Five tips for protecting your money during high inflation
During periods of high inflation, rising costs can be a source of stress. But with a few changes to your financial plan, you can lessen the impact on your household budget.
In brief
- In times of inflation, prices increase and the value of currency decreases.
- Keep the money you set aside for the future in an account that earns interest.
- Identify expenses that can be trimmed by tracking your spending.
- Focus on paying down variable rate loans.
- Choose a credit card that offers rewards to get more value out of your purchases.
When you own a home, you want it to be just right for your needs. Maybe you have been dreaming of a more spacious kitchen, a new garage, or lowering your electrical bills with solar panels. Before swinging a hammer, read on for expert guidance from Chip Allen, AVP Mortgage Sales at UNFCU and Lisa James, Licensed Real Estate Salesperson with The Corcoran Group (a US-based real estate firm with a network of international affiliates).
1. Options available to pay for the project
Understanding your options for financing will help you choose a project that you can easily afford. One popular option among homeowners is to borrow using your home as collateral:
- A home equity loan provides you with a lump sum, which can be paid off over time with fixed monthly payments.
- You can also use your home as collateral for a home equity line of credit (HELOC). A HELOC works similarly to a credit card in some ways. You can borrow up to a certain limit, and each payment you make replenishes the amount that is available to borrow. With a HELOC, you will pay interest and principal only on the amount you use.
Secured loans (loans backed by collateral) tend to have lower rates than unsecured loans. For this reason, a home equity loan or a HELOC may save you money on interest.
According to our mortgage team, home improvements are the most popular use for home equity loans and HELOCs among UNFCU members. “It doesn’t ever hurt to have a conversation with a mortgage representative,” says Chip. “They can help you gain a full understanding of how accessing equity can work.”
In summary
Completing your home improvement project will be even more satisfying without lingering money questions. You will have the peace of mind to enjoy your home upgrades while knowing you have made smart decisions.
For a big home improvement project, plan to build a team:
- A mortgage representative can explain your opportunities for leveraging your home equity.
- A contractor can help you understand the range of options that are possible within your budget.
- A licensed real estate professional can provide details on the local housing market and how specific changes or upgrades could increase or decrease the value of your home.
Whatever improvements will make your home feel more like home, we are here to help.
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