• What is title insurance and why do I need it?

    The answer is simple: The purchase of a home is most likely one of the most expensive and important purchases you will ever make. You, and especially your mortgage lender, want to make sure the property is indeed yours, and that no individual or government entity has any right, lien, claim, or encumbrance on your property.

    The function of a title insurance company is to make sure your rights and interests to the property are clear, that transfer of title takes place efficiently and correctly, and that your interests as a homebuyer are fully protected.

    Before issuing a policy, the title company performs an in-depth search of the public records to determine if anyone other than you has an interest in the property. The search may be performed by title company personnel using either public records or, more likely, the information contained in the plat.

    After a thorough examination of the records, any title problems are usually found and can be cleared up prior to your purchase of the property. Once a title policy is issued, if any claim covered under your policy is ever filed against your property, the title company will pay the legal fees involved in the defense of your rights. They are also responsible to cover losses arising from a valid claim. This protection remains in effect as long as you or your heirs own the property.

  • What is an Adjustable Rate Mortgage?

    An adjustable rate mortgage, or "ARM", is a loan type that offers a lower initial interest rate than most fixed rate loans.  The trade off is that the interest rate can change periodically, usually in relation to an index, and the monthly payment will go up or down accordingly.  Against the advantage of the lower payment at the beginning of the loan, you should weigh the risk that an increase in interest rates would lead to higher monthly payments in the future. It's a trade-off.  You get a lower rate with an ARM in exchange for assuming more risk.  Here's some detailed information explaining how ARMs work.

    Adjustment Period
    With most ARMs, the interest rate and monthly payment are fixed for an initial time period such as one year, three, five, seven or ten years.   After the initial fixed period, the interest rate can change every year.  For example, one of our most popular adjustable rate mortgages is a five-year ARM.  The interest rate will not change for the first five years (the initial adjustment period) but can change every year after the first five years.

    Interest-Rate Caps
    An interest-rate cap places a limit on the amount your interest rate can increase or decrease. There are two types of caps:

    1. Periodic or adjustment caps, which limit the interest rate increase or decrease from one adjustment period to the next.
    2. Overall or lifetime caps, which limit the interest rate increase over the life of the loan.

    As you can imagine, interest rate caps are very important since no one knows what can happen in the future.  All of the ARMs we offer have both adjustment and lifetime caps.  Please see each product description for full details.

  • What is a rate lock?

    A rate lock is a means for the borrower to lock in the lender's current interest rate.  SECU offers rate locks for a 60 day period.

  • What is an appraisal and who completes it?

    To determine the value of the property you are purchasing or refinancing, an appraisal will be required. An appraisal report is a written description and estimate of the value of the property. National standards govern the format for the appraisal and specify the appraiser's qualifications and credentials. In addition, most states now have licensing requirements for appraisers evaluating properties located within their states.

    After the appraiser inspects the property, they will compare the qualities of your home with other homes that have sold recently in the same neighborhood. These homes are called "comparables" or "comps" and play a significant role in the appraisal process. Using industry guidelines, the appraiser will try to weigh the major components of these properties (i.e., design, square footage, number of rooms, lot size, age, etc.) to the components of your home to come up with an estimated value of your home. The appraiser adjusts the price of each comparable sale (up or down) depending on how it compares (better or worse) with your property.

    As an additional check on the value of the property, the appraiser also estimates the replacement cost for the property. Replacement cost is determined by valuing an empty lot and estimating the cost to build a house of similar size and construction. Finally, the appraiser reduces this cost by an age factor to compensate for depreciation and deterioration.

  • What does it mean to “close” a mortgage?

    Real property in most jurisdictions is conveyed from the seller to the buyer through a real estate contract.  The point in time at which the contract is actually executed and the property title conveyed to the buyer is called the "closing."  During the closing process, you should expect to meet with a settlement company to review and sign final documents, including the Deed of Trust, which will transfer ownership of the property to you.

  • Are there any prepayment penalties charged for SECU loan programs?

    None of the loan programs we offer have penalties for prepayment.  You can pay off your mortgage any time with no additional charges.

  • What are Points?

    Points are a charge by a lender in order to provide a lower interest rate.  Each point is 1% of the loan amount.  Please note that until you lock in an interest rate, points are subject to change.

  • What is mortgage insurance and when is it required?

