Financial Pros Answer Your Top Questions

Q: I keep hearing about credit unions. Is it safer to keep my money in a credit union instead of a commercial bank?

Winterhalter: "Both commercial banks and credit unions are insured financial institutions. Credit unions are insured by the National Credit Union Association. This independent federal agency is backed by the full faith and credit of the U.S. government. The NCUA operates the National credit Union Share Insurance Fund , which insures consumer deposits up to $100,000/depositor just like FDIC does. The NCUA Web site (www.ncua.gov) provides additional information and a great online calculator. "

Engle: "Both are equally safe. It's a matter of convenience for you. If the credit union offers higher interest rates, or is closer to your home or work, then by all means choose it. In any choice, consider the locations of the ATM machines and other convenience products, such as online banking, etc. Credit unions are sometimes nonprofit or affiliated with employers or groups you might support. That's another reason to consider a credit union."

Palazzo: "Credit unions provide a nonprofit alternative, but like all financial institutions they are subject to risks. Eleven credit unions and 13 banks have failed this year."

Adam Levin, chairman of Credit.com: "The answer depends on the particular institution that you are considering. Credit unions, for the most part, have shied away from the subprime market. Many local banks also have avoided the rush to capitalize on the subprime lending frenzy. Smaller institutions tend not to be saddled with crippling volumes of nonperforming loans."

Q: I'm a homeowner. I need money, and I want to take out a home equity loan. Is that even possible today? How hard is it to get any kind of loan?

Levin: "Borrowing against your home equity requires three things: a good credit score, sufficient demonstrable income to support the new loan and all your other credit obligations and, most importantly, meaningful equity in your home. Lenders still are writing home equity loans and lines of credit but the least costly loans will require no less than 30 percent equity in your home after the new loan. Your best bet will be a local credit union or bank that is familiar with property values in your area."

Engle: "It is possible, but maybe not advisable at this moment. Ask yourself, 'Do I need money, or do I want money?' It looks like the Fed is about to lower interest rates again. If you can wait a few months, you should have no trouble getting a loan if you have good credit, and a valid use for the money."

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