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Mortgage

First Mortgage FAQs

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First Mortgages Questions

Questions & Answers

What is the Truth-In-Lending Act?

The Truth-In-Lending Act is a federal law requiring written disclosure of the terms of a mortgage by a lender to a prospective borrower within three days of application.

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What is a Mortgage Broker?

A mortgage broker is a person or entity that arranges financing for borrowers, but places loans with lenders rather than funding them with the broker's own money. 

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What is a Closing (or Settlement)?

A closing is a meeting between the buyer, seller and lender or their agents at which property and funds legally change hands. 

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What is Prepaid Interest?

Interest charged to a borrower at closing to cover interest on the loan between closing and the end of the month in which the loan closes.

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What are Convertible ARMs?

Adjustable rate mortgages with the option of conversion to a fixed rate loan during a given time period.

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What is a Mortgage Loan?

A loan for which real estate serves as collateral to provide for repayment in case of default. 

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What is a Mortgage Note?

It is a legal document obligating a borrower to repay a loan at a stated interest rate during a specified period of time. The agreement is secured by a mortgage. 

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What are Discount Points?

Money paid to a lender at closing in exchange for a lower interest rate.  Each point is equal to 1% of the loan amount.

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What are Seller's Points?

A lump sum paid by the seller to the buyer's creditor to reduce the cost of the loan to the buyer.  This payment is either required by the creditor or volunteered by the seller, usually in a loan to buy real estate. Generally, one point equals one percent of the loan amount. 

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What advantages would I have by getting a 15 year loan versus a 30 year loan for my first mortgage?

A lower interest rate and a reduction in finance charges over the life of loan. 

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What is an Estimated Settlement (or Closing) Statement?

A document provided by the closing agent a few days before closing, detailing all costs and indicating the final sum the buyer will be required to bring to the closing. 

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What would it cost me to refinance my first mortgage?

The cost to refinance your home depends both on the loan amount and the type of loan product you want. For example, conventional, FHA and VA loans have different fees associated with each particular loan type.  You can obtain a quote of closing costs by contacting a loan officer at 800-357-3729 or apply online at http://mortgages.cumortgage.net/rates.asp?siteId=6E5CC923-F933-40CA-B1B0-A20A68D95F94.

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What are Points?

Finance charges paid by the borrower at the beginning of a loan, in addition to monthly interest.  Each point equals one percent of the loan amount. 

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Are there any deals for first time home buyers?

FHA loans are ideal for first time home buyers and low-to-moderate-income borrowers.  Loans are insured by the Federal Housing Administration.  Down payments may be as little as 3% and the loans are assumable with release of liability to the original borrower.

These loan limits are determined by the Department of Housing and Urban Development (HUD).  These loans can also be fixed or adjustable rate.

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What is an adjustment interval?

The adjustment interval is the length of time between rate adjustments on an Adjustable Rate Mortgage (ARM). 

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How can I apply for a first mortgage loan?

Call us at 800-357-3729 or click on http://mortgages.cumortgage.net/rates.asp?siteId=6E5CC923-F933-40CA-B1B0-A20A68D95F94.

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What is Mortgage Insurance?

Insurance purchased by a buyer to cover the lender's risk of loss.  Mortgage insurance is generally required by lenders when the down payment is less than 20% of the purchase price, although it may be also be required based upon credit score. 

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What is a reverse mortgage?

A reverse mortgage converts home equity into money, but requires no repayment until the borrower(s) permanently leaves the home.

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Does AgFed offer HUD loans?

HUD loans are basically FHA loans. Yes, AgFed offers this type of loan.

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What is an Escrow Account?

An account held by the lender containing funds collected in conjunction with monthly mortgage payments. Also known as impounds, the funds in this account are held in trust by the lender on behalf of the borrower and are used to pay expenses such as property taxes and homeowner's insurance. 

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How is my final mortgage rate calculated and when is that rate confirmed?

Interest rates fluctuate daily, so the rates available when you apply may be different than the rates available when you decide to lock in your interest rate.  By locking in, you protect your selected rate for a stated period regardless of market fluctuation.

Your credit rating, debt-to-income ratio and combined loan-to-value ratio will determine the final mortgage rate.

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What is a First Mortgage?

The primary lien against a property. 

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Do I need to provide you with proof of my Homeowners Insurance?

Yes, you must provide proof of one year full coverage at the time of closing.

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Do you offer a third mortgage loan?

AgFed currently offers only first mortgage loans and second mortgage home equity loans. 

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What is Hazard Insurance?

A policy that protects the insured against loss due to fire or certain natural disasters in exchange for a premium paid to the insurer.  It is also known as Home Owner's Insurance or fire insurance. 

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How long would it take to get a first mortgage loan?

The process generally takes four to six weeks.

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Do I need to verify my payoff figures on the day of closing?

Yes, the amount due will change if payments were posted to or removed from the account after the payoff statement was ordered.  If payoff funds are received after the expiration date of the payoff statement, the interest amount due will be different. 

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What are Courier or Mail Fees?

Fees charged by the closing agent for the shipment of loan documents and related paperwork. 

