6 Reasons to Take Out a Smaller Mortgage Than You Qualify For

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Whether you’re buying your first home or your fifth, being approved for a larger-than-expected mortgage can be intoxicating. But qualifying for a big loan isn’t the same as being able to afford it — and you don’t want your biggest asset to ruin your finances.

Look at what happened during the Great Recession: Believing their homes would appreciate in value, many people borrowed more than they could handle. When their homes lost value instead, those homeowners were stuck with underwater mortgages — loans that exceeded their home’s worth. This made it impossible for many to refinance or sell their homes for a profit, and led to a flood of foreclosures.

Before you sign up for a mortgage, ask yourself “How much house can I afford?” Many financial advisors and consumer advocates recommend that you borrow less than you qualify for. These are a few of the reasons why.

1. You’ll lower your risk of missing a payment. If your housing costs are on the edge of what you can afford, “the odds of not being able to make payments in the event of an economic emergency or a job loss is much too high,” says Casey Fleming, a mortgage advisor with C2 Financial Corporation and author of “The Loan Guide: How to Get the Best Possible Mortgage.”

Missing a mortgage payment can have a domino effect on your finances. “If you are at risk of missing a payment,” Fleming says, “you are at risk of being in default, risk of ruining your credit, and risk of foreclosure, which would wipe out your investment in the home.”

To ensure that the home you’re considering is within your budget, take all housing costs into account, including your mortgage payments, property tax payments, insurance premiums, maintenance costs and, if applicable – homeowners association fees.

2. You’ll be prepared for emergencies. Life can be rough – you might lose your job or face a medical emergency that drains thousands from your savings. You might have to move before you’re able to build significant equity in your home.

“Many people are on the razor’s edge when it comes to being able to tolerate any kind of economic disruption in their life,” says Brian Sullivan, a supervisory public affairs specialist with the U.S. Department of Housing and Urban Development.

Close to half of all American households don’t have enough savings to stay above the poverty line for three months if they lost their income, according to recent findings from the Corporation for Enterprise Development.

Getting a smaller mortgage than you qualify for will allow you to stash away extra money so you can handle hardships. Experts advise keeping enough money in your savings to cover six months of living expenses. You should also be saving for life after retirement.

“If all of your money is going to your monthly housing costs, then you aren’t able to invest in your retirement accounts or other savings,” Fleming says. “The closer you are to the maximum qualifying mortgage, the closer you are to having too little disposable income and inadequate reserves.”

3. You can more easily afford other costs. Part of the fun of owning a home is filling it with things you want and need. If you have children, you might need to set aside money for college. Let’s also not forget the costs of fixing a leaking roof or a busted water heater.

If you have to make other debt payments on credit cards, auto or student loans — it’s in your best interest to opt for a smaller monthly mortgage payment, and put your savings toward these expenses.

4. You can avoid using your home like an ATM. When less of your monthly budget is taken up by the mortgage, you’ll have more disposable income and be less tempted to use a cash-out refinance— the process of replacing your current mortgage with a larger one and pocketing the difference to buy a new car or pay off credit card debt.

A cash-out refinance can be risky because you’re putting your home on the line. If you miss a few credit card payments, you won’t lose your home. It’s another story when you can’t make higher mortgage payments after a cash-out refinance. “A home is shelter first and foremost, as opposed to an ATM for wealth creation,” HUD’s Sullivan says.

5. You’ll be prepared if property taxes rise. “You don’t know what will happen to property taxes in the future, which affect your mortgage payment,” says Lorraine Griscavage-Frisbee, deputy director of the Office of Outreach and Capacity Building at HUD. Depending on where you live, property tax rates may increase annually.

“Many municipalities tie taxes on their properties to the current value of the home. If someone is maxed out on their mortgage payment, they may not have any wiggle room if next year the tax bill goes up because of appreciating property values,” Griscavage-Frisbee says.

6. You can decrease your risk of having an underwater mortgage. Your home’s value isn’t guaranteed to increase over time. If it drops and you don’t have enough equity built up, you could end up owing more than the house’s market value, which is sometimes called having negative equity.

