Real Estate
Frequently Asked Questions


General Mortgage Information

What is a mortgage?

A mortgage is a secured lien that uses your property as collateral to secure repayment of your loan. When you close your loan, the lender will place a lien against the value of your property. Mortgages are used to purchase a home, while a refinance mortgage allows you to use your equity to renew your original mortgage at a different rate and/or a different term, or to use the proceeds for any purpose you desire.

What is a Home Equity Loan?

A Home Equity Loan allows homeowners to borrow against the equity in their property. Equity is the difference between the outstanding liens and fair market value of the property. Homeowners often apply for this type of loan to make home improvements, pay college tuition or pay off debt. A Home Equity Loan (also known as a second mortgage) typically has a fixed-rate, but PFFCU also offers a 20-year Adjustable-Rate Home Equity Loan.

What is a Home Equity Line of Credit?

This is a secured, variable-rate revolving loan that allows you to borrow against the available equity in your primary residence. A Home Equity Line of Credit (HELOC) can be used for expenses such as home improvements, college tuition, or even a down payment for a second home. You can easily access your funds by speaking to a Telephone Member Service Representative, going to a branch, using HELOC convenience checks, through 24-hour EXPRESS Banker, PC EXPRESS, or Mobile PC EXPRESS.

How do I figure out how much equity I have in my property?

Equity is determined by subtracting any outstanding liens against the property from the fair market value of the home. Equity increases as the balance of the mortgage loan decreases, or as the property appreciates in value.

How do I calculate the mortgage amount I qualify for?

Our affordability calculator will help you determine how much you can afford based on your income and expenses.

I haven’t yet decided on what property I would like to buy. Can I still apply?

Yes. You should complete our Home Purchase Worksheet, making the best guess you can as to the city and state where you wish to purchase, and provide an estimate of your property taxes.

Should I refinance my existing mortgage?

Refinancing to a lower rate can save you money. Our Refinance Calculator can provide you with information on these savings.

To manually determine if refinancing is beneficial, subtract the amount of the new monthly mortgage payment from your current monthly mortgage payment. Divide the closing costs by that amount to see how many months it will take to recover your costs. If you plan to be in your home for at least that many months, refinancing may be a good idea.

How long will it take to process my application?

PFFCU is committed to providing our members with the highest possible level of personal, attentive service. Our goal is to close your Mortgage loan in 30 days from the date of application and close your Home Equity Loan in 21 days from the date of application.

I’ve submitted the worksheet, but I haven’t received a response. What should I do?

If you need to contact us for any reason, please email Member Service and we will follow up with you. You may also call us at 215-931-0300 or 800-228-8801 and ask to speak with one of our Loan Advisors.

What are the components of a monthly payment?

The monthly payment is determined by the loan amount, the loan term, and the interest rate. The components of a monthly payment may include the following:
  • Principal: This portion of the payment is applied to the outstanding balance of your loan.
  • Interest: This portion of the payment is the finance charge you pay to PFFCU for lending funds to you.
  • Real Estate Taxes: This portion of the payment is 1/12th of the estimated yearly taxes on your home. PFFCU collects the payments and pays the taxes for you when they are due. This is known as Tax Escrow.
  • Insurance: This portion of the payment is 1/12th of your annual homeowner's insurance payment. PFFCU collects the payments and pays your insurance for you when it is due. This is known as Homeowner's Insurance Escrow.
  • PMI: Primary Mortgage Insurance is required when your loan exceeds 80% of the value of your property. Use PFFCU's "No PMI" mortgage to avoid this if your total LTV exceeds 80%.
  • In some cases we may allow you to pay your own taxes and insurance, however there is a fee for the waiver of Tax Escrow. Ask your PFFCU Mortgage Advisor about waivers of escrows. Some loans may also require Flood Insurance.

Where can I obtain my amortization schedule?

Use one of our calculators to obtain an amortization schedule.

Can I make extra principal payments to pay off my loan sooner?

