The interest rate is dependent on market trends. Locking in a rate protects you during the timeframe from your rate lock to the day that your lock period expires.

What is a Lock-In Agreement?

This agreement between the credit union and the member specifies the number of days your rate and points are guaranteed. If the rate increases during that time, you are still guaranteed the rate that you "locked" in at. If interest rates fall during that period, you will pay the higher rate you locked in at.

When Can I Lock?

Please reach out to the Mortgage team to discuss rate lock options and timing. We currently offer a variety of lock-in periods which may range from 15 to 90 days. This means your loan must close and disburse within this number of days from the day we confirm your lock.

An adjustable-rate mortgage, also referred to as an "ARM," is a loan that provides a lower initial interest rate than most fixed-rate loans. But the interest rate can change periodically, usually in relation to an index, and in line with the type of ARM, for example: a three-year can change every three years, a 5-year would potentially change every five years, etc. When the rate changes, the monthly payment will also change.

To learn more, visit our blog titled: "Adjustable Rate Mortgages - Your Questions Answered"

Each point is equal to one percent of the loan. If you buy points at your closing you will lower your monthly payments but pay more at the closing.

To determine whether buying points is the right choice for you, it helps to compare the cost of the points paid to the savings you receive on your monthly payments. You can do this by dividing the total cost of the points by the savings in each monthly payment. For example, if you pay $2,000 to buy a point and your monthly savings with buying a point is $200, then divide $2,000 by $200. This comes out to 10 months of payments. By the 11^th month, you have already recouped the price you paid for the point. If you plan to stay in your house for any length of time, then buying points might be a good option.

The Federal Truth in Lending law requires that financial institutions disclose the APR when they advertise a rate. The APR reflects the actual cost of obtaining financing plus some closing fees. In addition to the interest rate, these fees determine an estimated cost of financing over the length of the loan. Usually, most people end up refinancing at some point so it may be considered misleading to spread some of these up front costs over the entire loan term.

Unfortunately, the APR doesn't include all the closing fees. Lenders are allowed to decide which fees they include. Fees for things like appraisals, title work, and document preparation are not included even though you'll probably have to pay them.

For adjustable-rate mortgages, the APR can be even more confusing. Since no one can predict market conditions there will most likely be rate adjustments.

It’s best to use the APR as a guideline when shopping for a good rate but seek a loan that works for you. Keep in mind total fees and possible rate adjustments (in the case of an adjustable-rate mortgage). Also, consider the length of time you plan on keeping the mortgage (or figure you’ll refinance later to draw funds out or lower your payment if rates drop), and whether you will be staying in the same place for any length of time.

Keep in mind that the APR is an effective interest rate not the actual interest rate. Your monthly payments will be based on the actual interest rate, the amount you borrow, and the term of your loan.

Mortgage rates are difficult to predict as the stock market changes daily.

If you feel that rates are going to increase, then it's best to lock in at your current rate. Just make sure that you do so during the rate lock period. There is a finite amount of time you have to lock in the rate. In most cases, when purchasing a new home, the loan usually takes 30-45 days to close (could be longer in some states or if there is still negotiating to do). Make sure you know the estimated closing date so that you can choose the rate lock period. Also, if you refinance and have secondary financing on your home that won't be paid off, make sure you allow some extra time to contact the lender to get their permission.

If you think rates might drop while your loan is being processed, you can take a risk and let your rate "float" instead of locking. After you apply, you can lock in the rate.

A 15-year mortgage allows you to own your home free and clear within 15 years, but your monthly payment will be higher than that of a 30-year mortgage. The added benefit of a 15-year mortgage is that you will be paying out much less on interest than you would for a 30-year mortgage. Keep in mind that during the first several years of your loan, you are paying more on interest than principal.

Most people end up taking out a 30-year mortgage because it just makes owning a house more affordable. As your loan gets paid down, you may want to consider a 15-year mortgage.

The 15-year mortgage is more desirable amongst young homeowners with a healthy disposable income that may want to pay off their house before their children start college. Other homeowners who have higher incomes would like to finance a 15-year mortgage so that they can retire without worrying about having a mortgage payment. It depends on your income and where you see yourself in the future.