Over 4 million homes were in negative equity positions at the end of 2015, according to a report by real estate industry research firm CoreLogic. That’s an improvement compared with conditions immediately after the last housing bust, but Fleming says it’s still dangerous to count on home appreciation.

“If real estate values rise dramatically, it may work out well in the end anyway, but it seems very dicey to put all your eggs in one basket. If it doesn’t work out, you could end up with no assets at all,” he says.

A borrowing rule of thumb:
So how much should you borrow? Your debt-to-income ratio — the percentage of your pre-tax income that goes toward mortgage and other debt payments — is one way to figure out how large your loan should be. Professionals say 28% is a safe target.

You can also use a mortgage calculator, like our free mortgage payment calculator at firstffcu.com – to see what you might pay and be able to afford each month. In some cases, it does make sense to borrow what you qualify for. We also have a mortgage qualifier calculator at firstffcu.com. If you have a high income, plan on staying in your home for at least seven years, are buying in a competitive market, or have sky-high rent payments, there is some flexibility in the 28% rule. But if you can go lower than 28%, you should. That way, you’ll be more likely to feel comfortable — financially and otherwise, living in your home.

Stop into any First Financial branch and we can help you with your home buying journey. We provide great low rates and offer a variety of Mortgage options – to speak with First Financial’s Loan Department, call us at 732.312.1500, option 4.* 

First Financial also offers a Mortgage Rate Text Messaging Service so you can receive updates on our low Mortgage Rates straight to your mobile phone. You can subscribe to our Mortgage rate text message service by signing up for text alerts, and receive instant notification when our mortgage rates change.**

*APR = Annual Percentage Rate. Subject to credit approval. Credit worthiness determines your APR. Rates quoted assume excellent borrower credit history and are for qualified borrowers. Your actual APR may vary based on your state of residence, approved loan amount, applicable discounts and your credit history. Higher rates may apply depending on terms of loan and credit worthiness. Minimum mortgage loan amount is $100,000. Available on primary residence only. The Interest Rates, Annual Percentage Rate (APR), and fees are based on current market rates, are for informational purposes only. Rates and APRs listed are based on a mortgage loan amount of $250,000. Mortgage insurance may be required depending on loan guidelines. This is not a credit decision or a commitment to lend. If mortgage insurance is required, the mortgage insurance premium could increase the APR and the monthly mortgage payment. See Credit Union for details. A First Financial membership is required to obtain a Mortgage and is open to anyone who lives, works, worships, or attends school in Monmouth or Ocean Counties.

**You must check the Text Message Signup box when registering in order to receive rate change text messages.+ If you do not receive an automated confirmation message after enrolling, please text “Yes” to (201) 808-1038

+The Text Message Signup box must be checked in order to receive text messages. Standard text messaging and data rates may apply.

Article Source: Michael Burge for Nerd Wallet, http://www.huffingtonpost.com/nerdwallet/6-reasons-to-take-out-a-s_b_11077442.html

9 Signs You’re Spending More Money Than You Have to and How to Fix It

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Sometimes it’s tough to find a healthy balance when it comes to your finances. While it’s nice to treat yourself every so often, doing it on the regular can be one of the signs that you may be spending too much money. Even though money is a taboo topic and can be a sensitive issue, it’s important to be honest with yourself. While it would be great to make millions of dollars and spend it frivolously all over town, you also need to keep your financial future in mind.

According to the financial app Mint, you might want to be more careful with your money if you’re not paying your bills on time, you’re paying for your necessities with credit cards, or you’re struggling to meet minimum payments. If you find yourself dealing with these things on the regular, it might be a good idea to create a budget and start using cash so you can keep an eye on your finances and spend less money. Feeling stressed about money is something that no one should have to deal with on a daily basis – that’s why it’s important to be honest with yourself and be aware of the signs that you’re spending too much.

Need some help in that department? Here are nine signs you may be spending more money than you need to.

1. You Carry A Large Balance On Your Credit Card

Having more than 30% of your credit card limit on your credit card is considered to be a big no-no. If you find that your credit card limit is higher than your savings account, you might want to switch things up. Some credit cards do have tools where you can track your expenses online. You can also use money apps such as Mint to figure out exactly where everything is going.

