The equity in your home can provide a cost-effective way to borrow money for just about anything. A home equity line of credit (HELOC) works similar to a credit card, but is better suited for large expenses and generally has a lower interest rate. With a HELOC, you borrow against the equity in your home that is used as collateral. Here are some of the best HELOC borrowing strategies and smart ways to use your HELOC:

Debt Consolidation
A home equity line of credit usually has a better interest rate than other types of loans. Financial obligations such as auto loans, personal loans, and credit card balances with high interest rates could be consolidated with a HELOC. This form of debt consolidation can provide lower interest rates and eliminate multiple payment due dates. The downside of a HELOC is that it uses your home as collateral, so if you fail to repay it, you could put your home in jeopardy.

Higher Education
College is expensive and if you or your child don’t qualify for low-rate, flexible federal student loans, borrowing against your home’s equity may be one of your better borrowing options. Before committing to any type of loan, compare the interest rates, repayment flexibility, and potential borrower benefits, to choose a financing option that best suits your needs.

Home Improvements
One of the most common reasons for taking out a HELOC is home improvements. Upgrades such as a new deck or kitchen renovation may increase the value of your home and be well worth the investment down the road. Even if you plan to keep your home, upgrades or renovations can make it a better place to live.

Emergency Expenses
Unexpected expenses may arise that deplete your emergency savings fund. Your HELOC can supplement emergency savings if life events such as loss of employment, medical expenses or expensive auto repair bills happen.

What About Other Expenses?
You could use a HELOC to pay wedding expenses or get a business off the ground. If your other borrowing options have high interest rates, a HELOC might be a good loan option.

Apply or contact us to learn more.

Is now the perfect time for you to buy a home? Or maybe next month will be more perfect. What about next year?

Many hopeful homebuyers try to predict when home values will rise or fall while also tracking the latest mortgage rates. This can add to the overall stress of the homebuying process and lead to poor decisions because predicting markets is very difficult. The best time to buy a home is when you can afford to.

Buy a home when…

Knowing that your financial health is the best indicator of when you’re ready to buy a home, you can focus your energy into the clear step-by-step process of getting your finances in order (no guessing necessary!).

• Save up for a down payment, 10–20% of expected home cost
• Save up for closing costs, 2–5% of mortgage
• Improve your credit score
• Shop for best mortgage terms between lenders (hint: start at your local credit union)

You can also follow these money-saving tips:

• Know about property taxes, utility costs, and any home-owners association fees so you can account for them in your home buying budget
• Hire your own inspector prior to purchasing
• If you plan to resell the home in the near future, consider the appreciation or depreciation potential of a home
• Remember that if you sell the house within two years of purchasing and living in it, you could incur capital gains tax on its sale

Seasons

In general, the seasons will factor into the supply, demand, and cost of housing—whenever there is more extreme weather (hot or cold), that’s when the supply is likely to be low and buyers will have more negotiating power. However, in general:

• Winter — Inventory and demand tend to be low in cold months in the north. Fewer people want to move in the middle of snow or rain—or in the middle of the school year for families, regardless of climate.
• Spring — More houses will enter the market in spring. This means more buying options but also more competition.
• Summer — This is the season with the highest inventory on the market. Competition can still be fierce, but you’re more likely to find the house that fits your must-have list now.
• Fall — This is often quoted as the best time of year to buy a home: sellers with houses that have been on the market since summer are motivated to sell and there’s still a good selection.

Each year, Americans complete transactions more and more online. Consumers need to stay diligent to prevent becoming a victim of fraud and identity theft.

Here is a list of things you can do right now to make your accounts more secure. There are more tips outside this list but with many things in life, it’s about taking the first step!

Change your passwords so they’re unique and strong

Take the time to start changing your passwords so that each account has a different password. Begin with your most important accounts such as your financial accounts.

The Federal Trade Commission (FTC) provides a great example of a creative password, “Think of a special phrase and use the first letter of each word as your password. Substitute numbers for some words or letters. For example, ‘I want to see the Pacific Ocean’ could become 1W2CtPo!”.