What are the advantages and disadvantages of a 15-Year Mortgage?

The 15-year fixed-rate mortgage offers two big advantages for most borrowers:

1. You own your home in half the time it would take with a traditional 30-year mortgage.

2. You save more than half the amount of interest of a 30-year mortgage. Lenders usually offer this mortgage at a slightly lower interest rate than with 30-year loans - typically up to .5% lower. This lower interest rate added to the shorter loan span creates actual savings for 15-year fixed rate borrowers.

The possible disadvantages associated with a 15-year fixed-rate mortgage are:

1. The monthly payments for a 15-year are roughly 10 percent to 15 percent higher per month than a 30-year.

2. Because you'll pay less total interest on the 15-year fixed-rate mortgage, you won't have the maximum mortgage interest tax deduction possible.

An installment debt is a loan that you make payments on, such as an auto loan, a student loan or a debt consolidation loan. Do not include payments on other living expenses, such as insurance costs or medical bill payments. We'll include any installment debts that have more than 10 months remaining when determining your qualifications for this mortgage.

A bankruptcy or home foreclosure could affect your ability to get a new mortgage unless it was caused by a situation beyond your control. We usually like to evaluate two to four years after the bankruptcy and three to seven years after a foreclosure. It all depends on the circumstances. This also provided a timeframe in which to build up your credit history.

With rental income we require the two most recent years of federal tax returns (showing a history of rental income on Schedule E), Signed lease/rental agreements, a recent mortgage statement (if applicable), and a tax and insurance bill to verify your rental income.

We’ll use rental income from your Schedule E deducting reported expenses, but adding back in depreciation. Depreciation does not count against your rental income.

In some cases, if you have owned the rental property for less than 2 years, we can still use some rental income and we will let you know what would be required for documentation.

We will ask for copies of your recent pension check stubs, or bank statement if your pension or retirement income is deposited directly into your bank account. Sometimes it will also be necessary to verify that this income will continue for at least three years since some pension or retirement plans do not provide a steady income for life. This can usually be verified with a copy of your award letter.

If you're receiving tax-free income, such as social security earnings in some cases, we'll consider the fact that taxes are not being deducted from this income when reviewing your request, meaning we will adjust the amount used to reflect the fact that you aren’t paying taxes as you would with regular income.

In general, only income that is reported on your tax return can be considered when applying for a mortgage. Unless the income is legally tax-free and isn't required to be reported. But it will need to be documented.

Generally, a co-signed debt must be considered when determining your qualifications for a mortgage. If the co-signed debt doesn't affect your ability to obtain a new mortgage. If that additional debt does change your approval decision, we may need to discuss additional documentation.

If you’ll be working for the same employer, complete the application as such but enter your new income if that has changed. You may also need a letter from your employer stating that your position will continue in your new location.

If your employment is with a new employer, complete the application listing your new employer. 

Gifts are an acceptable source of down payment if the gift giver is related to you or your co-borrower. We'll ask you for their name, address, and phone number as well as their relationship to you. If your loan is for more than 80% of the purchase price, with certain programs and products we'll need to verify that you have at least 3% - 5% of the property's value in your own assets.

Prior to closing, we'll verify that the gift funds have been transferred to you by obtaining a copy of your bank statement showing that you deposited the funds into your account. A signed gift letter will also need to be provided. The gift letter will need to clearly state the amount of the gift, the relationship to the homebuyer, and the fact that it does not need to be paid back. We may also need to document the account from which the funds are coming and ensure that they have been on deposit for a specific length of time.

If you’re selling your current home to purchase your new home, you’ll have to bring a copy of the closing statement in order to show that your current mortgage has been paid off and you have the funds available to close on your new home. Often the closing of your current home and new home happens on the same day. If that’s the case, we’ll just ask you to bring the closing statement to the closing and provide an unexecuted copy prior to the final closing.

If you are self-employed, we will verify your income by requesting copies of your federal tax returns from the past two years. Your net income as reported is used to determine qualification for the loan. Any income that has not been reported on your tax returns will not be considered. But, by getting two years of returns we can establish that you have a steady income and what is reasonable to expect in future years.

