September 2020 - High Point FCU

Millennials Hit Hardest by Coronavirus Recession

The coronavirus recession hasn’t been easy on anyone, but millennials may have been hit the hardest.

Here’s why the coronavirus pandemic has been especially hard 25- to 39-year-olds:

Another recession

For millennials, economic recessions are nothing new. This generation has already lived through the Great Recession of 2008, the impact from which is still being felt today.

The Great Recession hit millennials when they were still in college or just starting out on their career paths. For some, it meant the choices for their first post-college job were slim. For others, it meant dropping out of college when there was no longer a guarantee of a degree netting a high-paying job. Regardless of how they were impacted, many are still playing catch-up.

Job losses across the board

More than 40 million workers in the U.S. have filed for unemployment since the beginning of the pandemic, and millennials have been hit harder than most.

According to a report by Data for Progress, 52% of respondents under age 45 have lost jobs, been furloughed or had their work hours cut due to COVID-19. In contrast, just 26% of respondents over age 45 have suffered a job loss during this time.

The economy shed 20.5 million jobs in April. Of these, 7.7 million were in the leisure and hospitality sector — a sector dominated by millennials. An additional 1.4 million lost jobs were in health care, primarily in ambulatory services — another field that employs a large amount of millennials.

No nest egg

Many millennials are carrying piles of debt and have minimal or no savings. According to surveys conducted in 2018 by the Federal Reserve, 1 in 4 millennial families have a negative net worth, or debts outweighing assets. One in six millennials would not be able to find the funds to cover a $400 emergency. For these young employees, a relatively mild setback from the coronavirus can be devastating to their finances.

Can Millennials recover?

Millennials have been hit hard again, but there is hope. The forward-thinking millennial can use the challenges presented by COVID-19 as an opportunity to move onward toward a brighter future.

All You Need to Know About Closing Costs

If you’re in the market for a new home, don’t forget to budget for closing costs! This includes all fees and charges incurred while officially transferring a property from one owner to another.

Here’s all you need to know about closing costs:

How high will my closing costs be?

Closing costs usually amount to 2-5 percent of the home’s price. For example, if you’re purchasing a $130,000 home, your closing costs can be anywhere from $2,600 to $6,500.

What kind of charges can I expect as part of my closing costs?

Application/Underwriting/Origination fees: Compensation for the administrative costs associated with processing a mortgage loan.
Appraisal: Covers the fee of a professional appraiser to provide your lender with an estimate of your home’s true value.
Attorney fee: In some states, the closing documents must be reviewed by an attorney before they become binding. This charge covers the attorney’s fee.
Closing fee or escrow fee: The cost of the title company, escrow company or attorney for facilitating the closing.
Credit check: Some lenders charge a fee to examine your credit history.
Escrow deposit: You may be asked to make your initial escrow deposit at closing, to ensure the financial institution has the funds to pay property taxes and/or mortgage insurance for the first twelve months.
Home inspection: The cost of a professional inspection of your entire home and property.
Homeowners’ insurance: Many lenders require you to pay the first year’s worth of homeowners insurance premiums prior to closing.
Lender’s title insurance: Title insurance insures the outstanding balance of a mortgage in the event there is a financial loss due to a defect in the title to the property.
Prepaid interest: Most lenders require buyers to prepay the interest that will accrue from the day of closing until the date of the first mortgage payment.
Primary Mortgage Insurance (PMI): If you need to pay PMI on your loan, the first month’s premium is due at closing.
Title fees: This covers the cost of a title search, in which your lender hires a title company to look for possible legal claims on your property.

Should I choose the “no-closing-costs” option?

Before signing up for a no-closing-cost loan, it’s important to understand that there’s no such thing as a mortgage without closing costs. In a no-closing-costs loan, these fees will could be rolled into the mortgage. In this scenario, you would be paying interest on your closing costs throughout the life of the loan. Also, lenders usually raise the interest rates on no-closing-costs mortgages.

The Credit Union Difference – A Look at Loan Interest Rates

One of the most beneficial advantages we offer our members here at Olean Area Federal Credit Union is lower interest rates on loans. Let’s take a look at some of the most popular loan types and how the rates at credit unions differ from the industry average.

Auto loans

Looking for a new set of wheels? Look no further than Olean Area Federal Credit Union! With rates that fall far below the industry average, you can sign confidently, knowing you’re getting a fantastic deal.

Used Car Loan, 48 months:

Average industry rate: 5.44%APR (Annual Percentage Rate)

Average credit union rate: 3.50%APR

Used Car Loan, 36 months:

Average industry rate: 5.39%APR

Average credit union rate: 3.37%APR

New Car Loan, 60 months:

Average industry rate: 5.10%APR

Average credit union rate: 3.45%APR

New Car Loan, 48 months:

Average industry rate: 4.99%APR

Average credit union rate: 3.32%APR

You can explore current Auto Loan Rates at Olean Area FCU by clicking here.

Credit Cards

Why pay a steep interest rate on a new credit card when you can get one at Olean Area Federal Credit Union at a rate that’s nearly two points lower than the national average?