This is an excellent example because it:

• Has upper and lowercase letters
• Contains special characters
• Doesn’t contain personal information
• Is at least six characters long (but ideally could be longer)
• Is memorable to you but gibberish to others

Brainstorm how you can make every password memorable but different. If you have trouble remembering your passwords, consider a password manager.

Update your usernames so they’re unique too

It’s best to vary your login credentials to ensure that each financial account has a unique username and a unique password. Why? If you created a username and password that was the same as the one you had during a breach, your other financial accounts could have been compromised as well.

Sometimes apps require an email for your username. It’s not ideal because you cannot make it unique. Think about having an email for purchases and services you want to try and another email account for important communications. It can help with spam but also may limit your chances of exposure through your email.

Sign up for two-factor authentication

Two-factor authentication is key in securing your financial info. Here’s how it works: After logging in to your credit union’s online or mobile banking, you’ll get a code via text or email. The password and code can confirm that the member is the only one who is accessing their account.

Two-factor authentication is more secure than security questions. Your answers to security questions can sometimes be found on social media. For example, your mother’s maiden name or your favorite activity could be found if you posted about either.

Plus, it’s easy to forget how you answered a question. Two-factor authentication can make your life a little easier and safer. If you haven’t already, sign up for two-factor authentication where you can.

Opt in to automated account alerts

Sign up for automated alerts to help protect yourself from fraud. It takes just a few minutes and you can customize the alerts. With alerts set up, if you didn’t make a transaction, you can see it right away and contact your financial institution.

Install antivirus and get a VPN

Any device is vulnerable to hackers, including your smartphone. Install an antivirus that protects against malware, ransomware or trojan horses.

Also get a VPN, which encrypts your traffic, and use it anytime you’re online. Both an antivirus and VPN are worth the annual fee.

Say no to public Wi-Fi

When you’re getting work done at a coffee shop or browsing your phone at the airport, it is very tempting to hop on to the free public Wi-Fi. Don’t do it!

There are a few ways hackers can easily steal your information on public Wi-Fi:

• Fake Wi-Fi connections are simple to create and allow fraudsters to access your private information. Should you join Joe’s Coffee or Joe’s Coffee Shop? Both could be accurate but one could be malicious.
• Packet sniffing is when a hacker can scan everyone’s information on public Wi-Fi with easy to use, free software. Almost anyone can find your passwords.
• Sidejacking is when a hacker can access anywhere you’re logged in at the time. From there, they can download malware among other things.

Start paying with your smartphone

Mobile wallets such as Apple Pay, Google Pay or Samsung Pay help keep your transactions safe by creating a unique code for each transaction. It’s more secure than swiping because the store doesn’t have your name, card number or security code. All of that information stays private.

Add your debit and credit card to your mobile device and use it for any of your in-person payments. Hundreds of thousands of stores accept digital wallets so try it on your next trip to the store.

Laura Ybarra, President & CEO, AllCom Credit Union announces the recent promotion of Erin Harvey to AVP, Member Services. Starting with AllCom in 2011 as a part-time teller, Harvey has moved up the ranks holding multiple branch positions such as head teller, branch supervisor, assistant branch manager and most recently, branch manager.

“For more than 10 years, Erin has been a tremendous asset to our team,” said President/CEO Laura Ybarra. “AllCom is fortunate to have her continued dedication to delivering an experience for our members.”

Laura Ybarra, President & CEO, AllCom Credit Union announces the recent promotion of Christine Alves to AVP, Operations. In addition to her promotion, Christine recently celebrated her 10th anniversary with AllCom Credit Union. Her journey with AllCom Credit Union began in 2012 as a Financial Service Representative. From her branch position, she moved to Operations as an Operations Specialist and was later promoted to an Operations Manager.

“Christine is the epitome of a team player and always helps anyone whenever and wherever it’s needed,” says Laura Ybarra. “She spearheads the most complicated projects, demonstrates an unbelievable ability to stay calm and organized, and always does so with a smile.”

