Here is a great deal from Pentagon Federal Credit Union. They are currently offering home equity loans at 5.24% for up to 120 months. This is a fixed rate people, so no, it isn’t going skyrocket later. To get this rate you need to have at least 20% equity in the home after the loan is taken out. If you don’t have that much equity, their other rates are pretty good as well.

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I can’t find anywhere where it discusses closing costs, but when I took out my home equity loan with them, there were zero closing costs. Yes, not even an appraisal. I would call them to ask about closing costs prior to applying. Since PenFed is a credit union, you need to be a member to get in on these great rates. Most credit unions require you to live or work in a certain area, however with PenFed anyone can join and the process is fairly simple. If you don’t fit in their field of membership then sign up to be a member of the National Military Family Association (NMFA). The cost is $20 to sign up and you don’t need to renew the membership every year to stay a member of the Credit Union. Not a bad way to get you in the door here.

You can get statements in the mail or have everything done electronically. You can even have your loan paid through their website, so no need to write checks. Which means that you can make the payment the day before it is due.

They offer other products as well like cash back credit cards, checking and savings accounts too. I currently have a home equity loan with them and am definitely happy with everything. The next time I need another mortgage or decide to refinance, I am sticking with PenFed. You just can’t beat their low rates and nonexistent fees.

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My answer is Yes! But only if you don’t have a home to sell. If you are renting, now is the time to get that home. Mortgage rates are again at an all time low and with so much inventory on the market you should have no problem scoring a good deal on a very nice home. Many people are getting desperate to unload that home they have had on the market for a while. My advice is to never make an offer at the current asking price. I would undercut the offer by 10% or possibly more based on your area and see how much the seller is willing to negotiate. At this point you have nothing to lose and the seller probably realizes that he is going to have to take a loss at some point. Coming in under will also help you if the housing market continues to decline after your purchase since you want to make sure that you don’t lose the equity in the home right after you purchase it.

If you currently have a home that you need to sell, one interesting thing I am seeing is how creative new home builders are getting. A builder by me is offering a 70k options incentive. This means that if I buy a home, I can get 70k worth of upgrades free. Here is where the twist is. 20k of that would be put into a fund to pay your current mortgage if you can’t sell your home. So for example if your current mortgage is $1000 per month, you would have 20 payments covered so you are not financially strapped with 2 mortgages. Sounds great? Well the catch is that if you sell your home in 2 months, you forfeit the rest. So in my example you would lose $18,000. I guess you really don’t lose it since it was never yours in the first place, but you could have used it for options on your new home to help keep the purchase cost down. Also don’t forget any utility bills that you will still need to pay as well as property taxes and insurance if those aren’t included in your mortgage payment. I am curious if they force you to use their realtor to sell your house, as you could put your home on the market at a high price just to burn up the 20k. The sales rep wasn’t sure how the process worked when I asked about it. There are some homes in my neighborhood that have been on the market for over 2 years now, and with a recession possibly on its way, I would be leery that $20,000 wouldn’t be enough my existing home in case I couldn’t sell it.

It is amazing even in this current mortgage crunch that builders are still trying to push you into a home you probably can’t afford. Be smart and try not to live beyond your means since no one knows what the future holds and financial security is definitely worth more than an extravagant home, in my eyes anyway.

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Pentagon Federal Credit Union, my current lender, has also lowered their mortgage rates. They are currently offering a 30-year fixed at 5.875%.

This is definitely competitive if not the lowest out there. If you are interested in something other than a 30 year, check out all rates for all their mortgage products here! The rates are great for those as well.

Pentagon Federal Credit Union is one of the few credit unions that can be joined by anyone. See this Post for details on how to become a member.

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Anyway, he took out a 30 year fixed mortgage, so odds are he’s paid some principal down. I told him that he really needs to get rid of the PMI. It is wasted money since it doesn’t go toward your mortgage at all. One thing I recommened he do is refinance with a 80/10/10 loan. What this means is that you take out a mortgage for 80% of the value of the loan, you put 10% down and the other 10% is put into a home equity loan. The 10% down and the 10% home equity loan satisifies the 20% down on the first loan thus avoiding PMI. You can do this same thing when purchasing a home, not just with refinancing.

There are many ways to avoid PMI these days so don’t opt for it just because you don’t have the full 20%. PMI is also very difficult to get out of once you have it on a mortgage. You have to have the lender review the loan to see if the home as increased in equity to satisfy the 20% needed to avoid paying it. You can imagine how hard this must be these days as values are actually decreasing. Your only other way is to refinance, but that can cost you some closing costs.

