| General Mortgage Information
Rates,
Terms & Points
Closing
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.
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What
is a Home Equity Loan?
A
Home Equity Loan allows homeowners to borrow against the
equity in their property. Equity is the value of a homeowner’s
interest in real estate. Homeowners often apply for this
type of loan to
make home improvements or to pay college tuition or pay off debt.
Home Equity Loans (also known as second mortgages) typically have
a fixed-rate, but PFFCU does have a 20-Year Adjustable-Rate
Home Equity Loan.
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What
is a Home Equity Line of Credit?
This is a secured, interest-only, variable-rate
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, education, a vacation
or even a down payment for a second home. Checks are available
if you wish to write a check against your line of credit.
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How
do I figure out how much equity I have in my property?
Equity is determined by subtracting any outstanding liens against
the property and the remaining balance on your mortgage from the
fair market value of the property. Equity increases as the balance
of the mortgage loan decreases or as the property appreciates in
value.
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How do I figure the amount of mortgage
I qualify for?
Our affordability
calculator will help you determine how much you
can afford, based on your income and expenses.
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Who
do I call if I have questions?
You can reach us via
email or by calling 215/931-0300 or 800/228-8801
and request to talk with a Mortgage Advisor in our Mortgage
Department.
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I
haven’t decided on what property I would
like to buy. Can I still apply?
Yes. You should fill-out our Mortgage Application and make your best
guess as to the city and state that you wish to purchase in, and
provide an estimate of your property taxes.
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Should I refinance my existing mortgage?
Refinancing to a lower rate can save you money.
You can better determine if it pays to refinance by comparing your
current payment to the reduced payment of the new mortgage and
comparing these savings to the cost to close the loan. By dividing
the closing costs of your refinance by the difference in these
two payments you can see how many months it will take you to recover
your closing costs in payment savings.
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How
long will it take to process my Mortgage or Equity Loan application?
When you apply by phone or in person you'll receive
a loan decision in one hour*. When you apply online, you'll receive a
response in one business day. You will be asked to provide
us with some information and
some documentation. We will have your home’s value determined
by a state-licensed appraiser or a property valuation model and
title insurance will need to be obtained. 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.
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I’ve
submitted my application, but I need to contact
PFFCU about my application.
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.
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What
are the components of a monthly payment?
The monthly payment is determined by the loan amount, the term of
your loan, and the interest rate. The components of a monthly payment
are the following:
- Principal:
The portion of your loan that is being repaid with this payment.
- Interest:
A portion of the amount of finance charge you are paying us
for the use of the funds borrowed.
- Taxes:
This applies if your taxes are being held in an account for
payment when due by PFFCU. (This
is known as Tax Escrow.
- Insurance:
This is the portion of your payment that will be held for payment
of homeowners’ insurance
premiums when they come due. (This is known as Homeowner
Insurance Escrow.) In some cases
we allow you to pay your own taxes and insurance, however
there is a fee for waiver of Tax Escrow. Ask your PFFCU Mortgage
Advisor about
waivers of escrows.
- PMI:
Primary Mortgage Insurance is required when your loan exceeds
80% of the value of your property.
(Some loans may require Flood Insurance.)
^top^ Where
can I obtain my amortization schedule?
You can obtain an amortization schedule by using
our calculators. ^top^
Can
I make extra principal payments to pay off my loan sooner?
Yes. You can make extra principal payments at any time, in part
or in full. (Please note that some other lender’s
loans may be subject to prepayment penalties.)
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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 what your desired monthly payment is.
We offer several types of loans, including fixed and adjustable rate
mortgages (ARMs). We even have a 0% down payment loan that enables
you to purchase a home without any down payment required. For more
information on the type of loan you desire, visit our rates
page or call one of
our Mortgage Professionals at 215/931-0300 or 800/228-8801.
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What
are points?
One point is equal to one percent of your loan amount. Points are
essentially prepaid interest. 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.
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What
is the difference between a fixed-rate mortgage
and an adjustable rate
mortgage?
The question whether to get a fixed-rate mortgage
or an ARM has puzzled home buyers for years. Members who are purchasing
a home should consider the following before making their decision:
- How long do you plan to stay in your home?
- Can I afford the loan payment if the interest rate
on the ARM loan increases?
ARM's offer lower interest rates than a fixed-rate mortgage
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. An ARM
offers a lower initial interest rate than fixed-rate loans, however
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 treasure
security)
and a margin (a percentage over the start rate). Both are included
in the loan note. Ask an advisor about how these adjustments work.
PFFCU offers ARMs with the initial rate fixed for 3, 5, 7, or 10
years with a loan term of 30 years.
After the initial fixed-rate period, the rate can change
annually. There is also a lifetime interest rate cap
that gives you peace-of-mind because you will know your
maximum interest rate. For the 3 and 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 and 10-year ARMs
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.
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What
is Locking-In?
When the rate of
interest on a mortgage loan is "Locked- In", that loan
rate is guaranteed at settlement. There is a deposit associated
with Locking. Please refer to our Rate
Lock Policy for additional
information.
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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 day.
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What
are closing costs?
Closing costs are expenses that are paid during
closing or settlement that are in addition to your down payment,
pre-paid property tax and homeowner’s insurance. Closing
costs vary, please contact a Mortgage Advisor for more details.
The borrower usually pays closing costs associated with a Mortgage.
Some purchase mortgages allow for the seller to pay some portion
of the closing costs. There are closing costs associated with both
purchase and refinance mortgages.
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What
is the Good Faith Estimate?
After you apply for a loan, the lender will disclose an estimate
of the fees and costs associated with that loan, whether you are
buying a home or refinancing. This estimate will include the fees
you will be expected to pay at closing.
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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. You are provided disclosures regarding
PMI when you apply. PFFCU also has a "No PMI" mortgage
product, which offers members a cost-effective way to bypass Private
Mortgage Insurance.
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Do
I need homeowner’s insurance?
Yes. PFFCU requires members who close Mortgage
and Home Equity loans to maintain adequate homeowners
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, however PFFCU will pay
the premium when it comes due. Learn more about the home insurance
plans that PFFCU offers through MEMBERS® Homeowners Insurance.
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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 purchase money mortgages and
traditional refinance mortgages. Title insurance is not required
on our 20-year Home Equity Loan or our EXPRESS Refi Mortgage. ^top^
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 normal homeowners insurance does not cover flood losses. ^top^
*One hour loan decisions are contingent upon receipt of all required application information. |
