Do you want to buy a home but are worried that you do not have enough saved for the down payment? You’re in luck! If you are an Illinois resident, you may qualify for the myriad of down payment assistance programs offered through the State and local municipalities.

The Illinois Housing Development Authority, IHDA for short, offers down payment assistance in various tiers. The amounts range from $6,000 to $10,000. There are different repayment requirements for each amount listed. For example, the $6,000 down payment assistance amount is 4% of the home purchase price for a maximum of $6,000. You do not have to pay this back as it will be forgiven over a 10 year span as long as you remain in your home.[1] The $10,000 in down payment assistance covers 10% of the purchase for a maximum of $10,000. This assistance is paid back monthly over ten years at a 0% interest rate. IHDA has a list of participating lenders on their website.

The Federal Home Loan Bank of Chicago has two programs, Downpayment Plus & Downpayment Plus Advantage, that also offer down payment assistance. Downpayment Plus is a matching program that provides down payment and closing cost assistance for income-eligible homebuyers. The assistance is provided in the form of a forgivable grant paid on behalf of the borrower at the time the borrower closes on mortgage financing with a participating FHLBank Chicago member financial institution. Grants are forgiven on a monthly basis over a five-year retention period. Downpayment Plus Advantage is a similar program but assists income-eligible homebuyers participating in homeownership programs offered by nonprofit organizations that provide mortgage financing directly to the homebuyer; it is not a matching program. Nonprofit organizations providing direct first-mortgage financing, such as Habitat for Humanity or Neighborhood Housing Services, must partner with an FHLBank Chicago member financial institution to access DPP Advantage funds. Grants are forgiven on a monthly basis over a five-year retention period.[2] The maximum grant amount for both programs is $6,000.

Local organizations and counties also offer their own down payment assistance programs. The MMRP Purchase Assistance Grant provides up to $15,000 in down payment assistance for the purchase of a home in one of the City of Chicago’s 10 Micro Market Recovery Program (MMRP) Areas. This grant is available to low and moderate-income households earning up to 120% of the Area Median Income (AMI) for the Chicago Metropolitan Area.[3] It does require that you be a first-time homebuyer or not have owned a home in the previous 3 years.  More information can be obtained by contacting Neighborhood Housing Services of Chicago.

Community Partners for Affordable Housing, CPAH, provides eligible Lake County, Illinois homebuyers with up to 5% of the purchase price to help with down payment and closing costs. Assistance is provided in the form of a 0%-interest deferred loan with no monthly payments, forgiven at a rate of 1/60th every month. Loan forgiveness begins 60 days after closing. The loan is fully forgiven after 5 years and 60 days in the home. Other eligibility factors require that you put down $1,000 or 1% of the purchase price, whichever is greater, and that you qualify for financing with a CPAH Participating Lender.[4]

Kane County, Illinois offers a First-Time Homebuyer Loan Program that provides up to $10,000 in down payment and/or closing-cost assistance to first-time homebuyers in the form of a zero-interest, deferred-payment loan.  No interest accrues on the loan, and no payments are due until the home is sold, the title is transferred, or the home is no longer used as the homebuyer’s principal residence. Up to an additional $10,000 may be available if the home purchased is located within the city limits of St. Charles, under these same terms and conditions.[5] A nice perk with this program is that Kane County does not require First Mortgage Lenders to be pre-qualified. Homebuyers may work with a Lender of their choice to obtain their first mortgage.