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Why should I consider getting pre-approved before buying a home?

Declining market values have caused recent changes in the parameters of various loan products.  Even if you have been pre-approved before, you should consider having this done again to make sure you can get a program that works for you.

The past low inventory of homes for sale made home buying highly competitive in some areas.  To compete, many buyers are now getting pre-approved for a mortgage.  This way, the buyer is seen as more stable, has greater influence in negotiating a purchase price and can act quickly when they find a home they really love.

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What are closing costs?

Fees incurred in a real estate or mortgage transaction paid by the borrower and/or the seller at the closing of the transaction. 

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Do you offer ARMs or Adjustable Rate Mortgages?

Yes, we currently offer a variety of adjustable rate loans. To get more information, visit our website at http://mortgages.cumortgage.net/rates.asp?siteId=6E5CC923-F933-40CA-B1B0-A20A68D95F94.

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Does the Credit Union do VA home loans?

Yes, we do. For more information on the credit union's mortgage loans, please access our website at http://mortgages.cumortgage.net/rates.asp?siteId=6E5CC923-F933-40CA-B1B0-A20A68D95F94.

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Do you offer Construction loans?

We currently do not offer construction loans.

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If I get a first Mortgage with the Credit Union, where will I do my closing?

The location of a closing is arranged between the borrower and the title company.  Closings can occur at the title company's office, at the member's home or at another pre-arranged location.

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Is there a minimum mortgage loan amount?

Yes, the minimum loan amount for a first mortgage loan is $50,000.00.  The minimum loan amount for an equity loan is $10,000.00.

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Can I delete my escrow account?

An escrow account can be deleted if the following requirements are met:

The loan is at least one year old.

There have been no late payments within the last 12 months.

The current loan to value ratio (LTV) is 80.0% or less.

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What is a Fixed Rate Mortgage?

A mortgage whose interest rate does not change for the life of the loan.  Principal and interest payments are also fixed. 

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What are Documentary Stamps?

A state tax, in the forms of stamps, required on deeds and mortgages when real estate title passes from one owner to another. 

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Can I roll my closing cost fees into my loan?

Yes, providing you have the equity in the value of the property.

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Do you sell your first mortgage loans?

The Credit Union has the option to retain or sell the loan servicing and does both.

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What is the Primary Mortgage Market?

The primary mortgage market includes banks, savings and loans, credit unions and mortgage banks that make mortgage loans directly to borrowers.  These lenders sometimes sell their mortgages to lenders like FNMA in the secondary mortgage market. 

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Do you offer no closing cost loans and no point loans?

We do offer various loan products with different options.  Some options involve partial reduction of closing costs or the option to add them to the financing of the loan.

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What is a Lease-Purchase Mortgage Loan?

An alternative financing option that allows low- and moderate-income homebuyers to lease a home from a non-profit organization with an option to buy.  Monthly rental payments cover mortgage payments and include an additional amount that is saved toward a down payment. 

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Can I change insurance companies for my homeowner's policy? Does the Credit Union need to know?

We accept coverage from most insurance companies.  If you choose to replace your current coverage, please send your replacement policy, along with your written authorization, to our office so that it arrives at least 30 days prior to the expiration of your current policy.

Please keep in mind that if you change policies before your current policy expires, you may not receive a full refund from your current insurance company.

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What is a Balloon Mortgage?

A short-term, fixed-rate loan with low payments for a set number of years and a large balloon payment of the remainder of the principal due at the end of the term. 

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What is a Two-Step Mortgage?

A mortgage with a low fixed interest rate for 5, 7, or 10 years, which is then adjusted to a new rate for the rest of the loan. 

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What is Title Insurance?

Insurance which protects the lender (lender's policy) or the buyer (owner's policy) against loss due to disputes over ownership of a property. 

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Do you offer Jumbo loans?

Yes, we do offer Jumbo loans. Please call our loan department for information on Jumbo loans at 800-357-3729 or visit http://mortgages.cumortgage.net/rates.asp?siteId=6E5CC923-F933-40CA-B1B0-A20A68D95F9.

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How are my taxes paid if I have a mortgage with AgFed?

If you have an escrow/impound account, the Credit Union obtains your real estate tax amounts and pays the taxes as they become due.  Tax payments will be noted on your billing statement.

In certain areas, however, tax collectors will not release this information to lenders.  If we need your assistance in obtaining your tax bill, we will forward a letter to you requesting a copy.  If you receive your tax bill and do not receive a letter from us, please keep the bill for your records.

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Do I need to send the Credit Union a copy of my tax bill?

We will send you a written request for your tax bill if we need it.  Please send us the bill only upon our request. 

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What is a Town House?

Two or more story attached dwellings usually registered under Strata Title. 

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What is a Blanket Mortgage?

A mortgage covering at least two or more pieces of real estate, both of which together serve as collateral for the loan. 

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What is a Mortgage Banker?

A lender that originates and funds, then sells and services mortgage loans. 

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Does my mortgage balance show on my Credit Union statement?

No, your primary mortgage will not show on your Credit Union monthly statement.  Second Trust and Home Equity Line of Credit loans show on your monthly statement.

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