Yes. Although some lenders charge you a penalty if you prepay your loan, at PFFCU you can make extra principal payments at any time, in part or in full, without a penalty. Use our Prepayment Calculator to find out how prepayments can reduce your total payments over the mortgage term.

My mortgage lender has asked me for PFFCU's requirements for subordinating a Home Equity Loan at PFFCU. What are they?

These are the five requirements needed to make a decision for Subordination of a PFFCU Home Equity Loan:
  • Copy of Title Insurance Commitment
  • Copy of Appraisal, except for a Streamline Refinance. Lender will inform you if your loan is a Streamline Refinance.
  • The Subordination Agreement to be supplied by the New 1st Mortgage Lender (requesting the subordination).
  • Copy of the Mortgage Commitment Letter
  • $50 fee to PFFCU
Requirements should be sent to PFFCU via UPS, Fed Ex or any vendor the company chooses (along with a return envelope). Subordinations typically take up to 7 Business days to be completed.

Please send requirements to:

PFFCU Loan Center
4 Greenwood Square Office Park
3325 Street Road
Bensalem, PA 19020
Attention: Home Equity Subordination

How To Calculate Your total LTV – Loan-to-Value Ratio

Add your loan amount and the amount of any outstanding liens on your property. Divide the total by the fair market value of your home. The result is your total Loan-to-Value (LTV) ratio. Your LTV will be a factor in determining your interest rate and how much you can borrow.

Where do I send my tax and homeowners insurance bills?

Please foward the ORIGINALS of these bills to the following address:

PFFCU
ATTN: MORTGAGE SERVICING DEPARTMENT
3325 STREET ROAD
4 GREENWOOD SQUARE
BENSALEM, PA 19020

In most cases tax authorities require the ORIGINALS of these bills to be provided with payment. Copies are not accepted.

Rates, Terms & Points

How do I know what type of loan to get?

The type of loan you want depends on how long you plan to stay in your home and your desired monthly payment. We offer several types of loans, including fixed-rate mortgages and adjustable-rate mortgages (ARMs). For more information on the types of loans we offer, visit our rates page or call one of our Mortgage Professionals at 215-931-0300 or 800-228-8801.

Our adjustable-rate vs. fixed-rate mortgage comparison calculator can also help you decide which mortgage is right for you.

What are points?

Points are essentially prepaid interest. One point is equal to one percent of your loan amount. By paying points at settlement, you reduce the interest rate you pay on a loan. Paying more points at closing will lower your mortgage loan rate and monthly mortgage payment.

What is the difference between a fixed-rate mortgage and an adjustable-rate mortgage?

Adjustable Rate Mortgages (ARMs) offer lower interest rates than fixed-rate mortgages in the early years of the loan. This provides lower monthly payments that are especially attractive to first time home buyers and home owners looking to buy a larger home. A fixed-rate mortgage has an interest rate that will never change during the term of your loan.

Although an ARM usually offers a lower initial interest rate than a fixed-rate loan, after the initial fixed period the loan rate and monthly payment will adjust higher or lower depending upon market conditions. The frequency of the interest rate and payment changes are stipulated in the mortgage contract. The amount of the first change for the ARM is based on an index (usually a treasury security) and a margin (a percentage over the index). Both are included in the loan note. Ask an advisor about how these adjustments work. PFFCU offers terms up to 30 years with fixed rates, and adjustable rate mortgages with 30-year terms where the initial interest rate and payment are fixed for the first 5 or 7 years, then an adjustable rate, which may change annually.

ARMs also have a lifetime interest rate cap that gives you peace-of-mind because you will know your maximum possible interest rate. For the 5-year ARMs, the initial interest rate can increase or decrease up to 2% annually, with a lifetime interest rate cap of 6% higher than the initial rate. The 7-year ARM can adjust up or down by 5% in the first year after the fixed-rate period. In subsequent years, the rate can increase or decrease up to 2% each year, with a lifetime cap of 5% higher than the initial mortgage rate. All PFFCU ARMs have NO prepayment penalties.

If you have additional questions about ARMs as compared to fixed-rate mortgages, a PFFCU Mortgage Advisor can help you choose the mortgage product that is right for you.

