Coastal Community Federal Credit Union Mortgage

1. How do I know how much I can afford?

Generally speaking, you can purchase a home with a value of two times your annual household income. However, the amount that you can borrow will also depend upon your employment history, credit history, current savings, current debts, and the amount of down payment you plan to make. Give us a call and we can help you determine exactly how much you can afford.

2. What is the difference between a fixed-rate loan and an adjustable-rate loan?

With a fixed-rate mortgage, the interest rate stays the same during the life of the loan. With an adjustable-rate mortgage (ARM), the interest changes periodically, typically in relation to an index. While the monthly payments that you make with a fixed-rate mortgage are relatively stable, payments on an ARM loan will likely change. There are advantages and disadvantages to each type of mortgage. The best way to select a loan product is by talking with one of our licensed Loan Officers.

3. How do I know which type of mortgage is best for me?

There is no simple formula to determine the type of mortgage that is best for you. This choice depends on a number of factors, including your current financial profile and how long you plan on keeping your house. We will help you evaluate your profile, give you choices and help you make the most appropriate decision.

4. What does my mortgage payment include?

For most homeowners, the monthly mortgage payments include three separate parts:

Principal: Repayment on the amount borrowed
Interest: Payment to the lender for the amount borrowed
Taxes & Insurance: Monthly payments made into an escrow account for hazard insurance, property taxes, and sometimes Homeowner Association dues.

5. How much money will I need to purchase a home?

The amount of money that is necessary depends on a number of items. Generally speaking though, you will need to supply:

Earnest Money: The deposit made when you make an offer on the house
Down Payment: A percentage of the cost of the home that is due at closing
Closing Costs: Costs associated with purchasing or refinancing a house

6. What is a rate lock?

A rate lock is a contractual agreement between the lender and buyer. There are four components to a rate lock: loan program, interest rate, points, and the length of the lock.

7. What is a loan estimate?

It is the list of settlement charges that the lender is obliged to provide the borrower within three business days of receiving a complete loan application.

8. What are points?

It is a cost paid at closing and required by the lender as part of the charge for the loan, expressed as a percent of the loan amount; e.g., "2 points" means a charge equal to 2% of the loan balance.

9. What is a pre-qualification?

This is the process of determining whether a borrower has sufficient income and assets to meet the qualification requirements set by the lender on a requested loan. A prequalification is subject to verification of the information provided by the applicant. A prequalification is short of approval because it does not take account of the credit history of the borrower.

10. What does APR mean?

Annual Percentage Rate (APR) is the percentage used to figure out the total cost of your loan by taking into account all fees charged by your lender in addition to your loan principal and interest.

11. How do you calculate the loan-to-value ratio (LTV)?

The LTV ratio of your home is the financed amount (loan amount) divided by the fair market value of your home.

12. What is Mortgage Insurance?

Generally, Mortgage Insurance (MI) is required if the loan amount is over 80% of the fair market value of the home. MI protects the lender against loss in the event of default. In most cases, this insurance can be dropped once the loan amount has been brought down to less than 80% of the home value.

13. MI Cancellation under the Homeowners Protection Act and refundable vs. non-refundable premium.

Among other notice and disclosure requirements, the Homeowners Protection Act of 1998 (HPA or the "Act") requires lenders to cancel mortgage insurance and refund premiums under certain circumstances. MHL recognizes the importance of properly canceling mortgage insurance and refunding premium in accordance with the HPA and is providing the following information to help its MI partners with their compliance efforts. Any questions about a specific loan and its eligibility for cancellation under the Act should be directed to the loan servicer. (Legal disclaimer: MHL believes this information to be accurate as of June 20, 2014, however, this information is not intended to be legal advice and any person subject to the HPA should seek advice from their legal counsel to assure proper compliance. MHL is providing this information without any warranties, expressed or implied, and shall not be liable for any direct, indirect, incidental, punitive, or consequential damages due to any person's reliance on the information.)

A. When is a lender required to cancel or terminate mortgage insurance under the HPA?

A servicer must automatically "terminate" MI for residential mortgage transactions when the principal balance of the loan is first scheduled to reach 78% of the original value of the property and the borrower is current on the loan.
A borrower in good standing may initiate "cancellation" of MI coverage when the principal balance of the loan reaches (based on actual payments) or is first scheduled to reach 80 percent of the original value of the property, so long as 1) the borrower is current on the loan, 2) the value of the property has not declined below the original value, and 3) the borrower's equity in the property is not subject to a subordinate lien.
If not canceled by borrower request or automatically terminated, final termination is required at the midpoint of the loan's amortization period if, on that date, the borrower is current on the loan.

B. Does a Lender have to terminate insurance on second homes or investment properties?

The HPA only applies to a residential mortgage transaction, which is defined under the Act as the purchase, initial construction, or refinance of a loan secured by a single-family primary residence. The HPA does not require termination of MI on second homes or investment properties (but see investor rules and state-specific rules).
However, for loans sold to Fannie Mae, the Fannie Mae Single Family 2012 Servicing Guide requires cancellation on both principal residences and second homes but does not require cancellation with respect to investment properties. Other mortgage loan investors may have similar expanded MI cancellation requirements.
Finally "protected" state law may provide greater protection than available under the HPA. While the HPA generally preempts state law, the cancellation laws of eight states were deemed "protected" under the Act. Under this provision, a state law that provides equal or greater protection to a borrower (by requiring the termination of MI either at an earlier time or at a higher mortgage principal balance than the federal standard) is considered a "protected state law" and will continue to be valid to the extent it is not inconsistent with the HPA. Any provisions of the state law that are inconsistent with the federal statute are superseded. For example, the New York cancellation law provides broader protection and requires cancellation on an "authorized real estate security," which includes both primary and secondary residences.

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