Home Loans — Frequently Asked Questions (FAQs)
This is an account set up to pay Real Estate taxes, Homeowners Insurance premiums, and/or Private Mortgage Insurance (PMI) premiums when they come due. The money is taken from the account and paid directly by the mortgage holder. These funds are collected from the homeowner each month in addition to the amount needed to pay principal and interest. The amount is usually 1/12 of what will be needed to pay these items; the lender is also allowed to collect up to a 2-month cushion to ensure that there will be sufficient funds when needed. If a loan is for more than 80% of the home’s value, the borrower will be required to pay PMI and will be required to escrow for PMI, taxes and homeowner’s insurance. If the loan is for no more than 80% of the value, the decision to escrow is usually left to the borrower. MCU does not currently charge a higher rate of interest to those who are not escrowing.
PMI is Private Mortgage Insurance. PMI is designed to protect the credit union against loss should a borrower default on their home loan. PMI is required for a loan that is for more than 80% of the sales price of the property. PMI also would be required on refinance loans which are more than 80% Loan-to-Value (LTV). Loans with PMI include an insurance premium that is added to the monthly payment which will continue until the principal loan balance is paid down to less than 78% LTV. When the principle loan balance reaches 80% LTV, a member may send a written request to MCU to discontinue PMI. However, PMI automatically terminates when the principle loan balance is 78% LTV.
A discount point is a prepaid fee used to reduce the interest rate. One point equals 1% of the loan amount.
How long will it take for my loan to be approved?
If the necessary documentation has been provided, you can usually be approved within 24 hours.
What is a Good Faith Estimate?
Law requires the lender within 3 business days from the date you apply, to furnish you with an itemized estimate of closing costs. Keep in mind that this is an estimate based on the information available at the time. Your actual closing costs may vary somewhat depending on certain costs (i.e. how much the appraisal actually costs, the actual closing date, the amounts of your real estate taxes and homeowner’s insurance.)
An amortized fixed-rate loan with monthly payments for a certain period of time, usually 7 or 5 years, and one large payment for the remaining amount of the principal at a time specified in the contract or note.
Why do I need hazard insurance?
Hazard insurance protects you against losses sustained by natural causes such as weather and unnatural causes such as burglary. The lender requires insurance on the property used to secure your mortgage for at least the loan amount.
The Federal Emergency Management Agency (FEMA) developed and mandates the use of flood maps to determine if a property is in a flood zone. These maps include areas that are within the 100-year flood boundary. (Note: This does not mean the land will flood every 100 years, but rather that there is a 1% greater chance that a flood level will be equal or exceeded in any given year.) The appraiser will make an initial determination of the property flood zone. However, the lender will order a report from a flood determination agency. If a property is in a flood zone, the lender will require the borrower to obtain flood insurance before closing.
Title insurance protects the borrower and the lender from title mistakes. A title search ensures the seller owns the property being financed and there are no hidden liens on the property.
Does money from a home equity loan have to be used for improvement to my house?
Absolutely not, you can use money from a home equity loan for anything. Buy a car, send your children to college, take a long awaited vacation, or just consolidate your bills.
What to bring to your MCU Real Estate Lender
- Completed loan application.
- Paystubs — Provide copies of the two most recent paystubs for each borrower.
- W-2s — Provide two most recent W-2 forms for each borrower.
- Bank Statements — Provide copies of two (2) most recent bank statements, including checking, savings accounts and one (1) copy of your most recent retirement statement(s) — IRA, mutual funds, stock, etc.
- Self-Employed — Provide two years' tax returns, signed and dated; year-to-date profit and loss statement; and a balance sheet.
- Child Support Information:
- If using child support or maintenance as income, please provide the following:
- Copy of divorce decree;
- Evidence of twelve months receipt of payment;
- Name of recipient; and
- Name of the payor.
- If you are required to pay child support/maintenance:
- Copy of divorce decree;
- Be sure to include on the liabilities section of your loan application; and
- Name of recipient.
- If using child support or maintenance as income, please provide the following:
- Rental history — Please provide the last two (2) years of rental history and include information for each location rented:
- Address where rented;
- Landlord's name;
- Landlord's address; and
- Rental from ______ to ______ dates.
- Homeowner's insurance information:
- Provide your current homeowner's insurance company name;
- Homeowner's insurance company address; and
- Agent name and phone number.
- Current mortgage information:
- Mortgage company name;
- Company address;
- Company telephone number; and
- Account number.
- Payoff for 30 days after application.
- Any additional information that may be helpful.
For an appointment, call (573) 874-1477 Columbia or (573) 635-8007 Jefferson City or (800) 451-1477 Toll-free (Outside of Columbia or Jefferson City only) or .