Frequently Asked Questions for a 1st Mortgage Home Loan
1. What is the maximum monthly payment I can qualify for?
The USU Charter Credit Union (USUCCU), like most lenders, qualifies you as a prospective borrower by looking at your income and debts. For conventional loans, standard industry debt-to-income ratios are 28/36. This means that up to 28% of your gross monthly income may be used for the payment of your mortgage, or up to 36% of your gross monthly income may be used for your total monthly debts (i.e., credit cards, car loan payments), including the amount of your new mortgage payment. USUCCU also offers programs with more relaxed qualifying ratios. Call (435-713-1800) or
your Mortgage Loan Associates for information about programs with expanded ratios.
2. What are discount points?
Discount points are a percentage of the loan amount that you can pay to reduce your interest rate. One "point" equals 1% of the loan amount. If you're going to be in your home for a relatively short period, it may not be worth it to you to pay discount points to reduce your rate. If you would like to lower your monthly payment by lowering your interest rate, then paying points up front may be the best way to do this. Calculate your break-even point by subtracting the difference between the payments of a no-point loan and a specific discount-point loan. Then divide the extra cost of the discount points by the monthly savings amount. This is the number of months it will take to recoup your costs and start saving monthly with the reduced rate.
3. What is APR?
APR stands for "annual percentage rate" and reflects the interest rate charged on the loan plus prepaid finance charges, such as the points and financing costs you pay in obtaining the loan. Other lenders may quote a low interest rate, but often charge miscellaneous fees in addition to origination and closing fees. You'll want to look closely at the APR to see how much you're really paying for your loan. At USUCCU, we're committed to quoting our rates accurately and letting you know about any pre-paid fees up front.
Within three days of application, USUCCU will issue you a good faith estimate -estimating your closing costs- and a truth-in-lending statement -disclosing your APR and explaining precisely how much your loan will cost you with all related fees and charges.
4. What does my monthly mortgage payment consist of?
Your monthly mortgage payment consists of a payment on the principal of your loan, the interest payment, and your escrow payment (monthly payments collected to pay for your hazard insurance, mortgage insurance if required and property taxes.) This is commonly referred to as P.I.T.I. (principal, interest, taxes and insurance.)
5. When should I lock in my interest rate?
To be an informed buyer, you'll want to be aware of what interest rates are doing. Have they been falling or rising? Depending on the market, you may want to wait before locking in an interest rate, or you may want to lock in as soon as possible. Although we can’t tell you when you should lock-in, we can provide you with some tools that will keep you advised on what the markets are doing and general trends.
6. Once I apply, how long will it take before I receive an approval?
If you meet certain criteria, you can receive a loan decision before you leave our office. Otherwise, it still takes only 48 hours for your loan decision. Some programs, however, may require additional documentation and verification, so approval may require a longer timeframe. Check with your USUCCU Loan Officer for an estimate of the time that it will take to receive your approval.
7. How much money will I need at closing?
Your closing costs will depend upon the amount of your down payment as well as the various fees charged to finalize the purchase of your home. Generally, conventional loans require a minimum of 3% to 10% of the sales price in down payment. FHA loans require at least 3% to 5% down, while VA loans can often be financed for 0% down. Closing cost fees will include such items as mortgage insurance, prepaid taxes, attorney's fees, title insurance, etc.
Within three days of application, USUCCU will provide you with a Good Faith Estimate of all closing costs.
8. Why should I choose the USU Charter Credit Union?
If there's one thing that's true about buying a home, or refinancing one, it's that you'll always have questions. That's why the most important thing you should look for in a mortgage lender is the knowledge and helpfulness of its people.
At USUCCU, we're here to answer your questions, to recommend the right program, and to help you understand the process every step of the way, from application to closing. We have dozens of Conventional, FHA and VA loan programs including fixed, adjustable rates, balloons, first-time buyer programs and more. We offer programs that make it easier to get started with low down payments and relaxed qualifying guidelines. All of our programs offer competitive rates. As one of Cache Valley’s prominent mortgage lenders, we're in the business of putting people into homes, and we can do it quickly and cost effectively.