Preparing to borrow.

Everyone typically borrows money at some point throughout life. Mortgages, auto loans and college loans help you afford things that may be beyond your current financial reach and credit cards can provide convenience. However, borrowing money can also be cause for serious problems if you rely on it too much or you do the wrong type of borrowing.

Some fundamentals
As your credit union, we're here to help serve your financial needs, and that includes helping you borrow money. We're also here to help you build a strong financial future. That's why before applying for a loan or a credit card, there are some important things we encourage you to consider:

• Why are you borrowing?
  We recommend borrowing for things that provide long-term value before borrowing for things that provide only momentary enjoyment.
  Any money you borrow you’ll need to repay with interest. That means if you buy that new wardrobe with a credit card that "sale" may end up costing you more in the end. Be sure you can afford the payments that the borrowing will require. Also, spend some time to find the loan with an interest rate and terms that best fits your situation.

Getting ready
Before sitting down to fill out a loan application or arranging a meeting with a loan officer, here are some items you may want to know:

• Your credit report.
  All lenders will order a credit report and you should know what yours contains. You can visit www.annualcreditreport.com to obtain a free credit report once annually from the three major credit reporting agencies.

• Proof of income.
  Depending on the type of loan, you may need to provide proof of income.

• Tax return.
  If you’re applying for a mortgage or a large personal loan, you’ll probably need to supply copies of at least one federal tax return.

• Personal financial statement.
  For mortgages and other large loans, lenders may require that you supply a financial statement listing all your assets and liabilities. It‘s also a good idea to prepare a personal financial statement annually as part of managing your finances.

What lenders are looking for
Remember that lenders are loaning you money that they want repaid along with interest. This is their business and they want to make sure that you’ll be able to live up to your repayment responsibilities. Along with the items mentioned above, they’ll be looking at other aspects of your finances to get the comfort to approve your loan.

Final words
The decision to borrow money is serious and we encourage you to thoroughly understand the loan terms and conditions before signing on the dotted line. Spending a little time to think about borrowing and being properly prepared will make the process easier and help you build a stronger financial future.