Average industry rate on new credit cards: 13.15%APR

Average credit union rate on new credit cards: 11.54%APR

Click here to discover current credit card rates offered by Olean Area FCU!

Home Equity Loans

Looking to fund a home renovation or expansion? Consider a home equity loan, or a home equity line of credit (HELOC) at Olean Area Federal Credit Union.

Home Equity Loan, 5 years, up to 80% of the home’s value:

Average industry rate: 5.21%APR

Average credit union rate: 4.65%APR

Home Equity Line of Credit, up to 80% of the home’s value:

Average industry rate: 5.05%APR

Average credit union rate 4.56%APR

Home Loans

When you apply for a home loan at Olean Area Federal Credit Union, you’ll enjoy personalized attention throughout the loan process, quick, professional service and interest rates that beat the industry average no matter what kind of mortgage you choose.

30-Year Fixed-Rate Mortgage:

Average industry rate: 3.79%APR

Average credit union rate: 3.71%APR

15-Year Fixed-Rate Mortgage:

Average industry rate: 3.36%APR

Average credit union rate: 3.23%APR

5/1 Year Adjustable Rate Mortgage (ARM):

Average industry rate: 3.79%APR

Average credit union rate: 3.28%APR

3/1 Year ARM:

Average industry rate: 3.74%APR

Average credit union rate: 3.26%APR

1 Year ARM:

Average industry rate: 3.61%APR

Average credit union rate: 3.48%APR

Discover current mortgage rates offered by Olean Area FCU by clicking here.

Unsecured loans

When you need a bit of extra cash for a reason that doesn’t fit neatly into any other category, consider taking out an unsecured loan at Olean Area Federal Credit Union.

Average industry interest rate on fixed 36-month personal/unsecured loans: 10.21%APR

Average credit union interest rate on fixed 36-month personal/unsecured: 9.28%APR

You can find out about your unsecured loan options by calling an Olean Area FCU lender at (716) 372-6607, or by filling out the “Contact Us” form.

What School Doesn’t Teach You About Money

With the new school year either here or just around the corner, it’s time to fill your shopping carts with No. 2 pencils, protractors and all the goodies the kids will lose by the second day of school. If they’re headed off to college, it can be even more exciting. But, instead of needing you to replace their pens on day two, your college-aged child will probably be calling to ask for money by then.

It’s such a ritual that, at this point, many of us don’t really question it. But how much do our kids actually know about money? You might want to only include the lessons you taught them, because their school probably didn’t teach them much at all.

Common core and other national guidelines don’t include requirements for teaching budgeting skills, how to balance a checkbook, or even explanations of basic concepts such as credit, loans or mortgages. Basically, the last time your children learned about money at school, it probably involved finding out how many apples and oranges they could buy in some middle school math word problem.

We talked to some credit union members about the lessons they want to pass on to their kids, and below you’ll find some of our favorite lessons to teach your kids.

Pay yourself first

No one else is going to make you a financial priority, so don’t make them your financial priority.

If you want to know if you can afford something, check your budget. When you have to check your checking account, you can’t afford it.

If you reconcile your accounts every month, you’ll have a pretty good idea how much is actually in each account. Plan ahead. Make a budget. Execute the plan by sticking to that budget.

Take risks while you’re young

You can afford to be more aggressive with your retirement and college funds while you have plenty of time to make it back up, so don’t be afraid to push those funds a little bit. That said, not saving for retirement is not a risk. It’s just a bad idea.

Make sure the Joneses are keeping up with you

It’s easy to get lost trying to compete with your peers and almost as easy to ignore those consumer pressures entirely. But what about the third option? Instead of ignoring their financial situation, check in every now and then to see if they need help. Our communities are better when we care about each other.

Whether your kids are in diapers or their kids are wearing them, it’s never too early or too late to teach financial literacy. Make sure you’re instilling the right lessons, and check back in with Olean Area Federal Credit Union, because we’ve always got plenty of resources for young people to learn the lessons they aren’t getting in math class.

All You Need to Know About Selling Your Home During COVID-19

For many homeowners, the hot real estate market of spring and summer of 2020 was going to be the season they put their homes up for sale — until the coronavirus hit. With people struggling just to get by financially, selling a home seemed like a dream from another lifetime. Records of U.S. home sales for March show a sharp decline of 21% in total homes sold, according to data from the National Association of Realtors.

Now, though, the U.S. real estate market is looking very different. As the economy limps toward a recovery, national home sales climbed a record 20.7 percent in June, compared with home sales from June 2019.

However, many homeowners who have planned to sell this year are still reluctant to take that leap. Here’s all you need to know about selling your home during the COVID-19 crisis.

Are you really ready to sell?

Before putting your home on the market, consider all variables involved and be sure it’s a financially responsible move. Thanks to coronavirus, life circumstances you may have relied on, such as a steady salary, may not be dependable anymore.

Stage your home to sell

With restrictions still in place in many states and lots of people home in quarantine, many buyers will be doing their touring virtually. For sellers, this means staging and photographing a home properly is more important than ever.

Consider hiring a professional home-staging and photography service to present your home in the best light. You can also invest in virtual staging software to help you update the furniture with just a few clicks.