    Mortgage insurance makes it possible for you to buy a home with less than a 20% down payment by protecting the lender against the additional risk associated with low down payment lending. Low down payment mortgages are becoming more and more popular, and by purchasing mortgage insurance, lenders are comfortable with down payments as low as 3 - 5% of the home's value. It also provides you with the ability to buy a more expensive home than might be possible if a 20% down payment were required.  Usually, the premium is included in your monthly payment and one to two months of the premium is collected as a required advance at closing.  It may be possible to cancel private mortgage insurance at some point, such as when your loan balance is reduced to a certain amount - below 75% to 80% of the property value.
  • When can I lock in my interest rate and points?

    Once we have reviewed your credit, income, and type of loan request, a Loan Originator will contact you to review and give you the opportunity to lock into those terms.  If you are applying for a pre-approval, your rate and points cannot be guaranteed until you have found the home of your choice.

  • How are interest rates determined?

    Interest rates fluctuate daily based on a variety of factors, including inflation, the pace of economic growth, and Federal Reserve policy.  Over time, inflation has the largest influence on the level of interest rates.  A modest rate of inflation will almost always lead to low interest rates, while concerns about rising inflation normally cause interest rates to increase.  Our nation's central bank, the Federal Reserve, implements policies designed to keep inflation and interest rates relatively low and stable.

  • What is a credit score and how will my credit score affect my application?

    A credit score is one of the pieces of information that we'll use to evaluate your application.  Credit scores are based on information collected by credit bureaus and information reported each month by your creditors about the balances you owe and the timing of your payments.  A credit score is a compilation of all this information converted into a number that helps a lender determine the likelihood that you will repay the loan on schedule. The credit score is calculated by the credit bureau, not by the lender. Credit scores are calculated by comparing your credit history with millions of other consumers.  They have proven to be a very effective way of determining credit worthiness.  Some of the things that affect your credit score include your payment history, your outstanding obligations, the length of time you have had outstanding credit, the types of credit you use, and the number of inquiries that have been made about your credit history in the recent past.

    Credit scores used for mortgage loan decisions range from approximately 300 to 900.  Generally, the higher your credit score, the lower the risk that your payments won't be paid as agreed.  Using credit scores to evaluate your credit history allows us to quickly and objectively evaluate your credit history when reviewing your loan application.  However, there are many other factors when making a loan decision and we never evaluate an application without looking at the total financial picture of a customer.

  • Will the inquiry about my credit affect my credit score?

    An abundance of credit inquiries can sometimes affect your credit scores since it may indicate that your use of credit is increasing.  But don't panic!  The data used to calculate your credit score doesn't include any mortgage or auto loan credit inquiries that are made within the 30 days prior to the score being calculated.  In addition, all mortgage inquiries made in any 14-day period are always considered one inquiry.  Don't limit your mortgage shopping for fear of the effect on your credit score.

  • How much money will I save by choosing a 15-year loan rather than a 30-year loan?

    A 15-year fixed rate mortgage gives you the ability to own your home free and clear in 15 years. And, while the monthly payments are somewhat higher than a 30-year loan, the interest rate on the 15-year mortgage is usually a little lower, and more important - you'll pay less than half the total interest cost of the traditional 30-year mortgage.

  • What is an APR?

    To make it easier for consumers to compare mortgage loan interest rates, the federal government developed a standard format called an "Annual Percentage Rate" or APR to provide an effective interest rate for comparison shopping purposes.  Some of the costs that you pay at closing are factored into the APR for ease of comparison.  Your actual payments are based on the interest rate, not the APR.

  • What is an FHA loan and how do I know if I am eligible to apply?

    FHA loans are mortgages issued by government-approved lenders that are insured and administered by the U.S. Department of Housing and Urban Development (HUD). FHA mortgage loans generally require a lower down payment and have less stringent qualification requirements than conventional loans. Any borrower of legal age is eligible to apply for an FHA mortgage loan regardless of income level, including non-U.S. citizens. However, FHA does limit the maximum amount an individual can borrow under this program based on the location of the property.  If you are looking for a loan that requires a lower down payment, you should compare both Conventional and FHA loan types to determine which financing type is best for you.

  We do business in accordance with the Federal Fair Housing Law and the Equal Credit Opportunity Act.