In most cases, no. We will need to see documentation of your employment prior to taking time off, and verification of your current job.

In order to consider these factors, there must be a history of receiving this “extra” money and it must be likely to continue in order to be considered a regular part of your income. Again, we usually need a two-year history of receipt to verify this income. We’ll average the amounts you have received over the past two years and take that into consideration when approving a loan amount.

If you haven't been receiving bonus, overtime, or commission income for at least one year, it probably can't be given full value when your loan is reviewed for approval.

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

Several inquiries from different lenders, made in a short amount of time may indicate that you are opening many lines of credit and this, in turn, could affect your score. 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. Also, any mortgage inquiries made in any 14-day period are considered one inquiry. Don’t limit your house shopping because you are concerned about multiple credit inquiries.

In general, a home loan involves several fees, including the appraisal fee, title charges, closing fees, and state or local taxes. These fees vary from state to state and also from lender to lender. Any lender should provide you with accurate costs. MIT FCU takes quotes very seriously. We've completed the research necessary to ensure that our fee quotes are accurate to the city level - and that is no easy task! For more information on fees read our blog titled: Closing Fees and What You Should Know.

PMI kicks in when you are not able to make a down payment of 20% or more on the purchase of your new home. It protects lenders against the risk of a low down payment if someone eventually stops making loan payments and the property goes into foreclosure. The benefit as a borrower is that you can afford a more expensive house and put down less than 20% to get the home of your dreams. While there is an additional cost on your monthly payments for PMI, it does allow for more flexibility when house hunting.

The price of private mortgage insurance is based on loan-to-value ratio, type of loan, credit score, debt-to-income ratio, property type, and amount of coverage required by the lender. Usually, the price is included in your monthly payment. Discuss different options with your Mortgage Originator. 

Eventually, it will be possible to cancel your PMI when the loan balance is reduced. Recent Federal Legislation requires automatic termination of mortgage insurance for many borrowers when their loan balance has been amortized down to 78% of the original property value, however, this applies only to single-family homes. If you have any questions about when your mortgage insurance could be canceled, please get in touch with your Mortgage Originator.

We take advantage of an automated underwriting process which helps to limit the amount of paperwork needed to complete your application. We use this information to verify your income and assets. The automated underwriting system will compare your financial situation with statistical data from millions of other homeowners and uses that comparison to determine the level of verification required. If at some point our automation system or someone in our office feels that they need more information to get a full picture of your financial status, additional documentation may be requested.

In general, two years of personal federal tax returns are required to determine the amount of your dividend/ interest income. An average of the amounts you receive will then be calculated. We will also need to verify ownership of these assets with copies of current statements from your financial institution(s), brokerage, stock certificates, etc. to ensure the likelihood of continuance of receipt of this income.

This information does not need to be provided unless you want it to be considered when paying your mortgage. If you do want to use it, you will need to document receipt for a period no less than 6 months.  We will also need a copy of the fully executed divorce decree or separation agreement.  The income must also continue for the next 3 years to be considered.

The maximum percentage of your home's value depends on the purpose of your loan, how you use the property, and the loan type you choose, so the best way to determine what loan amount we can offer is to complete our online application!

Still, need answers? Contact our Mortgage team today!

If you were in school before your current job, enter the name of the school you attended and the length of time you were in school in the "length of employment" fields. You can enter a position of "student" and income of "0." You will need to provide a copy of your diploma and/or transcripts.

Typically changing jobs is not an issue as long as you don’t have recent wide gaps in your employment history. We also look at advancements in salary as the job history changes.

If you are paid on a commission basis this can be a bit tricky since it is difficult to predict future earnings - especially if you recently started a new job. However, we will review and consider a two-year history and determine an average income from commissions. If you have not been earning commissions for two years, we may not be able to use this income.

Income from a second job will be considered - provided you can show a 2-year work history from the place of employment.

A credit score is just one of the factors considered when obtaining a loan from a mortgage lender. It determines your credit worthiness and can affect the rate you obtain for a loan. For more information read our blog titled: What is a credit score and how does it affect my mortgage?