First Financial’s Visa® Platinum Cash Plus Credit Card comes fully loaded with  a lower APR, no annual fee, a 10-day grace period+, uChoose Rewards redeemable for merchandise and travel, and so much more!* 

2. You’re Easily Swayed By Your Social Activities

It isn’t fun missing out on adventures with your friends. But while happy hour sounds awesome, paying your bills is even better. According to Business Insider, author of Living Well, Spending Less: 12 Secrets to the Good Life, Ruth Soukup says, “This can be as innocent as going out to eat when you’ve already exhausted your restaurant fund for the month, or as extreme as paying rent you can’t afford in order to keep up with your friends.”  It really won’t be fun when you can’t afford your rent – stick to your budget and don’t spend outside your means.

3. You Don’t Have An Emergency Fund

Ideally, you want to have 10 percent of your income in your savings, but even five percent is good – as long as you have some type of savings built up. Essentially, you want to make sure that you have enough in your bank account for those rainy days. According to Business Insider, billionaire John Paul DeJoria – it’s important to always have at least three to six months’ worth of savings in your account, depending on how much you make annually.

4. You’re Living Paycheck To Paycheck

You probably need to re-adjust your finances if you find yourself living from paycheck to paycheck and not saving any money at the end of the month. According to U.S. Money, if you have a budget, but still find yourself short at the end of every month, it might be time to cut your expenses and re-evaluate.

Check out our free budgeting and savings calculators at firstffcu.com to get started!

5. You Don’t Have A Budget

Certified money coach Ashley Feinstein, founder of “Knowing Your Worth” says, “I recommend that every client keep a money journal for at least a couple of weeks to get conscious about where their money is going.” If there’s one thing you need to do ASAP on this list, it’s creating a budget to help get your finances on track.

6. Your Fridge Is Empty

You might be thinking that this has no correlation with your spending habits, but it actually does. Think about it: if your fridge is empty and you never have to do the dishes, it probably means you spend a lot of money eating out. According to the website Cheat Sheet, if you’re spending an average of $45 for two people and eating out for dinner once or twice a week, you’ve probably already spent more than you would on a week of groceries.

7. You Borrow From Friends Or Family

While it’s probably okay to borrow every now and then (in addition to paying them back on a timely manner), you don’t want to be borrowing from friends or family every time you need to pay your rent.  According to the Huffington Post, if you’re constantly asking your friends and family for money, then it means you either are spending way too much or you need to look for a new job.  Not to mention, constantly borrowing from a loved one can put strain and tension in your relationship.

8. You Don’t Know Where Your Money Is Going

If you find yourself forgetting where all your money is going to, whether you use cash or credit, then it might be a sign that you need to fix your finances. According to U.S. Money, people who shop a lot tend to ignore exactly how much money they spend. It’s best to figure out a budget with exactly how much spending money you have, so you know your spending limit.

9. You Feel Stressed About Money

The American Psychological Association conducted a survey and found that 72% of Americans were stressed about money at least once in the month. One of the key signs you need to pay attention to is how money actually makes you feel. Sometimes finances can make you feel edgy or anxious when you don’t have control over them. However, if you keep track of every penny that goes in and out of your account, then that anxious feeling could subside.

While spending money may bring you happiness, it’s important to budget your finances so you can have some in savings. While there are plenty of ways to spend your money, it doesn’t necessarily mean you should.

*APR varies up to 18% for purchases, when you open your account based on your credit worthiness. The APR is 18% APR for balance transfers and cash advances. APRs will vary with the market based on the Prime Rate. Subject to credit approval. Rates quoted assume excellent borrower credit history. Your actual APR may vary based on your state of residence, approved loan amount, applicable discounts and your credit history. No Annual Fee. Other fees that apply: Cash advance fee of $10 or 3% of the total cash advance amount—whichever is greater (no maximum), Balance transfer fee of $10 or 3% of the balance—whichever is greater (no maximum), Late Payment Fee of $29, $10 Card Replacement Fee, and Returned Payment Fee of $29. A First Financial membership is required to obtain a Visa® Credit Card and is available to anyone who lives, works, worships, or attends school in Monmouth or Ocean Counties.

