Mortgage Payment Scams

Scam AlertThe Mortgage Payment Scam has been around a long time. Mortgages are recorded in the local county courthouse and are therefore public information.  It is just as easy for a criminal to get a hold of this information as anyone else, so be mindful of any solicitations you get in the mail regarding your property.

How does it work?

A member may receive a letter from a company other than their known mortgage company indicating that they purchased their Freedom mortgage and future payments are to be make to them, not us.  This is the entire SCAM.  Freedom does not sell the servicing of our mortgages to anyone.  If you receive such a letter, please disregard and report it back to us.

How can I protect myself from this type of scam?

Do:

  • Be wary of any solicitations demanding immediate payment or warning that you are late on a payment that is not from your known mortgage provider.
  • Call your mortgage provider to confirm that there have been no changes to your loan servicing agreement.
  • Report the letter to your credit union.
  • Use the Consumer Finance Protection Bureau’s online portal to file a mortgage-related complaint
  • Report any suspected scams to the Better Business Bureau (BBB). Don’t let those crooks walk free!

 Don’t:

  • Make a payment to anyone who is not your known mortgage lender without verified proof from your original lender.
  • Share any personal information with an unverified contact. If it’s personal info, make sure to keep it that way!
  • Click on links or download files from an unfamiliar email address.

Stay safe!

Freedom keeps all loans, including mortgages, in house for the duration of the loan term.  Your loans will not be sold to any other management company.  If you receive something suspicious via text, email, or mail, please don’t hesitate to reach out if you are unsure.  

Your Turn: Have you encountered a scam like this before? Tell us about it on Facebook, LinkedIn,Twitter, or Instagram @FreedomFedCU.

 

All You Need to Know About Home Equity Loans

Home Equity LoansAs you pay down your first mortgage or the value of your home increases, you develop equity. When you have equity built up in your home, borrowing against it with a home equity loan is a great way to tap into the money when you need it most. Many people take out a home equity loan to finance home improvements, pay for their child’s college education, cover unforeseen medical costs, and many other purposes. Here’s all you need to know about home equity loans.

What is a home equity loan? 

A home equity loan (HEL), or second mortgage, is a secured loan that allows homeowners to borrow against the equity in their home. The loan amount is based on the difference between the home’s current market value and the homeowner’s outstanding mortgage balance. Home equity loans tend to be fixed-rate, while the typical alternative, home equity lines of credit (HELOCs), generally have variable rates and allow the borrower to withdraw funds as needed.

How is a home equity loan amount determined?  

Your primary mortgage is the amount you borrowed when you first purchased your home. Over time, as you pay down the loan and/or the value of your residence increases, so does your equity. You can take a home equity loan out against the equity you have built up in your home, essentially borrowing against your home’s value minus what you still owe on your mortgage. It’s important to note that a home equity loan is a second loan against your home. You’ll still need to pay your primary mortgage along with new payments for your home equity loan.

A lender will typically want you to have at least an 80 percent loan-to-value (LTV) ratio once your home equity loan has been approved.

Interest rates on home equity loans 

Home equity loans typically have a fixed interest rate, making budgeting for the payments easy. The lender provides a lump sum payment to the borrower, which is then repaid over the life of the loan, along with a set interest rate. Both the monthly payment and interest rate will remain the same over the entire loan term, which can last anywhere from 5 to 30 years. If the borrower sells the home before the loan term is matured, the loan must then be repaid in full.

A home equity loan can be a great choice for a borrower with a one-time or straightforward cash need such as a home addition, large medical expenses, debt consolidation, or a wedding.

Are there any costs associated with home equity loans?

As with mortgage loans, there are closing costs associated with home equity loans. Closing costs refer to any fees incurred when originating, writing, closing, or recording a loan. These fees include application, appraisal, title search, attorney fees, and points. Some lenders may advertise no-fee home equity loans which require no cash at closing, but these will usually have other associated costs or a higher interest rate which can easily offset any gains.

What are the pros and cons of a home equity loan?

There are several advantages to taking out a home equity loan to fund a home improvement project or a large expense:

  • The amount of interest paid toward a home equity loan may be tax-deductible.
  • Interest rates on HELs are generally lower than those provided by credit cards or unsecured loans.

Home equity loans do have some disadvantages as well:

  • Using your home as collateral for the loan means risking foreclosure and the loss of your home if you default on the loan.
  • If your home value declines over the term of the loan, you may end up owing more than your home is worth.
  • You’ll need to pay closing costs and other fees when you take out a home equity loan.
  • You may qualify to borrow more than you actually need and ultimately end up using more than planned, which of course you’ll need to repay.

The hot real estate market has led to a boom in popularity for home equity loans. However, it’s important to weigh all factors carefully before determining if a home equity loan is best for your specific needs.