There are down payment assistance opportunities in other counties and cities throughout Illinois from Madison County down south to Rockford up north. Madison County Community Development offers a 5-year forgivable loan, based on 80% of area median income or less, for closing costs and down payment. This loan, for up to $5,000, will be forgiven only after five full years’ occupancy. Homebuyers who receive funds must obtain one-on-one pre-purchase counseling from a HUD-certified agency. A list of agencies may be obtained from a participating lender.[6] The city of Rockford offers a Homebuyer Assistance Program that provides financial assistance to make the purchase of a home more affordable to income-eligible homebuyers. The city of Rockford determines the amount of financial assistance, up to a maximum of $14,999, based on the applicant’s income, debt, and anticipated mortgage. The homebuyer must live in the home from the time of purchase through the end of the forgivable loan; approximately 6 years.[7]

You may be wondering why there are so many down payment assistance programs available to homebuyers. The Community Reinvestment Act (CRA) of 1977 required federally regulated banks to make an effort to lend to low and moderate income clients in their service area.  As a result, most of the larger federally regulated banks and mortgage lenders in our country have created CRA home loan programs.[8] Some of the programs mentioned above are the result of this initiative.

References:

[1] “IHDA Mortgage Program Directory.” IHDAmortgage.org, Illinois Housing Development Authority, www.ihdamortgage.org/program-directory.

[2] “Downpayment Plus Programs: FHLBank Chicago.” FHLBC.COM, Federal Home Loan Bank of Chicago, www.fhlbc.com/community-investment/downpayment-plus-programs.

[3] “Grants at Nhschicago dot org.” NHS Chicago, Neighborhood Housing Services of Chicago, www.nhschicago.org/purchase-assistance/mmrp-purchase-assistance-grant/.

[4] “Down Payment Assistance.” CPAH Down Payment Assistance, Community Partners for Affordable Housing, www.cpahousing.org/home-buying/down-payment-assistance/.

[5] “Pages   – First-Time Homebuyer Program.” Kane County – Established January 16, 1836, Kane County Office of Community Reinvestment, www.countyofkane.org/Pages/ocr/firstTimeHomebuyer.aspx.

[6]Madison County HOMEbuyer Program, Madison County Community Development, www.co.madison.il.us/departments/community_development/homebuyer_program.php.

[7]Homebuyer Assistance Program, City of Rockford Community & Economic Development Department, cdn.rockfordil.gov/wp-content/uploads/2020/08/Homebuyer-Brochure-08.19.2020.pdf.

[8] “First-Time Home Buyer Loans – Conventional, CRA, FHA, HUD, USDA, State Bond and VA Loans.” CRA Home Loan Programs, First Home Advisor, 12 Mar. 2019, firsthomeadvisor.com/home/loans/.

How is my credit score an asset?
Having a good credit score can be key to getting a great rate on that mortgage for your dream home. Credit can help secure your education. Credit can help you land your dream job.

What difference does it make?

When is the best time to try to fix your credit score?
NOW! If your credit score is less than ideal, contact our Housing and Financial Counseling Team! Together we can walk through your credit history, budget, and address your goals, concerns, etc. Schedule a screening to get started!

[1] Vincent, John M. “What Is a Good Credit Score to Buy a Car?” U.S. News & World Report, U.S. News & World Report, 21 Jan. 2020, cars.usnews.com/cars-trucks/good-credit-score-to-buy-a-car.

[2] NerdWallet. “Why Employers Check Credit – and What They See.” NerdWallet, 18 June 2019, www.nerdwallet.com/blog/finance/credit-score-employer-checking/.

[3] Carter, Matt. “Refinancing Student Loan Debt Can Save Thousands.” Credible, Credible, 9 Mar. 2020, www.credible.com/blog/refinance-student-loans/credible-savings/.

What if you got a phone call one day and find out your industry is not doing well financially, and all employees may take a pay cut? Or you came home one day to find out your partner just got laid off. Maybe you’ve had a successful business, but one day wake up to a slump in sales that could go on for months due to the current economy.

We have all, at one time or another, had a financial shock that arrived without notice. Unexpected events like these are terrifying. An unfortunate reality is that the above examples are increasingly common as COVID-19 has more and more of an economic impact. When households experience some form of financial hardship, it’s time to review a bare essentials budget.