Believe it or not, you’ll need more than just a pile of cash to make your first (or second, or third) home purchase. There are other non-monetary assets that you’ll need in order to qualify for a home loan with the lowest interest rate. Add these five assets to your list of things to have before you begin your house hunt!

Steady Income

Proof of a steady, reliable income shows a lender you are capable of affording the monthly mortgage payments and are a low risk for defaulting on the loan. Usually, lenders want to see a work history of at least two years at your current employer or in your current field. If you’re self-employed, the required work history length may be longer.

As proof, lenders may ask for a signed letter from your employer stating your position and salary or two years’ worth of paystubs. Or you may be asked to provide your last two years of income tax returns.

Low Debt-to-Income Ratio

This ratio is a non-cash asset, but it’s important in the eyes of lenders. Although a lending agent won’t ask for your entire personal budget, they will look at the ratio of your monthly debt obligations (student loans, car loan, credit card balances, personal loans, etc.) to your gross monthly income. This is your debt-to-income ratio. You want to keep this ratio as low as possible, with your estimated new mortgage payment included in the calculations. These days, lenders offer the best mortgage rates to borrowers whose total monthly debts (including the estimated mortgage payments) are no more than 43% of their total gross income.

Carrying a high debt-to-income ratio will make it harder to qualify for a mortgage. Before beginning your house hunt, work to pay off current debts and lower that ratio.

Good Credit Score

This is another non-cash asset that is an important part of every home-buyers’ mortgage application. Your FICO credit score is the primary way lenders gauge how well you’ve managed credit, loans, and debt in the past and if you pay your bills on time (a big factor when they’re considering you for a mortgage!). Scores fall on a scale of 300 to 850. While a credit score of 670–739 is considered “good,” applicants with a score of 740 or higher are the ones most likely to receive better-than-average rates from lenders.

You are allowed one free credit report each year from each of the three credit reporting agencies: Experian, TransUnion, and Equifax. While you’re saving up for a hefty down payment, you can also check on your credit score and work to improve it: pay off debt (e.g. student loans, credit cards, medical debts, etc.), pay all bills on time, and don’t open or close any lines of credit (e.g. store credit card, personal loan, etc.).

Cash for a Down Payment

The money you plan to spend as your down payment on a house should be in the form of cold, hard cash in an account you can easily access (not in a CD or share savings account where you may pay a fee for the withdrawal). It can be tempting to put all or part of the down payment on a credit card, but this will affect your debt-to-income ratio, which ultimately lowers your creditworthiness.

In order to receive the best loan rate and avoid paying private mortgage insurance (PMI) on a conventional loan, you need to save up for a down payment of at least 20%. With other strong financial elements—like low debt-to-income ratio and excellent credit score—you may be able to put less money down and secure a decent mortgage rate, but you’ll still be taking out a larger loan and ultimately paying more interest on that larger principal over the life of the loan.

Cash for Closing Costs

Be sure to earmark some of the cash you’ve saved up as cash for paying closing costs, an often-overlooked home-buying expense. Closing costs include loan origination fee, title search and recording fee, appraisal fee, inspection fee, property taxes, and others. While these costs can vary, they generally fall between two percent and five percent of a home’s purchase price.

While you can sometimes roll these costs into the mortgage, it’s best to be able to pay them up front with cash, thereby avoiding a higher monthly mortgage payment and possibly a higher loan rate. You may also pay these fees with monetary gifts from relatives or by negotiating with the seller to have them pay these costs—especially if they’re eager to sell.

If you or someone you know plans to attend college this year after graduating from high school, you’ll be happy to know that AllCom Credit Union is offering eligible members a chance to win a $1,500 scholarship to help cover the expanding costs associated with your college education.

The Credit Union College Scholarship Program, supported by Massachusetts Credit Unions and our statewide campaign, Better Values – Better Banking, is funding six (6) $1,500 scholarships that will be awarded to six (6) high school graduates chosen as winners from across the state. 