Unfortunately, that is not the case when buying a new home. We use the lower of the appraised value or the sales price to determine the down payment of the home.

It's still a great benefit if you can purchase a home for less than the appraised value, but our investors don't allow us to use this "instant equity" when making our loan decision.

The short answer is, "not much." In fact, a hard credit inquiry only drops your score by a few points, at the most, 5. So don't worry about those credit pulls mortgage lenders or mortgage apps request as part of their prequalification or quote process. Unless your credit score is very low to begin with, those few points aren't going to change anything.

In fact, according to Experian (one of the "big three" credit bureaus), "...hard inquiries related to mortgage, auto loan and student loan applications are entirely ignored for 30 days from the date of the inquiry."

And even after those 30 days, Experian states, "After those inquiries have aged past 30 days, they still may not be counted as independent inquiries by credit scoring models. That's because FICO^® considers similar loan-related inquiries that have occurred within 45 days of each other as a single inquiry in the scoring process."

So go ahead and get that quote, prequalification, or application started! You're good. 

Read more from Experian about how credit inquiries impact (or don't impact) your loan application/approval.

Anyone can be a joint owner of a property and they are not required to be on the loan application.

Only the person applying for the mortgage will appear on majority of the documents. If there is an owner of the property who is not on the loan application, they will still be required to attend the closing and sign a few documents to acknowledge the fact that a new lien is being placed on the property.

We use a nationwide network of closing agents and attorneys to conduct our loan closings. We'll schedule your closing to take place in a location that is located near your home for your convenience.

We'll deliver our loan documents and wire transfer your loan funds to the closing agent or attorney prior to closing so that they'll have plenty of time to prepare for your closing.

To learn more read our blog titled: What Should I Expect at My Home Closing? 

If you won't be able to attend the loan closing, contact your Mortgage Originator to discuss other options. If someone you trust is able to attend on your behalf, you can execute a Power of Attorney so that this person can sign documents on your behalf. Please reach out to your Loan Originator to verify if this is a viable option as certain products do not allow for a Power of Attorney. In some cases, we're able to mail you the documents in advance so that you can sign them and forward them to the closing agent. Please make sure to let us know as soon as possible if you will not be able to attend the closing.

The closing agent acts as our agent and will represent us at the closing. However, your personal Mortgage Specialist will contact you prior to closing to talk about your final documents and to provide a final breakdown of your closing fees. If you have any questions that the closing agent can't answer during the closing, ask them to contact your Mortgage Specialist by phone and we'll get you the answers you need.

To learn more read our blog titled: What Should I Expect at My Home Closing? 

The most important documents you will sign at closing are the Note and Mortgage, also referred to as the Deed of Trust. Unless there are special circumstances, these documents are usually prepared one to two days before your closing. Other documents are prepared by the closing agent the day before or the day of your closing. If you would like copies of the completed documents to be sent to you after they are prepared, please feel free to contact us.

To learn more read our blog titled: What Should I Expect at My Home Closing? 

It depends. In some areas of the country, it is required to have an attorney represent you at the time of the closing but in other areas it is not as common. We recommend having an attorney present, especially if it makes you more comfortable.

To learn more read our blog titled: What Should I Expect at My Home Closing? 

We tend to use licensed appraisers in the area where you are planning to purchase your home. The appraisal is ordered as soon as we receive your application. It usually takes 10-14 days before the written report is sent to us. However, during busy times or rural areas it can take longer.

WeWe follow up with the appraiser to ensure that it is completed as soon as possible. If you are refinancing, an interior and exterior inspection of the home is necessary, the appraiser should contact you to schedule a viewing appointment. If you are buying a new house the appraiser will usually contact your real estate agent. To learn more read our blog titled: What Should I Expect at the Closing?" 

Both an appraisal and a home inspection are designed to protect you from potential issues with your new home. Some buyers waive the home inspection which can be attractive to the seller who may have many offers on the table.

The appraiser will take notes of any interior or exterior constructions problems on the home including things like termite damage, structural flaws, dry rot, leaky roofs, etc. All of this information will be written in the appraisal report. But they do not do the detailed inspection that a home inspector would do. Instead they make notes of things they notice as they complete their walk-through.