Necessary vs Discretionary

When someone sits down to do a household budget, they are usually categorizing spending in two broad categories: Necessary or Discretionary. Necessary expenses are vital to your life. There is not a lot of opportunities to cut back on ‘must-haves,’ but it does get us to think about how we spend on items like shelter and food.

Discretionary expenses are where we spend for leisure, such as eating out or going to the movies. This concept may seem simple, but what we consider necessary can significantly vary. A cell phone, car, or internet may not seem “vital,” but these all might be vital to your income. What this means is that we often have to look at both “necessary” and “discretionary” expenses to figure out where we can cut back.

Let’s take a look at an example:

Jane Doe’s Budget

Necessary (Monthly)Discretionary (Monthly)
Groceries: $400 — Change to $300Movies: $20 — $0
Household items: $50 — Change to $35Eating out: $100 — Change to $20
Rent: $1,000 — Can’t change right nowGym: $50 — Change to $0
Internet: $100 — Change to $40Storage: $100 — Change to $0

Jane’s expenses went from $1,820, to $1,395. Saving $425 after reviewing only 8 expenses.

Jane Doe recently lost her job. She decides to take a look at her budget to begin cutting back on expenses. Jane spends $400 on food and $50 a month for household items. However, she knows that there are certain expensive foods and cleaning products that she could cut back on. Jane decides to cut back on costlier items in to be more budget-conscious. She researches cheaper brands and estimates spending caps to stay under her limit.

Jane then looks at her rent. Having signed a new lease just two months ago, this expense is not going to change. Jane keeps the rent budgeted as is and moves on to her internet expense; another item deemed essential due to necessary job hunting to restore income. While the internet is a necessary expense, Jane’s TV/internet bundle can be reduced to include fewer TV channels for additional savings.

Finally, Jane takes a look at discretionary items to see what she can cut; movies aren’t essential, certain subscription services can be removed, and Jane aims to cut back on eating out.


Why an Emergency Budget is Worth the Effort

While not easy, cutting back on spending can significantly help with the stress of keeping finances together. In the above case Jane may have lost a job, but by lowering expenses in her budget, she extends how long her income from unemployment and her reserves in emergency savings will last her. For another person who doesn’t make these kinds of budgetary cuts, the stress from mounting bills and dwindling savings can cause adverse impacts.

One thing that is often important to remember is that a bare essentials budget does not have to be forever. Strict budgeting is a safety measure that you follow to get back on track during hardship.

Following a budget while confronting financial difficulty can help you avoid serious debt, hurting your credit, and making sure that you have money to pay for groceries week to week. An essentials budget helps with financial safety and alleviating stress, and it may be one of the most important tools to have during an unexpected life event.

If you are experiencing financial hardship or simply want to chat about your financial future, do not hesitate to contact GLCU at (800)982-7850.  We offer several free financial wellness services including but not limited to; budget counseling, debt management, credit counseling, bankruptcy/foreclosure prevention, and more. No question is too big or small for GLCU’s HUD-Certified Housing Counseling team and we are standing by ready to assist!

Your checking account is about far more than having somewhere to safely store your money and obtain debit card access. You can take advantage of your checking account to move forward in reaching your financial goals. These five checking account benefits can help you on your path to financial stability. 

1. Budget Easier

Using a checking account for your purchases and deposits allows you to keep track of your exact income and expenses. 

When you operate using other methods such as cash only, it’s more challenging to track how much you spend. Therefore, it’s not as simple to create a monthly budget.  

When you’re ready to develop your budget, you can review your income and expenses from the last three months based on your checking account statements. That information will help you determine your budget categories and amounts, along with any areas in which you’re spending too much. 

2. Automate Payments

If you’re repaying loans or credit cards, one of the worst things you can do is miss a payment or pay late, as it can harm your credit score. Sometimes you have no choice but to miss a payment due to financial hardship, but other times, it’s as a result of mere forgetfulness. 