+No late fee will be charged if payment is received within 10 days from the payment due date.

Article Source: Raven Ishak for Bustle.com, http://www.bustle.com/articles/170200-9-signs-you-may-be-spending-more-money-than-you-have-to-how-to-fix 

4 Ways to Avoid Cybercrime When Banking and Shopping on Your Smartphone or Tablet

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The nature of identity fraud is changing. With the rollout of smart chips in credit and debit cards making it more difficult to steal using cards themselves, thieves have their eyes on your data instead.

If you don’t protect yourself, you could join the millions of Americans who reported they got hit by identity thieves.

While mobile banking and payments are certainly making it easier and more convenient to handle one’s finances and conduct business, the same ease and convenience make them a ripe target for criminals, says Madeline Aufseeser, CEO of fraud prevention company Tender Armor.

“Because merchants are trying to make it easier for consumers to shop online and on their phones, all your credentials are stored online, including payment information, and you don’t even need a basket — just click a button and boom, you get charged. Because they have gone down this path of making things easier to purchase online, it makes it easier for the fraudsters to get to the data,” said Aufseeser.

Consumers are turning to their phones more often to manage their finances, from depositing funds to paying bills to splitting dinner and a movie among friends. Mobile payment apps are growing in popularity, particularly among Millennials.  A survey by FICO found that 32% of consumers 18 to 34 had used some kind of mobile payment app, and 23% had used a peer-to-peer lending app.  According to consulting firm Accenture, 94% of consumers under 35 access their banking services through the Web and mobile apps.

Don’t be a victim!  Here are 4 ways to protect yourself and your finances:

Safety tip # 1: Update your OS

People who are not careful about how they use their mobile payment apps, where they use them and how they manage their mobile devices, are putting themselves at risk. For starters, avid users of mobile payment services should always keep their mobile operating system, or OS, up to date. Ignoring updates for Android or iOS means ignoring free security patches for vulnerabilities hackers already know how to exploit.

Safety tip # 2: Update that app

The same goes for the apps themselves — keeping a payment app completely up to date means keeping its security protocols as strong as they can be. Some apps introduce new security features, like biometric sign-in capabilities. Aufseeser stresses the importance of two-factor authentication for passwords and personal information to double down on account protection.

Safety tip # 3: Beware of Wi-Fi

Accessing a mobile banking app or a payment app while on public Wi-Fi also makes it easier for criminals to “eavesdrop” on the information one’s phone is sending and accessing, exposing usernames, passwords and any stored information on the phone — including saved credit or debit card info from payment apps. Consumers with data to spare should limit their use of public Wi-Fi hotspots when accessing sensitive information, checking a bank statement, sending a payment, etc. Keep in mind, fraudsters and hackers can eavesdrop on any information sent over public Wi-Fi, so mind your browsing and emailing in public spaces.

Safety tip #4: Watch out for person-to-person payments

Besides guarding yourself from hackers, you have to be on guard about the people you do business with as well. The wild west of mobile payments has tangible, real-world fraud risks associated with it. The incredibly popular person-to-person payment app Venmo, has exposed some of the weaknesses in the mobile payment ecosystem.

While users expect their payments to be safe and instantaneous, the reality is more complicated. Payments take time to process, which leaves a period of time during which scam artists can abuse a clause in Venmo’s user agreement that prohibits “business, commercial, or merchant transactions.” The buyer cancels their payment and the seller cannot get the money back because, technically, they broke Venmo’s rules. In short: If you sell something to someone and they take back their payment, you’re out of luck.

This phenomenon is not unique to Venmo — various frauds and scams have plagued person-to-person payment sites and apps since the dawn of the Internet. Fraudsters populate websites like Craigslist and Ebay and use PayPal scams to rip off unsuspecting users, like having a seller send their item to a different address than is listed on the buyer’s PayPal account, effectively voiding any protections from PayPal and allowing the scammer to recall their payment and keep the item. However, as the Consumer Federation of America noted, there is no federal law that provides payment dispute rights.

