of employer-sponsored retirement plans, such as 401(k)s, and contribute consistently. If your employer offers a matching contribution, be sure to contribute enough to maximize this benefit—it’s essentially free money. Additionally, consider opening an Individual Retirement Account (IRA) for additional retirement savings. 

The power of compound interest is your ally when it comes to retirement planning. The earlier you start contributing to your retirement accounts, the more time your money has to grow. There are numerous online retirement calculators that can assist you in preparing for your retirement needs; simply google retirement calculators. 

Plan for Life Changes

Life is dynamic, and major life changes can profoundly impact your finances. Whether it’s getting married, having children, buying a home, or changing careers, adjusting your budget to accommodate these changes is essential. Anticipate upcoming life events and plan accordingly to ensure a smooth financial transition. Tap to read about the cost of various life changes, such as buying a home, a wedding, or a baby. 

Plan for a Home

If homeownership is on your radar, careful financial planning is crucial. Save for a down payment and consider the additional costs of owning a home, such as property taxes, insurance, and maintenance. Research mortgage options and interest rates to find the best fit for your financial situation. Homeownership can be a valuable asset and a key component of long-term financial stability. Benchmark’s Home Buyer’s Guide provides a wealth of information. 

Borrowing and Credit

While it’s important to be mindful of borrowing, there are situations where taking on debt is a strategic financial move. For example, using a mortgage to buy a home or taking on student loans for education can be considered investments in your future. When borrowing, shop around for the best interest rates and terms, and only take on debt you can comfortably repay. Benchmark offers loan options for every need. 

Budget to Invest for the Future

Investing is a powerful way to grow your wealth over time. To spread risk, consider diversifying your investments across different asset classes, such as certificates, stocks, bonds, and real estate. Take advantage of tax-advantaged accounts, like IRAs and 401(k)s, and explore other investment options, such as index funds and robo-advisors.

Investing requires a long-term perspective, so be patient and stay committed to your financial goals. Regularly review and adjust your investment portfolio based on your risk comfort, financial goals, and market conditions. Read our stock market basics or learn the value of adding certificates to your investment portfolio

Begin the New Year on Strong Financial Footing

The road to financial prosperity begins with sound budgeting strategies and a commitment to long-term financial health. By learning to budget effectively, building and maintaining good credit, saving for emergencies, planning for retirement and life changes, considering homeownership, managing to borrow wisely, and investing for the future, you’ll achieve financial success in the new year and beyond. Take the time to assess your current financial situation, set realistic goals, and make informed decisions that align with your vision of a prosperous future. Happy budgeting!

Learn more in our blog article “Money Makeover: Strategic Financial Resolutions for a prosperous 2024.” 

As the calendar flips to a new year, many individuals embark on a journey of self-improvement. Personal finance is a crucial aspect that often reaches the top of resolution lists. Setting financial resolutions for the upcoming year can pave the way for a more prosperous future. In this article, we will explore eight strategic financial resolutions for 2024. This will encompass achievable goals and practical tips to transform money management and build a solid foundation for financial success.

Establish Clear and Achievable Goals

A set of clear, achievable goals is the cornerstone of any successful financial resolution. Rather than generic aspirations like “save more money” or “spend less,” break down your objectives into specific, measurable, attainable, relevant, and time-bound (SMART) goals. For example, instead of a vague savings goal, specify an amount or percentage of your income that you aim to save each month. Whether building an emergency fund, paying off high-interest debt, or saving for a down payment, defining your goals sets the stage for a successful money makeover.

Build a Financial Safety Net

A sound financial resolution for 2024 involves prioritizing and building an emergency fund. Aim to save at least three to six months’ living expenses in a separate account. This fund is a financial safety net, providing a cushion for unexpected expenses like hospital bills, car repairs, or unforeseen job changes. Automate your savings by setting up direct deposit to an emergency fund, ensuring consistent contributions without the temptation to spend the money elsewhere. 

Benchmark FCU provides numerous savings vehicles, from basic and ultimate savings accounts to money markets, to help meet your emergency fund needs. Read our “Ultimate Guide to Choosing a High-Yield Savings Account.” 

Focus on Debt Repayment & Tackling High-Interest Loans

Another impactful financial resolution is to devise a plan for tackling high-interest debt. Identify outstanding debts, such as credit cards or personal loans, and prioritize repayment. Consider employing the avalanche or snowball method, where you either pay off the debt with the highest interest rate first (avalanche) or the smallest balance (snowball). Consistency is key. Allocate a portion of your budget specifically for monthly debt repayment and watch your financial burden lighten.

Invest for the Future: Start or Boost Retirement Contributions

Investing for retirement is an essential aspect of financial planning. If you haven’t already, make 2024 the year you start contributing to a retirement fund, such as a 401(k) or an Individual Retirement Account (IRA). If you’re already contributing, consider increasing your contributions. Please take advantage of employer matching programs, as they provide free retirement money. The earlier you start, the more time your money has to grow through compound interest, significantly enhancing your retirement nest egg. Tap to learn more about Benchmark’s Traditional and Roth IRA options and Coverdell Education Savings Account. 