A checking account with bill pay allows you to remove that possibility by automating payments. All you have to do is set up automatic bill pay to ensure your payments are made on time every month. Never worry about paying late fees or having your late payments reported to the credit bureaus. 

3. Meet Your Savings Goals

Saving money can be a challenge.

According to a study by the Associated Press-NORC Center for Public Affairs Research, two-thirds of Americans would struggle to come up with $1,000 in an emergency. 

Are you one of the two-thirds? If so, you can use your checking account to automate your savings by making automatic transfers to your savings account each month. 

If you’re on the other side and have at least $1,000 in the event of an emergency, you can still take advantage of automatic savings to build upon what you have already saved. 

4. Know Your Financial Standing

With the convenience of a checking account, you can quickly review your finances at any point to determine how much money you have available. 

This knowledge enables you to make well-informed choices related to how you will spend your money and how much you could be saving, investing, etc. to move you forward in your life. 

5. Protect Your Money

As long as your checking account is with an insured financial institution, your funds are protected for up to $250,000 per depositor per account.

If you have a bank, it will be insured by the Federal Deposit Insurance Corporation (FDIC) while a credit union is protected by the National Credit Union Administration (NCUA).  

This insurance means that in the event of a financial mishap, including identity theft or fraud, any money taken from you will be returned to you as soon as possible. 

If you solely use cash or keep your money in accounts places that don’t provide insurance coverage, you are not protected if something unfortunate happens. 

Choosing The Best Checking Account For Your Finances

When you select a checking account, it’s essential to look at the options that will offer you the best features so you can reap all the benefits possible. 

At GLCU, we offer no monthly fees, no minimum balance, mobile check deposit, and an instant-use Visa Debit Card. 

You’re striving to improve your credit, and while a checking account can help you do that, you want to choose one that gives you all of the benefits and features you need to make your journey even easier. 


Learn more about our checking account options today.

When you’re ready to open a free checking account, you have several banking options available to you. However, there’s a reason why credit unions are preferred time and time again over traditional banks and online banks. Actually, we can name seven reasons. 

While you have many choices available, the financial institution where you choose to open your free checking account can significantly impact your banking experience. That’s why you want to make sure you choose wisely. 

1. Non Profit Status

The primary reason why credit unions offer better free checking accounts is their nonprofit status. 

Unlike traditional banks, they don’t operate with their profit goals front and center. Instead, they have the interests of their members at the forefront. Since profit is not of primary concern, credit union practices are generally more beneficial to the members. 

2. Members Have Voting Rights

As a member of a credit union’s cooperative organization, you are a co-owner and have voting rights to help determine important decisions within the credit union. These decisions include tasks such as selecting credit union board members. Your co-owner status allows you to vote on how the credit union operates and select options that benefit you. 

As you continue reading, most of the primary reasons why a credit union offers improved service stem from their nonprofit status. 

3. Offer Higher Savings Rates

Credit unions will pass along the savings they experience to their members. This is often seen in their ability to offer higher interest rates on their deposit accounts. Whether you have a free checking account, a high yield checking account, a savings account or money market account, you can expect to have a higher interest rate at a credit union. 

4. Provide Better Member Service

Credit unions tend to be smaller in size with fewer chains and provide a more personalized member care experience. 

Due to their size, credit unions get to know you by name or by face, instead of being just another member. By developing a relationship with the staff, you build a level of trust that makes handling your banking needs with the credit union better. 

5. Charge Fewer Fees

Most credit unions strive to decrease the amount their members pay in fees. You will find a $0 fee for most transactions that you’d typically pay for at a bank. When a fee is required, like processing a returned check, you can expect to pay less than you would at a traditional bank.

Along with offering free checking accounts, many credit union accounts also have $0 minimum balance requirements. Although fees are generally small, they can add up quickly, so paying no fees or less in fees will save you money over time.  