These days, there is no sense paying more money than you need to, that the would-be PMI and save it for a rainy day instead!

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Ok, I know I mentioned yesterday that taking out a Home Equity loan to pay off cars and other items could be risky. Well if you HAVE to do it, I thought I would offer a reccomendation.

I currently have a Home Equity loan through Pentagon Federal Credit Union. They are essentially a credit union that anyone can join. The reason I went with them was because there were no closing costs. LITERALLY! I asked for $20,000 and they sent me a check for $20,000. No fees, or anything. Not sure where else you can get a deal like that.

They are now offering Home Equity loans up to 120 months with no points or closing costs for 4.99%. The best part is that this is a fixed rate. So it is not going to change for the life of the loan like other lenders do. When I got my loan last year the rate was at 7.24%, so this is a pretty good deal!

Signing up is easy. If you don’t fit in their field of membership then sign up to be a member of the National Military Family Association (NMFA). The cost is $20 to sign up and you don’t need to renew the membership every year to stay a member of the Credit Union. Not a bad way to get you in the door here.

You can get statements in the mail or have everything done electronically. You can even have your loan paid through their website, so no need to write checks. Which means that you can make the payment the day before it is due.

They offer other products as well like cash back credit cards, checking and savings accounts too. Over the year I have had my loan with them I am definetly happy with everything. The next time I need another mortgage or decide to refinance, I am sticking with PenFed. You just can’t beat their low rates and nonexistent fees.

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P2P Lending Sites: (High Risk)
P2P (Person To Person) Lending Sites are becoming very popular for people to invest money. These sites give you the chance to act like a small bank and loan money out to indivuidals at a specified interest rate which is paid back over a certain period of time. I currently have money loaned out at Prosper.com. Prosper only does 3 year loans with a minimum of $50 per loan. You can get a great interest rate here, but that does not come without risk of the borrower defaulting or filing for bankrupcy. Prosper does give you credit information on the indivuidal which should help you narrow down your decision. I also suggest that you only loan the minimum of $50 for each loan that you do so you can spread the risk among many different borrowers.

High Yield Savings Accounts: (Low Risk)
If you are not a high risk investor, why not stuff all that money into a Federally Insured High Yield Savings Account? Many of them are still offering in the upwards of 5% APY. One of my favorites is UFBDirect.com. (See my Post) They are currently offering a 5.31% APY with a $1 minimum balance. This is definetly better than keeping it in the Free Checking account!!!

US Savings Bonds: (Low Risk)
Another possibility is investing in the good old US of A. US Savings Bonds are a pretty safe investment since they are backed by the full faith of the US Government. Treasury Direct is an online service offered by the U.S. Department of the Treasury Bureau of the Public Debt as an easy way to purchase and sell bonds online. Depending on the Savings Bond you can probably see interest rates in the 3-5% range. The great thing about savings bonds is that these are longer term savings tools, so if it is hard for you to put money into savings and not spend it, savings bonds can force you to save since most can’t be sold for one year after purchasing without some sort of penalty.

Collections: (Medium Risk)
Many people invest their hard earned money into collecting things. This can be tricky since you need to collect something that will increase in value over time. I used to collect baseball cards, but once people found out that old cards were worth a lot of money they started to collect current year cards which ultimately devauled them. Ebay.com is a great place to help you seek out items for your collection as well as give you a good idea of what you could start collecting. Some things that are poplular these days are old Coca-Cola memorbilia, Hello Kitty Items (don’t ask me why!) and Matchbox Cars.

Item Flipping: (Medium Risk)
Sites like Ebay.com and Craigslist are great ways to buy an item, then turn around and sell it for a profit. Many things that I see do well are cars and furniture. The reason is that the base prices for these items are high enough where you can buy an item, add $200 to the price and resell. But this can be done with anything from baby clothes to antique arcade games. Things you need to consider when item flipping are shipping costs, taxes, and payment methods as they tend to cut into your profits.

Real Estate: (Low Risk)
The reason that I marked this as low risk is that I am assuming that you are investing in your primary home and you are planning on living there for a while. If you are looking to buy and flip land or houses, than that would increase the risk. If you are currently renting, now is the time to buy a house. Prices have softened all over the country and mortgage rates are approaching their historic lows again. If you currently own a house and are looking to move, selling that house could be your biggest challenge. In Chicago, the average house is taking in the upwards of 9+ months to sell.

The above are just a few alternative ways to earn a little extra money on your cash. If you have a great way to invest your money why not comment at let us know! I am always looking for different ways to make some money.

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