Mortgages 101

Applying for a Mortgage

Lenders consider many factors in evaluating your application, including:

  • Credit
  • Income
  • Debt
  • Assets
  • Property

Pre-approval

Getting pre-approved means you receive a loan commitment from your lender before you have found a home, based on a review of your credit and finances. Having your credit pre-approved shows sellers that you’re a qualified buyer and helps you establish a clear price range.

Down-payments

Many home buyers believe they must be able to put down as much as 20% of a home’s purchase price in cash. That may have been true in the past, but many of the mortgage options available today require little or no down payment.

Mortgage Payments

Each monthly mortgage payment goes toward the following:

  • Principal, which is the total outstanding balance of the loan
  • Interest, which is the cost of borrowing money
  • Taxes, which are levied on the property by the local government
  • Insurance, which protects the owner and the lender from losses caused by fire or natural hazards

Mortgage Insurance

Private Mortgage Insurance (PMI) provides your lender with a way to recoup its investment if you are unable to repay your loan. PMI is usually required when the mortgage amount is higher than 80% of the home’s value. However, it is NOT required with the CU Promise 90 loan!

Closing Costs

Closing costs vary based on a number of factors including mortgage type and lender.  In general, the following are usually included in costs required at closing:

  • Prepaid items. Certain costs must be paid to your lender in advance. These include pre-paid interest and deposits to set up escrow accounts for homeowners insurance and real estate taxes.
  • Lender fees. Expenses related to making the loan to include but not limited to origination and discount points.
  • Third party fees. Services provided by third parties such as title work, appraisal and credit report fee.

AnnualCreditReport.com (Obtain a free copy of your credit report)

To check your credit score visit:
www.equifax.com
www.experian.com
www.transunion.com