To make it easier for buyers to view your home, you can post a virtual tour on your online listing, and offer the option of scheduling a live tour with an agent through FaceTime.

Play it safe

If you will be allowing potential buyers into your home, set up a box of disposable masks, shoe covers and sanitizing wipes at the door for all visitors who will be tramping through your home.

Price it right

Fewer homeowners are putting their houses up for sale this year, but the pool of buyers is also smaller than usual. This means that you won’t be able to jack up the price of your home for way more than it’s worth. Work with a real estate agent to look at comparable home sales in the area and to determine a fair asking price.

Closing during COVID-19

The coronavirus pandemic will likely affect every aspect of selling your home. With many professionals working with a smaller team now, be prepared for various steps of the process to be delayed. This is especially true with lenders, as low mortgage rates have triggered a spike in refinance applications and lenders are busier than ever.

Should I Buy a House During a Pandemic?

Q: I’d planned to buy my first home this spring — and then the coronavirus changed everything. Should I forget about my plans, or can I buy a house during a pandemic?

A: The coronavirus outbreak that has swept through the world has given rise to dozens of financial questions. No one can say when this pandemic will end, or the lasting impact it will have on the economy. Experts can only look at past economic crises in an attempt to predict what the financial future will look like in the United States.

Let’s explore the mid-pandemic housing market and the wisdom of purchasing a home during a time of economic instability

The home sales of February 2020 were the strongest they’ve been in the country since 2007, topping 5 million sales. Factors, like falling interest rates and a booming economy, contributed to the thriving housing market. But two months later, experts are already seeing a sharp decline in buying.

This downturn has likely been triggered by the economic devastation caused by the outbreak, including widespread job insecurity, thousands of shuttered businesses and millions of employees on leave from work.

The decrease in home sales is also likely due to practical reasons. When people are worried about their health, it’s difficult for them to think about purchasing a new home. Meeting with potential sellers, real estate agents and looking at properties is also complicated when trying to maintain social distancing.

A dwindling housing market does not automatically mean this isn’t a good time to buy a house. In fact, times of financial uncertainty generally lead to falling mortgage rates and the ease of credit qualifications. Mortgage rates have already reached a record low of 3.13 percent in the beginning of March, prompting some buyers to rush into new home purchases.

Some market experts also believe the coronavirus pandemic will cause an eventual spike in home sales as buyers, fearing a recession, will want the stability and control that homeownership brings.

Before you jump into a home purchase at this time, you may want to consider the following factors:

How stable is your income? If you have reason to believe you might be laid off soon, you may want to hold off on your purchase.
How long do you plan on living in this home? If you plan on selling within the next few years, you may come out at a loss due to a falling housing market and an unstable economy.
Will you have savings left after buying a home? As the economy heads toward a probable recession, this is not the best time to be without a savings cushion.

If you can afford the purchase, and your income isn’t threatened by the economic instability, the favorable interest rates and looser qualifications during this pandemic can make it a good time to buy a new home.

What’s a Recession Anyway?

You’ve likely caught the term “recession” thrown around on the news in the last several months. But, do you know the exact definition of a recession? How is it different from a depression? How long do recessions last?

So many questions — and we’ve got answers! Here’s all you need to know about recessions.

What is a recession?

A recession is a widespread economic decline in a designated region lasting several months or more. In a recession, the gross domestic product (GDP), or the total value of all goods and services produced in the region, decreases for two consecutive quarters. In most recessions, the GDP growth will slow for several quarters before it turns negative.

What’s the difference between a recession and a depression?

A depression has similar criteria as a recession, but is more severe. For example, in both a recession and a depression, the unemployment rate rises; however, during the Great Recession of 2008, unemployment peaked at 10%, while during the Great Depression, unemployment levels soared to 25%.

Depressions also last longer than recessions. The Great Depression officially lasted four years, but continued to impact the economy for more than a decade. In contrast, recessions last only about 11 months, according to data from the National Bureau of Economic Research (NBER) .

Why the COVID-19 recession is unlike any other

The COVID-19 recession, also known as the coronavirus recession, is unique because it was not sparked by any inherent problem within the economy.

Another anomaly of the coronavirus recession is the super-healthy state of the economy before it hit. In February, unemployment levels were at a 50-year low, stock markets were at a record high and the U.S. economy had enjoyed its longest period of growth in history.

The unusual triggers and the explosive start of the current recession may be good news for its end. An April Reuters poll found that nearly half of 45 economists believed the U.S. recovery would be U-shaped; meaning relatively quick.

How will this recession affect me?

The coronavirus recession can impact the average consumer in multiple ways.

First, many are struggling with sudden unemployment or will be facing joblessness in the coming months. The most recent data from the Bureau of Labor Statistics show the unemployment rate at 10.2%.

Secondly, the economic uncertainty has triggered record-low interest rates, which in turn sparked a rush to refinance. If you are currently paying high interest rates on a long-term loan, you may want to consider refinancing for a lower monthly payment. Explore our current rates by clicking here.

Finally, investments in stocks, bonds and real estate may lose value during a recession.

If you are experiencing financial difficulties of any kind, feel free to reach out to us to see how we can help.