What is Locking-In?

When the interest rate on a mortgage loan is "Locked- In," that loan rate is guaranteed for a specified period of time, which is indicated on the Rate Lock Confirmation you receive. There is a good faith deposit that you must make to lock in your rate, which may be refunded when your loan closes.

For 10 year and 15 year fixed rate mortgages and all Adjustable Rate Mortgages (ARMs):
If you choose to lock in your rate, on the fourth (4th) business day before your scheduled closing date, PFFCU will compare that day’s interest rate for your loan, with the rate you locked in. The interest rate for your loan will be the lower of those two rates! At closing, your good faith deposit will be returned to you.

For 20 year and 30 year Fixed Rate Mortgages:
If you choose to lock in your rate, you will receive the locked in rate at closing. Your rate will not be lowered if the interest rate for your loan is lower than your locked-in rate on the fourth (4th) business day before closing. Your good faith deposit will be returned if your loan closes at the locked in rate. If you choose to close at the lower rate, your good faith deposit will not be returned.

For all loans: If your loan does not close on the scheduled closing date, and/or your rate lock expires, your rate will be subject to change, and you may not have your good faith deposit returned.

Please call one of our Mortgage Advisors at 267-332-3400 for important conditions and additional information.

Closing

What is closing?

"Closing" is the day when the sale or purchase of a home is complete, or when you receive the proceeds of your refinance loan. This is also known as "settlement".

What are closing costs?

Closing costs vary based upon a number of factors, including the type of loan you choose.

Our Express Refinance mortgage program offers the lowest closing cost, just a $995 fee that can be included in your loan.

For conforming loans closing costs are expenses that are paid at closing or settlement that are in addition to your down payment. Fees paid to PFFCU are generally lower that what other competitors charge.

Some examples of closing costs associated with getting a new loan are:
  • Title Insurance
  • Title Agent Fees
  • Government Recording Charges
  • Transfer Taxes
  • Processing Fee
  • Appraisal Fee
  • Underwriting Fee
Some examples of funds that you are required to have covered at closing are:
  • Property taxes
  • Homeowners insurance
  • Interim Interest to cover the time period until the 1st of the next month after closing.
These items are not lender fees, but expense that you would have to budget for regardless of refinancing your loan. Costs such as these may be incorporated into your new loan.

What is the Good Faith Estimate?

After you apply for a loan, the lender will disclose an estimate of the fees associated with that loan, whether you are buying a home or refinancing. This estimate will include the fees and closing costs you will be expected to pay at closing.

What is Private Mortgage Insurance? When do I need to pay it?

Private Mortgage Insurance (PMI) is required when your loan exceeds 80% of the value of your property. This insurance protects the lender against loan default. Disclosures regarding PMI are provided to you when you apply.

PFFCU also has a "No PMI" EXPRESS Refi product, which offers a cost-effective way to avoid Private Mortgage Insurance.

Do I need homeowner’s insurance?

Yes. PFFCU requires members who close Mortgage and Home Equity Loans to maintain adequate homeowner’s insurance on their property for as long as we hold the mortgage lien on your property. PFFCU may require you to pay a portion of your homeowner’s insurance premium as part of your monthly payment, and PFFCU will pay the premium when it comes due.

Learn more about the home insurance plans that PFFCU offers through MEMBERS® Homeowners Insurance.

Do I need title insurance?

Title insurance protects the lender and homeowner against any loss resulting from a title error or dispute. Title insurance protects the homeowner until the property is sold. A title search is a search of public records to confirm the property’s owner and to find out if there are any liens against the property. New title insurance policies are required on mortgages for a home purchase and traditional refinance mortgages. Title insurance is not required on our Home Equity Loans or our EXPRESS Refi Mortgages.

Do I need flood insurance?

Flood insurance is required for properties located in federally designated flood areas as determined by FEMA (Federal Emergency Management Administration). When you apply for a Mortgage or Home Equity Loan with PFFCU, a flood determination certificate is purchased to determine if you are in a flood plain. It is important to note that regular homeowners insurance does not cover flood losses.