Budgeting: Your Financial Roadmap

A well-crafted budget is an indispensable tool for financial success. Resolution-wise, commit to creating and sticking to a realistic budget in 2024. Track your income, categorize expenses, and identify areas to cut back or optimize spending. Utilize budgeting apps, such as EveryDollar or YNAB, to streamline the process and receive real-time insights into your financial habits. Regularly review and adjust your budget as your circumstances change, ensuring it remains a dynamic and practical financial roadmap.

Diversify Income Streams: Explore Side Hustles

In an ever-evolving job market, diversifying your income streams can add additional financial security. Explore opportunities for side hustles or passive income ventures. Whether it’s freelance work, online tutoring, or investing in a side business, diversifying your income can provide a financial cushion and help you achieve your financial goals.

Strive for Continuous Financial Learning

Commit to expanding your financial knowledge in 2024. Take the time to read books, attend workshops or follow reputable financial blogs, such as the Benchmark FCU blog. Understanding investment strategies, tax implications, and personal finance principles empowers you to make informed decisions. Consider consulting with your Benchmark Federal Credit Union representative or a financial advisor to receive personalized guidance tailored to your specific circumstances and goals.

Review and Adjust: Maintain Flexibility in Financial Planning

Financial resolutions should not be set in stone. Life is dynamic, and circumstances may change. Regularly review your progress, celebrate achievements, and reassess your goals. Be flexible in adjusting your financial plan to accommodate unexpected developments, such as job changes, family additions, or economic shifts. The ability to adapt ensures that your financial resolutions remain relevant and achievable throughout the year.

A Recap of Strategic Resolutions for 2024

Embarking on a money makeover journey for a prosperous 2024 involves a combination of strategic goal-setting and disciplined execution. Establishing clear and achievable goals, prioritizing emergency funds and debt repayment, initiating or boosting retirement contributions, embracing budgeting, diversifying income streams, and committing to continuous financial education will pave the way for a more secure new year. The key to success lies in consistency, adaptability, and unwavering commitment to your financial resolutions. Here’s to a year of economic empowerment and prosperity!

Stay educated in the financial world via the Benchmark FCU Blog for the most up-to-date information on scams and for important financial tips.

In an age where convenience is king, online shopping has become an integral part of our daily lives. With the surge in home deliveries, a new and sinister trend has emerged – the rise of delivery driver scams. Con artists don the guise of legitimate delivery drivers, weaving a web of deception that leads unsuspecting victims into a trap of personal information theft. This blog explores the tactics these scammers employ, shedding light on how they operate, and provides essential tips for recognizing and avoiding these malicious schemes. 

A Closer Look at Delivery Driver Scams 

The delivery driver scam typically begins with a text message. Victims receive a seemingly innocent message from someone claiming to be a delivery driver, expressing difficulty locating their house for a scheduled delivery. The text might even mention a surprise gift from an unknown sender, playing on the victim’s curiosity. The unsuspecting individual is then prompted to call a provided number to assist the fake driver in reaching their destination. 

Once the victim makes the call, the scammer employs various techniques to extract sensitive information. They may pose as a delivery service representative, asking for confirmation of the victim’s address or personal details to ensure a successful delivery. In more sophisticated scams, the con artist might claim that you must resolve a credit card issue to complete the delivery process, coercing the victim into revealing their credit card information. 

Tip Offs for Recognizing Delivery Scams 

  1. Unexpected Messages: Legitimate delivery services typically provide detailed tracking information and updates through official channels. Be wary of unsolicited messages claiming delivery issues or surprises.
  2. Generic Language: Scammers often use generic language in their messages to target a broad audience. Legitimate delivery notifications are usually personalized and specific to your order.
  3. Check the Tracking: If you receive a delivery-related message, cross-verify the information by checking the tracking details on the official website of the delivery service. Authentic messages should align with the tracking information.
  4. Caller ID Verification: Before calling any provided number, cross-check the caller ID with official contact details from the delivery service. Scammers often use generic phone numbers or ones that differ from official company lines.
  5. Be Skeptical of Surprise Gifts: If you’re not expecting a package or a surprise gift, approach such messages cautiously. Scammers frequently use the allure of unexpected gifts to manipulate victims. This is especially true during the holiday gift-giving season. 

Practical Tips for Protecting Yourself from Delivery Scams 

  1. Verify Before Responding: If you receive a message from a supposed delivery driver, verify the information independently before responding. Use official tracking tools or contact the delivery service directly through trusted channels.
  2. Guard Your Personal Information: Legitimate delivery services do not request sensitive information such as credit card details over the phone. Be cautious about sharing personal information and always confirm the request’s legitimacy.
  3. Use Official Contact Information: When in doubt, contact the delivery service using official contact information on their website or from previous official correspondence.
  4. Read Benchmark’s Blog to Educate Yourself: Stay informed about the latest scams and educate friends and family about the potential risks of scams by regularly reading the Benchmark FCU blog. Awareness is a powerful tool that hinders the efforts of scammers.

Don’t be Deceived by a Delivery Scam 

In the ever-evolving landscape of online interactions, it’s crucial to remain vigilant against deceptive practices. By understanding the tactics of delivery driver scammers and adopting preventive measures, you can safeguard yourself from falling victim to these elaborate schemes. Stay informed, stay cautious, and keep the wheel of deceit at bay. 

Stay safe from online holiday scams by reading our blog article “Too Good to be True: How to Avoid Falling for Fake Holiday Discounts Online” or learn more about delivery scams by reading our blog post on “Brushing Scams.”

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