Without laws in place, it falls to the company that owns the payment platform to resolve disputes — and when it comes to cybercriminals and fraudsters, they are pretty good at covering their tracks and leaving their victims high and dry. The moral of the story is – be mindful when sending payments with your mobile phone or tablet.

Article Source: 

http://www.usatoday.com/story/money/personalfinance/2016/04/20/security-identity-theft-cybercrime-banking-shopping-mobile-phones/82466908/ by Benjamin Mitchell

Press Release: New Corporate Office is Open!

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Press Release

2016 New Corporate Office Opening - June Staff Photo

Pictured above: First Financial staff in front of their new corporate office that is now open!

First Financial Federal Credit Union’s new corporate office is now open (www.firstffcu.com) and located at 391 Route 9 North (next to the Howell Park & Ride) in Freehold, NJ 07728.

The credit union’s new corporate office is located on the same property as their newest branch which opened in early 2015, the Freehold/Howell Service Center (389 Route 9 North).  This branch now serves about one third of the credit union’s nearly 19,000 members.

This new corporate office boasts two stories, spans 20,000 square feet, and has the same modern design as First Financial’s newest branch directly in front of it.

In regard to the credit union’s new corporate location, Issa Stephan, First Financial’s President/CEO stated, “We are dedicated to Monmouth and Ocean county residents and businesses, and we were fortunate enough to be able to buy this land on a main highway like Route 9 and build our new corporate offices. The new building will provide enhanced operational efficiencies that will help us to grow and evolve to keep pace with our members’ needs.  The corporate location represents our commitment to our members and our investment in Monmouth and Ocean counties to deliver a member-centric approach to banking.  This is a win-win-win for New Jersey, for our First Financial employees, and for our members.”

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About First Financial Federal Credit Union:

First Financial Federal Credit Union (formerly Mon-Oc Federal Credit Union) is a not-for-profit financial cooperative whose goal is to provide the highest level of quality products and personalized services while maintaining financial integrity and stability.  Our vision is to be a long-term financial partner with our Members. While First Financial has a highly trained, professional staff using the latest technology, we also pride ourselves on our personal touch. Unlike huge banking conglomerates, policy setting and overall strategic direction of First Financial are overseen by a volunteer Board of Directors made up of credit union members. The credit union is federally insured by the NCUA. For more information on First Financial, visit www.firstffcu.com.

9 Hacks for a Perfect Monthly Budget

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While the word “budget” may want to send some of us screaming in the other direction, creating a successful budget is actually one of the biggest gifts we can give ourselves. It not only helps you out financially, but it does a ton to reduce the day-to-day anxiety so many of us feel when it comes to our finances.

If you’re losing sleep over your monthly finances but don’t know where to begin, here are eleven helpful tips for getting started with a monthly budget.

Grab Your Calculator and Block Out Some Time

Grab your calculator, a pen and paper, and open that Excel doc — and most importantly, block out some time for this. Really figuring out what you spend can take a few hours, and one of the most important parts of this process is simply scheduling some time to do it.

Record Your Take-Home Pay

The first step in any budgeting process is to figure out how much you take home each month. Don’t include anything that automatically gets subtracted, like a 401k or taxes — you just want to know what you actually have in your pocket each month.

Subtract The Essential Expenses

Subtract all of the “essential” expenses you absolutely have to pay each month, like student loans, rent, car payments, cell phone, etc. Take time to really think about every bill that comes in.

Allocate For Savings

You now have the amount of money you can use for personal choices — as in you can literally do whatever you want with it. Things like groceries, clothes, and take out all fit into this category. And in a piece for Nerd Wallet, financial writer Anika Sekar says this is now when you allocate for savings (or “paying yourself first” as some retirement planners put it). She recommended saving at least 20 percent after taxes, which comes to about 12-16 percent pre-tax. If you already accounted for a retirement fund in a previous step, you can factor it into this assessment.

Assess The Numbers

Now is the time when you assess the balance of your numbers. In a piece for the financial site Learnvest, financial writer Laura Shin recommended the 50/20/30 rule of thumb. This system says that no more than half your income should go to necessary expenses, no more than 20 percent should go to savings, and no more than 30 percent should go to everything else. If your ratio is coming off far from this, think about re-balancing.