Keep in mind that appraisers are not the same as inspectors. Appraisers are looking for more obvious items, but they won’t inspect the mechanicals and turn on every light switch. They also don’t test for things like termites, radon, or mold. This is where the home inspector comes in. The home inspector will go through these details and will educate you about any defects the house will have. Getting a home inspection is a good idea, but not required for your mortgage. If you are having a home inspection (and we do recommend that you do when purchasing a new home) it is best to be present during that home inspection so you can ask any questions or discuss any issues that may come up during the inspection. You are not required to be available for the inspection since you will receive a report but having the expert right in front of you to discuss anything they discover provides you with an increased comfort level regarding the condition of the property you are purchasing.

The value and marketability of condominium properties is dependent on items that don't apply to single-family homes, there are some additional steps that must be taken to determine if the condominium meets our guidelines. There is also additional documentation required to ensure that the condo purchase meets underwriting guidelines.

The ratio of owner-occupied units to non-owner occupied units can also affect the marketability of the condo since many people would prefer living in a complex with owners versus renters.

If you are purchasing a condominium as your primary residence, we will provide you with a list of documents required beyond the information required in the appraisal.

As soon as we receive your appraisal, we'll update your loan with the estimated value of the home. We will provide you a copy of the appraisal, even if your loan does not close.

When we look at the provided appraisal report, we'll review the features of your home and compare them to the features of other homes in the neighborhood. For example, if your home is on a 20-acre lot, or has a large accessory building, we'll want to make sure that there are other homes in the area on similar size lots or with similar outbuildings. It is hard to place a value on such unique features if we can't see what other buyers are willing to pay for them. Sometimes, those unique features don’t really have as much value as you might think. It all depends on what the market is willing to pay for them. Finding comparable properties can be more challenging in rural areas where it is more difficult to find homes that have similar features.

We are primarily concerned that the value of your home is sufficient to cover the amount of money you are borrowing.

When you buy or refinance a home, the property is used as collateral for the loan.

An appraisal will usually be required to determine the value of the property being used as collateral. An appraisal is a written description/report of the property including the value. There are national standards that govern the format of this report and the appraiser completing it must meet licensing requirements. Both the lender and the person applying for a mortgage will receive a copy of this report.

After the appraiser inspects the property, they will compare qualities such as design, square footage, number of rooms, lot size, etc. with other houses that have recently sold in your neighborhood. These homes are called “comparables” and they play a role in determining the estimated value of your home. The appraiser uses their own experience in the market, and sales of these homes that are comparable to yours, to assign a value to your home.

The comparable sales approach is the most important valuation method in the appraisal because a property is worth only what a buyer is willing to pay and what a seller is willing to accept.

It’s common for the appraised value of the property to be the same as the amount stated on your sales contract. Your purchase contract is the most valid sales transaction there is because it represents what the buyer is willing to pay and what the seller is willing to accept. Only when the comparable sales differ greatly from your sales contract will the appraised value be very different. When a market is “hot” and many homes are selling at or above ask, it can be common for issues to arise with value. The appraiser needs to base values on comparable properties that have closed and funded. This means that sometimes, more than one appraisal is necessary, or your realtor may need to work with the appraiser to provide additional information when determining a fair value for your home.

The short answer is, "not much." In fact, a hard credit inquiry only drops your score by a few points, at the most, 5. So don't worry about those credit pulls mortgage lenders or mortgage apps request as part of their prequalification or quote process. Unless your credit score is very low to begin with, those few points aren't going to change anything.

In fact, according to Experian (one of the "big three" credit bureaus), "...hard inquiries related to mortgage, auto loan and student loan applications are entirely ignored for 30 days from the date of the inquiry."

And even after those 30 days, Experian states, "After those inquiries have aged past 30 days, they still may not be counted as independent inquiries by credit scoring models. That's because FICO^® considers similar loan-related inquiries that have occurred within 45 days of each other as a single inquiry in the scoring process."

So go ahead and get that quote, prequalification, or application started! You're good. 

Read more from Experian about how credit inquiries impact (or don't impact) your loan application/approval.