Should You Pay for Mortgage Points?

Posted by SIU Credit Union on Oct 9th, 2009 | View Comments

You’ve just bought your dream home and now your finalizing your mortgage.  Your lender ask if you want to purchase “points” on your mortgage and now you’re confused.  Should you or shouldn’t you?   What exactly are these points that your lender is talking about?

Mortgages come with “points” – a polite synonym for fees or premiums that your lender charges for loan origination or refinancing. The math on points is simple: one point equals 1% of the amount of the loan you take out, two points equal 2%, and so forth. While the math is easy, the real value of a point is not always so simply calculated.

There really is a point. Why would you want points? Well, when you buy a point or two along with your mortgage, you get a lower interest rate and a lower monthly payment. Pay $3,000 for a point now, and you could save that much and more later on over the course of the loan.
 

What’s the Point?

But it may seem pointless. The problem is, points don’t move when you do. Who stays in one home for 30 years these days? If you have a 30-year loan and you sell your home and move five years from now, you lose the points and the benefits that go with them. The same applies when you refinance. There’s also the interest rate aspect. Let’s say you buy two points at 6% interest when you get your mortgage. What if two years later, interest rates fall to 4%? You’ll regret your purchase.

Are There Tax Benefits?

Sometimes. Usually, points are amortized over the duration of your mortgage – that is, paid off in installment payments over the life of the loan. But you might be able to deduct the cost of these points at tax time.

If you took out your mortgage to buy or refinance your primary residence, you could qualify for a deduction in the tax year you took out the loan, if your loan meets certain conditions. The IRS has a 9-point test, and the key points are:

1. the points must be a percentage of a principal amount clearly defined on the settlement statement
2. the points can’t be paid in place of separately stated amounts elsewhere on the settlement statement
3. funds supplied by the buyer + points paid by the seller must be equal to or greater than points charged
4. points charged must not be excessive, and
5. the charging of points must be “an established business practice” for such a mortgage. If you buy a home and the seller pays any points, you can deduct those points.

If you’re refinancing, there is no quick tax break. Points have to be amortized, unless you are using part of the loan for home improvement. Then a partial deduction is allowable.

If you’d like more information on mortgages and the financial questions linked to them, speak with a qualified mortgage professional today.

This was prepared by Peter Montoya, Inc., not the named Representative or Broker/Dealer, and should not be construed as investment advice. Neither the named Representative or Broker/Dealer give tax or legal advice.

Jeff Rose is an Illinois Certified Financial Planner and co-founder of Alliance Investment Planning Group. He is also the author of Good Financial Cents, a financial planning and investment blog. You can also learn more about Jeff at his website Jeff Rose Financial.

Get Back in the Game After a Job Loss

Posted by SIU Credit Union on Oct 8th, 2009 | View Comments

A major challenge when losing a job is to move ahead and find new work, while trying to process what happened.

These steps can help jumpstart your job search:

* Get the word out. In addition to getting moving as soon as possible, the most important thing to do is communicate. Let everyone know you’re looking for a job.
* Network. The more people who know you’re looking for work, the better, and don’t forget former co-workers. Experts agree that the best way to find a new job is through personal and professional contacts. Job seekers have a much easier time job hunting if they keep current a copy of their contact database and personal files.
* Establish a daily routine. The job hunt is your new job.
* Be flexible. Finding new work will be easier if you are. For example, consider alternatives to one traditional job, such as a couple of part-time jobs.
* Consider temp work, especially if you need work now. Some income is better than none at all, especially if you need it to keep you or your family financially stable. Don’t make the mistake of holding out for your dream job or for a job with a salary that’s unrealistic in the current economic environment. Besides bringing in some much-needed money, you can try to work on weeknights and weekends, leaving time for job hunting during the day. It also can be a good way to position yourself for a full-time job.
* Consider retraining or going back to school, especially if the hiring outlook in the field you came from is bleak. If you’re deficient in a basic skill, many state employment services offer computer classes, for example.

Remember that perseverance and fortitude may be tough to measure, but they’re indispensable if you’re going to be successful in finding new work, especially if nothing breaks right away. Don’t forget to take some time for yourself too. Find some balance, and keep your mind engaged by continuing to read publications related to your field of expertise as well as recreational sources.

Contact SIU Credit Union. Our professionals are here to help. Don’t wait until you’re in even deeper trouble financially. We can help you through this difficult time.

Business of the Year — Metropolis

Posted by SIU Credit Union on Oct 7th, 2009 | View Comments

2008 ribbon cutting at new Metropolis Branch

Last night, we received the  Large Business of the Year Award at the annual Metropolis Chamber of Commerce banquet. This is a huge honor for us. In October of 2008, SIU Credit Union completed a merger with Massac County Credit Union, in Metropolis. During the past year, we’ve spent a lot of effort introducing SIU Credit Union to our new MCCU members and to the Metropolis community. From corporate sponsorships of their large festivals, to golf outings and Chamber meetings, we’ve been there talking about our commitment to the community. Last night, our efforts were validated and we are honored.

Scam Alert From the IRS

Posted by SIU Credit Union on Oct 5th, 2009 | View Comments

In recent weeks, a phony e-mail claiming to come from the IRS has been circulating in large numbers. The subject line of the e-mail often states that the e-mail is a notice of underreported income. The e-mail may contain an attachment or a link to a bogus Web page directing taxpayers to their “tax statement.” In either case, when the recipient opens the attachment or clicks on the link, they download a Trojan horse-type of virus to their computers.Malicious code (also known as malware), of which the Trojan horse is but one example, can take over the victim’s computer hard drive, giving someone remote access to the computer, or it could look for passwords and other information and send them to the scammer. The scammer will then use whatever information they gather to commit identity theft, gain access to bank accounts and more.

Marion Chamber Business After Hours Event

Posted by SIU Credit Union on Oct 2nd, 2009 | View Comments

Last week, SIU Credit Union hosted the Marion Chamber of Commerce’s Business After Hours event. Over 50 Marion business leaders attended the reception. Our friends at Asian Bistro catered the event. It was great to get to know the movers and shakers in Marion and to talk with them about the services

Credit Union staff offer a glass of Alto Vinyard Wine to Joni, with the Marion Chamber of Commerce.

 SIUCU can offer them. SIU Credit Union has added business loan and deposit accounts to our list of products and services. For over 70 years, we’ve been a major player in the consumer financial market. We’re excited to expand the level of service and the competitive pricing structure into the business market.

Credit Unions Top Satisfaction Survey

Posted by SIU Credit Union on Oct 2nd, 2009 | View Comments

Credit unions are meant to serve their members, and they are known for achieving high customer satisfaction. So it comes as no surprise that a recent study shows credit unions outperform both large, national banks and community banks in terms of customer satisfaction with online banking.

A 2009 ForeSee Results/Forbes.com study of online banking gave credit unions a customer satisfaction score of 86, higher than both large banks and smaller, community banks. Why are credit union members so satisfied with their online banking? They are happier with tasks, transactions, and Web site performance, and they feel more comfortable with the privacy of their online banking.

“When it comes to personal attention, high-quality service, and low fees, credit unions continue to knock the socks off other providers in the financial services marketplace,” says CUNA President and CEO Daniel A. Mica. “Credit unions are not-for profit cooperatives, which means member service is their reason for being.”

We hope we’re exceeding your expectations in the area of service. Let us know.