NN: What is a Mortgage, and how do I know how much to spend on a home?

LO: A Mortgage is a loan obtained to purchase real estate.  Your mortgage payments, property taxes, and insurance should be no more than 40% of your household income.

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NN: What types of loans are available from MCU, and what kind of home can I purchase with a mortgage from MCU?

LO: MCU offers fixed rate, adjustable rate, and jumbo fixed rate mortgages.  You can purchase any residential, one to four family home, condo, or co-op in New York or New Jersey with a mortgage from MCU. 

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NN: What documents will I need to obtain a mortgage from MCU?

LO: You need the following documents to apply for a mortgage:

• Latest 2 years tax returns (Along with W-2 Forms)
• Two recent pay stubs
• Latest 2 months bank statements
• Fully executed Contract of Sale (Purchase)

Always remember if you have a question about any information you collect or receive, check it with a reputable source for validity, like your credit union’s auto lending area.

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NN: What is a credit score, and will it have any affect on obtaining a mortgage?

LO: A credit score is a number that helps lenders and others predict how likely you are to make your credit payments on time. Each score is based on the information in your credit report.  Credit scores affect whether you can get credit and what you pay for credit cards, auto loans, mortgages and other kinds of credit. For most kinds of credit scores, higher scores mean you are more likely to be approved and pay a lower interest rate on new credit.  For mortgages, a borrower should have a minimum credit score of 620. 

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NN: How will I know the amount of money I will have to put down as a down payment?

LO: Your down payment could be anywhere from 3.5% to 20%, and it is based on the individual buyer’s situation.  There is no set formula to calculate a down payment.  Rarely are down payments greater than 20% of the price of the home.

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NN: What are points, and how do they affect my mortgage rate?

LO: A point (discount point) is a fee equal to 1 percent of the loan amount. The more points you pay, the lower the interest rate on the loan and vice versa. Borrowers typically can pay anywhere from zero to two points at MCU, depending on how much they want to lower their rates. This kind of point is tax-deductible.

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NN: What is APR?

LO: APR is an acronym for Annual Percentage Rate.  The APR is a measure of the cost of credit expressed as a yearly rate.  The APR reflects the amount being financed, the interest rate, the timing of the payments, and any other costs (prepaid charges) required as a condition of the mortgage loan that make up the finance charge. The finance charge, another required disclosure under the Truth in Lending Act, expresses as a dollar amount the costs associated with the loan, including interest and charges payable by the borrower such as points, loan fees, origination fees, application fees, and insurance, to name a few.

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NN: How do I calculate my debt to income ratio?

LO: You can calculate your debt to income ratio in three steps:

  • Add up your total net monthly income. This includes your monthly wages and any overtime, commissions or bonuses that are guaranteed; plus alimony payment received, if applicable. If your income varies, figure the monthly average for the past two years. Include any monies earned from rentals or any other additional income.
  • Add up your monthly debt obligations. This includes all of your credit card bills, loan and mortgage payments (if applicable).
  • Divide your total monthly debt obligations by your total monthly income. This is your total debt-to-income ratio.

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NN: What is the difference between an FHA Loan and a Conventional Loan?

LO: An FHA loan is a mortgage loan that is insured by the U.S. Federal Housing Administration to help those who are buying homes for the first time. A mortgage conventional loan is a lender agreement that's not guaranteed or insured by the federal government under the Veterans Administration (VA) the Federal Housing Administration (FHA), or the Rural Housing Service (RHS) of the U.S. Department of Agriculture. Although a conventional loan is not insured or guaranteed by the government, it can still follow the guidelines of government sponsored enterprises (GSE's) such as Fannie Mae or Freddie Mac as both Fannie Mae and Freddie Mac are stockholder-owned corporations and are not part of the federal government.

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NN: What is PMI?

LO: Private Mortgage Insurance, or PMI, is a type of insurance that insures the lender in case the buyer defaults on the loan. The lender, or bank, requires PMI when the buyer has a down payment less than 20% of the asking price of the home.

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To apply for a mortgage from MCU or for more information on MCU Mortgage products, visit the Mortgage Place or call an MCU Mortgage Specialist at 212-238-3521.