6. Flexible Decision Making

Since credit unions are smaller and customer-oriented, they are also more flexible with their decision making in regards to who is approved for checking accounts, credit cards, loans, etc. 

Credit unions have the capacity and wherewithal to focus on each member application. When they do this instead of quickly passing paperwork through a process based on a set of predetermined requirements with no flexibility, they experience an increased acceptance percentage. 

Also, many credit unions come to know their members individually. So, if you try to qualify for a product such as a credit card, the bankers will review your standing with the credit union and consider your history with them. 

7. Lower Loan & Credit Card Interest Rates

While credit unions are known for offering higher interest rates for deposit accounts, they provide lower interest rates for loans and credit cards. 

Again, since profit is not their primary focus, they can pass their savings on to you as a member in the form of lower rates. When you secure a loan or credit card from a credit union, you can save hundreds or thousands of dollars over the period in which you borrow money. That savings is a significant benefit to your finances. 

Open A Free Checking Account At A Credit Union

When you’re ready to open a free checking account, consider doing so at your local credit union. 

The seven reasons why credit unions have better checking accounts and offer an improved banking experience overall isn’t all-inclusive. Once you open a free credit union checking account you’ll discover more reasons why it’s a great option. 

If you haven’t experienced the credit union difference, the time is now! 

Checking Account Definition

A young woman monitoring the balance of her checking account

A checking account is a transactional account that’s held by a bank or credit union. You deposit your funds into the account and your financial institution allows you to make withdrawals and deposits. 

A checking account by definition of being transactional is designed for frequent transactions. You’ll typically have access to your funds through a debit card, checks, ATM, or by going to the bank branch in person. 

Some common reasons for using a checking account include handling your daily spending needs, making online transactions, and paying your bills online or over the phone. 

There are various types of checking accounts you can open, including a personal checking account, high yield checking account, student checking account, business checking account, and more. You must select an option that meets your specific needs. 

Why Open A Checking Account?

Some of the reasons why you should open a checking account have already been touched on, but here’s a more detailed breakdown of the benefits of using a checking account to store and manage your money. 

Your money is protected

One of the primary reasons to open a checking account is to keep your money safe. When you open an account with a bank or credit union that’s insured by the Federal Deposit Insurance Corporation (FDIC) or National Credit Union Association (NCUA), respectively, your money is protected in the event of a financial mishap.  

The FDIC and NCUA will protect your funds up to $250,000 per account. If you choose not to use a checking account and instead relied on a cash-based system, you wouldn’t get this level of financial protection.

Conveniently access your funds

Along with keeping your money protected, you can conveniently and easily access money that’s stored in a checking account. There are several ways to do so. 

Most banks and credit unions offer individual locations and branches. Even those that aren’t available in your area or are only online sometimes have sister branches you can visit to conduct financial business.

You can use an ATM to make deposits and withdrawals conveniently. Your financial institution might have an ATM or offer you the ability to access those within their network at a free or reduced rate. 

Most accounts will also provide you with a debit card and checks so you can easily make purchases as needed.

Finally, when you set up a direct deposit through your employer, you gain access to your money quickly. Doing so allows you to easily access your funds without worrying about depositing a check and waiting for it to clear or cashing it and having to keep track of large amounts of money. 

Online and mobile banking

Another convenience offered through a checking account is the ability to manage your finances through online and mobile banking. 

When you complete your financial transactions online, you can view your balances and activities at your convenience 24/7, transfer funds between different accounts, and more. 

Mobile banking is also an option available on a mobile app that allows you to complete many of your financial transactions from your phone or other mobile devices. 

With online banking, you can work with banks you might not have previously considered that are only online or not in your area. Now, more than ever, it’s easier for you to bank anywhere and still receive the level of service you need and desire. 

Deciding Why You Should Open A Checking Account

Are you still on the fence about why you need to open a checking account? 

Review these additional resources for more information on the benefits of opening a checking account.