2023 College Scholarship Application

Application deadline: April 7, 2023

Scholarship Eligibility
1. Eligibility is limited to high school seniors who will be enrolled in an undergraduate college degree program during the 2023-2024 academic year.

2. Applicant or parent/guardian must be a member of the sponsoring credit union.

3. The credit union must be a member in good standing with the Cooperative Credit Union Association.

4. Each applicant must complete a current scholarship application form and submit it with the other required material to the sponsoring credit union.

5. Each credit union will select its top 3 applications and forward them to their chapter president. They must be accompanied by a cover letter from the sponsoring credit union CEO verifying that each applicant and/or parent/guardian is a credit union member.

Each chapter will select its scholarship winner evaluating each applicant on the same criteria the credit unions will be using grades, essay and extracurricular/community activities.

Students must submit the following items with their completed applications. All items requested must be received in order for the application to qualify for consideration.

1. Completed printed application.

2. An academic transcript of grades.

3. A typewritten essay of at least 250 words describing what you career you wish to pursue when you complete your education and why.

4. A detailed list of extracurricular/community activities and/or volunteer activities.

If you have any questions, please call Erin Harvey, Branch Manager at 508.754.9980.

Within the $1.7 trillion omnibus bill passed by Congress are a potpourri of sweeping changes to retirement plans–some of the biggest changes made in many years, including increasing the age of Required Minimum Distributions to age 73 starting for tax year 2023. 

Congress continued the trend of delaying Required Minimum Distributions. Many savers don’t like to be forced by the government to take RMDs, instead preferring to see their savings grow, especially given lifespans have increased. During the height of COVID, Congress allowed RMDs to be skipped for 2020 and later increased the RMD age to 72, and now in 2023 the age increases to 73 and will later increase to 75 in 2033. 

Another impactful change to RMDs is the steep penalty for failing to take an RMD has been reduced. Prior to the bill, if an IRA holder failed to take an RMD they were charged a 50% penalty of the RMD. That has been reduced to 25% and can be 10% if corrected in a timely manner. 

Emergency Withdrawal Option

There is a also a new relief for a retirement accountholder in need of emergency cash. Retirement account holders who withdraw funds prior to age 59 1/2 pay a 10% penalty. The bill contains a provision that waives the fee for an $1,000 emergency withdrawal if it is made for the “purpose of meeting unforeseeable or immediate financial needs relating to necessary personal or family emergency expenses.”

Charitable Changes

One strategy IRA holders employ to do good and reduce their tax obligation is to make Qualified Charitable Distributions from their IRAs. The bill allows IRA holders 70 1/2 and older to do a one-time $50,000 withdrawal to fund a charitable gift annuity or charitable remainder trust. 

529 Roth Option

The government created 529 plans to help deal with the high cost of higher learning. One of the uncertainties with 529 plans for savers was the prospect of the child not going on to higher learning or having unused money in the 529. Prior to the bill, money in 529s that was not used could be designated to another family member for the purpose of higher learning or the account holder could pay a 10% penalty to withdraw the funds. The bill introduces a new option–allowing up to $35,000 of the 529 to be transferred into a Roth IRA. The 529 must be more than 15 years old under this change. 

Roth 401k Gets Roth IRA Attribute

Unlike Traditional IRAs that require RMDs, Roth IRAs do not require RMDs. Interestingly, Roth 401(k)s, which are not that widespread, did require RMDs, until now. The new law eliminates RMDs for Roth 401(k)s starting in 2024. 

Catch Up Amount Boosted for Older Workers

Prior to the new law, workers over the age of 50 could put an extra $6,500 in their 401(k)–that has been increased to $10,000. 

Tax Advisor Best to Assist

As always, members should consult with their tax advisor when assessing the impacts of any tax law changes. The new law includes a host of other changes around using 401(k)s for paying off student loans, mandating more investment options in 401(k)s, requiring small businesses to offer 401(k)s and more.