Freedom has Home Equity Loans and Home Equity Lines of Credit available.  Visit freedomfcu.org/personal/home-loans/ for more details. 

Your Turn: Do you have questions or advice about home equity loans?  Talk to us on Facebook, LinkedIn,Twitter, or Instagram @FreedomFedCU.

 

Why Your Kids Should Have A Youth Account

Ellie Lott

Ellie Lott
Guest Blogger
youngandtheinvested.com

“Ellie is passionate about millennial financial planning and uses her website to help educate her generation on making smart decisions with their money.”

Why your kids should have a youth account
Children are rarely too young to be taught financial education. A study conducted at the University of Michigan Center for Human Growth and Development indicated that children as young as five have already developed emotional reactions to saving and spending money.

One of the roles of parents/guardians in their kids’ lives is to protect and nurture them into independent and responsible members of society. While living with the young ones may be fun, one day they will inevitably have to leave home to fend for themselves. Often, financial independence is an indicator of whether they are ready to sustain themselves. Opening a youth account is a great way to kick-start your kids on the path to financial success.

What is a Youth Account?

The US law prohibits minors from opening a bank account. However, this should not prevent them from having a savings account. A youth account is a savings account that is under the minor’s name with a custodian as joint on the account. In most cases, the adult manages the account until the minor turns eighteen, although the age may vary depending on the financial institution. The adult plays a supervisory role and may impose certain controls such as setting a withdrawal limit to ensure it is well-managed.

Benefits of a Youth Account

Besides the obvious reason which is to gain interest in their savings, here is why you should encourage your kids to open a youth account and develop healthy financial habits.

1. They learn financial literacy

Financial management is an essential life skill that is not taught conventionally in a classroom. Since not everyone grows up in a family where money matters are taught, when teens have their own money in their accounts, they are likely to learn a lot about managing their finances. From the basics of how to set financial goals and budgeting to the more complex issues of how to manage debt. Having a youth account goes a long way in enabling kids, teens, and young adults to take full control of their financial future and possibly pass on the acquired knowledge to friends or family in the future.

2. Cultivates responsibility

A savings account enables kids to keep track of their contributions, savings as well as withdrawals. This teaches them, from a tender age, the correlation between choices and consequences. The more they save, the faster they can achieve their financial goal. This is not attainable without regularly contributing to the account and resisting the urge to spend.

3. Teaches them the value of investing

As a kid, grasping the concept of interest may be difficult. However, a youth account simplifies it by practically showing kids how their savings increase over time. It teaches them practically how saving not only safeguards their money but can also earn them more money. As their savings increase, so does the interest earned. Since most accounts can be accessed digitally, they can notice any interest earned on their savings, however small it may be.

4. Develops their banking relationship

Developing a relationship with financial professionals is another great bonus. For starters, your kids can better utilize the services offered in financial institutions. Credit unions offer many other services besides savings and checking accounts. They offer services like budgeting basics, debt consolidation services, and ultimately the best stock picking services for the long term.

Having a financial specialist could go a long way in ensuring children achieve their financial goals. In developing a one-on-one relationship with the credit union, they may appropriately analyze your child’s spending and saving habits and offer advice. They can assist the child beyond verifying his/her deposit and in this way, he/she becomes more than just an account number.

5. Teaches compassion and perspective

In some ways, a youth account can help kids understand how financial resources are tied to what people have and don’t have. Through this, they can start to form a bigger picture about life and how some people are more or less fortunate than others.

Additionally, the simple act of saving, watching their money grow, and using their money to buy what they need teaches them that to purchase things in the future, one needs to budget and save. It also enables them to understand that as a family, certain sacrifices need to be made to meet certain financial obligations.

6. Prepares them to be financially independent

As kids grow up, they often express a desire to handle bigger responsibilities. What better way to ensure they do this by helping them open a youth account? In opening one, they are entrusted with the responsibility of managing their funds. There is no more begging or pleading for money, what they save is what they get. Having the ability to budget, reference previous spending, and curb their enthusiasm to overspend their money prepares them to be financially independent adults.

Closing thoughts

There is no right time for kids to open an account, but given life’s unpredictable nature, having a youth account would secure your child’s financial future and teach them at the same time.

If you’re ready to open a youth account, visit Freedom’s Youth Account Webpage to learn about their tiered options and other youth financial products.  Depending on your employer, you may also qualify for a $25 youth match. Ask by calling 800-440-4120 or email [email protected].

About Freedom Federal Credit Union

Freedom Federal Credit Union is proud to be your financial partner. Freedom serves and is open to anyone who lives, works, worships, attends school, volunteers, or has family in Harford or Baltimore County, MD. As a credit union, we are committed to putting you first, not shareholders, and helping you achieve your financial goals.

Learn more at freedomfcu.org/personal/youth-accounts or call us 800-440-4120 to see how we can help.