Get Into The Nitty-Gritty

Now it’s time to break down that 30 percent, “personal choice,” portion of your budget. Figure out all the little things you spend on each month — from coffee, to manicures, to ordering in. It’s important to be realistic during this process.

Make Some Cuts

It’s entirely possible that after completing the above step you realize that you spend way more than your allocated 30 percent on random stuff. This is the stage where you might need to figure out where you can cut some expenses. Maybe it’s making coffee at home, or limiting yourself to a take out order just once a week, or maybe it’s not letting yourself “just pop in” to a store after work because you know you always end up buying something.

Consider A Money Tracking App

If all of this seems overwhelming, consider a money-tracking app on your phone. DailyWorth.com recommended Mint.com, Goodbudget, and Mvelopes as a few of their top choices for personal budget helpers, but you can definitely research around to see which one best suits your needs.

Remember — Treat Yourself Sometimes!

Budgeting doesn’t mean restriction. It just means knowing where your money is actually going. Don’t get overwhelmed at the thought of a monthly budget or think a solid budget is out of reach. Just remember it’s about informed choices so you can enjoy the money you make!

First Financial Foundation Awards Classroom Grant to Cathy Heuser of Lanes Mill Elementary School

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Press Release

Heuser

L to R: Cathy Heuser, EXCEL Teacher and Theresa Goodfellow, Assistant Vice Principal at Lanes Mill Elementary School in Brick, NJ

WALL, N.J. – Lanes Mill Elementary School EXCEL teacher, Cathy Heuser, was surprised by members of the First Financial Foundation with a $500 classroom grant for the 2015-2016 school year.

Mrs. Heuser submitted a grant application to purchase materials to help with environmental projects in the Science, Technology, Engineering and Mathematics (S.T.E.M) classroom in her school in Brick, NJ. This would allow her to buy advanced wind experiment kits, sensors, batteries, and circuit kits so students would be able to use the gathered information about gear ratios, generators, polarity, and vertical axis to create alternate designs for wind turbines.

“With the speed of technology growing exponentially, the students of today are likely preparing for jobs and careers that do not yet exist. Therefore, it is imperative that educators take on the role of the facilitator; guiding students to develop their skills to think critically, use logical reasoning, problem solving, working cooperatively and communicating,” said Heuser. “It is my intention to use the award to help my students realize their personal strengths and use those strengths to teach them how to be lifelong learners. By investing in the S.T.E.M. classroom today, we are investing in our students’ future.”

Since First Financial began with a group of Asbury Park schoolteachers back in 1936, the credit union has not forgotten its educational roots. That is why its Foundation offered current Monmouth and Ocean County educators six (6) classroom grants to use at their schools for the 2015-2016 school year.

“Education has and always will be a pivotal piece of our organization, and we’re delighted to be able to help our local educators enhance their classroom experience,” noted First Financial President & CEO, Issa Stephan.

Stephan also noted that the Foundation committee had a tough job of choosing just six winning teachers out of the numerous applications received this year. “We received dozens of heartening essays from educators hoping to use the grant money to implement or maintain a variety of creative programs in their schools such as purchasing basic skills materials for struggling students, funding a thanksgiving feast for the less fortunate, integrating digital voice recorders for students to practice second languages, new tables for a classroom, iPads, updated software, and pencil grips for students in pre-K through 2nd grade – to name a few,” said Stephan. “We wish we were able to reward each and every one of our participants, and after extremely careful consideration we selected the six classrooms in which we felt the grant money would have the largest impact.”

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About the First Financial Foundation: Since 1994, First Financial has supported the Monmouth & Ocean communities with the Erma Dorrer Scholarship Program. Today, that program has been extended into the First Financial Foundation to assist charitable organizations of the Monmouth & Ocean County Communities.  The First Financial Federal Credit Union Foundation is a non-profit working to support a variety of community programs and organizations throughout Monmouth and Ocean Counties.  We direct 100% of your contributions to programs because all administrative expenses are paid for by First Financial Federal Credit Union.  To learn more, visit www.firstffcu.com.