This financial calculator is an internet-based application intended to help you analyze your financial needs and is for informational purposes only. It does not guarantee a specific rate, term or payment. The calculations provided are based on a conventional mortgage loan with a debt-to-income ratio of 37% along with information provided by you. The results are not provided or reviewed by America First Credit Union and should not be construed as financial, legal or tax advice. In addition, this data should not be relied upon as the only source of information. Consult an America First loan officer for accurate rates, terms and payment estimates.
The first step is easy. Just answer a few questions online, and we'll provide you with a variety of loan options. Then, we'll help you decide on the best type of loan based on your personal circumstances:
You will be able to preview a variety of loan programs and payment options. For information on total costs, you can use the Estimated Closing Costs tools to view the costs associated with a specific type of loan. Once you select the type of loan you want, you're ready to apply for that loan.
We've pared our application down to only the most essential information. Here's what we need to know:
In many cases, we can give you immediate credit approval of your loan request. This is a true loan commitment, not just a pre-qualification offered by other lenders. It approves a specific loan amount and loan program based on your income and debts. It is, however, legally subject to underwriting the property you are financing and verification of the information you've provided us on your application.
When we process your loan application, we need to verify the information you've provided us. We will request minimum documentation to verify assets and income. The property will be reviewed by ordering a title report, appraisal, and flood certification on the home. A prepaid processing deposit is required for these services and will be applied toward your closing costs. We also set up escrow for the loan closing and send out applicable disclosures so you have a chance to read through them.
Final approval of your mortgage loan involves the underwriting of the property and loan application information. We will underwrite the information received and give final approval to prepare the loan for closing.
With final loan approval, we prepare the loan documents for both you and the escrow company to sign. Once we receive the signed documents, we'll transfer the money to the escrow company and they will disburse the loan and record the documents.
Here is a list of some of the items you'll need to complete your application:
Homeownership can be a great investment tool. Your monthly mortgage payments are a type of scheduled savings plan that can help build equity. As a benefit, you often can borrow against that equity or convert it to cash if you sell the home.
Another benefit is the amount of money you'll likely save in taxes. The interest paid on your mortgage is usually tax-deductible and can save you a substantial amount each year in federal income taxes. Any discount points you pay on your loan may also be deductible. (Always contact your tax professional about possible savings and tax benefits.)
Houses can increase in value over time. In many parts of the country, homes sell at a higher price than when they were purchased - this is called "appreciation." This increase in value means the homeowner has essentially increased his or her net worth.
Another advantage of owning your own home is that with fixed rate mortgage products, you will have fixed principal and interest payments for the life of the loan. With our adjustable rate mortgage (ARM) products, the interest rate can fluctuate, but often is initially much lower than that of a fixed rate mortgage.
Don't forget the other benefits of homeownership. You often feel more a part of the community while realizing the American dream of homeownership.
As you progress through the home buying process, the question of insurance will be raised. Here are the basic types of insurance you should know something about. Be aware that most policies contain standard exclusions and exceptions.
Homeowner's insurance covers fire, theft, certain natural disasters and personal liability if someone is injured on your property. It protects the lender against the loss of the property securing your mortgage. You'll have to prove that you have adequate homeowner's coverage as a condition of obtaining a mortgage.
Several things happen behind the scenes when you buy a house. For example, America First will have someone perform a title search to make sure the seller has a legal right to transfer ownership, and to see if there are liens or restrictions on the property. A lawyer, abstractor or employee of the title company does the title search.
Title insurance provides protection against financial loss in case a defect in the title turns up at some future date. Possible defects include:
Private Mortgage Insurance
When you acquire a mortgage with less than a 20 percent down payment, America First may require you to buy mortgage insurance. This coverage helps protect the lender in case you can't make your payments and default on the loan. America First isn't the only beneficiary. Mortgage insurance makes it possible for people with small down payments to buy the home of their choice.
Flooding is not covered by a standard homeowner's insurance policy. To determine if you need flood insurance, ask your insurance professional about the flood history in your area. If there is a potential for flooding, you will be required by America First to purchase a policy that covers the structure and your personal belongings.
Flood insurance can be purchased from an insurance agent or company under contract with the Federal Insurance Administration (FIA), part of the Federal Emergency Management Agency (FEMA). Flood insurance is only available where the local government has adopted adequate flood plain management regulations under the National Flood Insurance Program (NFIP).
America First Credit Union Insurance Relationships
America First Credit Union makes available a number of products and services that complement our primary financial accounts.
As a member, you have access to the benefits offered by and through America First Financial Solutions. These services are designed to help you protect your financial resources and meet your economic goals. Please contact any of the following America First Credit Union affiliates to develop your financial plans for the future:
Liberty Mutual Insurance (homeowner's)
1-877-291-4509 toll-free for an office nearest you
CUNA Mutual Life Insurance Company (mortgage life insurance)
1-800-999-3961, extension 8934
America First Financial Solutions (insurance & investments)
1-800-999-3961, extension 8936
Buying a home is a rewarding experience. You derive a great deal of personal satisfaction from owning a home. Homeownership allows you to build up your personal net worth over time. Traditionally, long-term increase in housing prices nationwide makes homeownership a relatively attractive investment.
In some cases, renting may be a more attractive option. For example, if you plan to move in a year or two, you are unlikely to recover the closing costs you pay when you buy a home. In addition, finding a home to buy generally takes more time than looking for an apartment to rent.
In addition to building up equity over time, owning a home offers significant tax breaks. The interest expense that you pay on up to $1 million in home mortgage debt ($500,000 if you are married and filing a separate return) is tax-deductible. (Always consult your tax professional for the most current information.)
Your tax savings from the mortgage interest tax deduction is greatest in the early years of a mortgage loan. For example, on a 7%, 30-year fixed rate mortgage loan of $100,000, you pay $6,968 in interest the first year of the loan. If you are in the 25% income tax bracket, your tax savings are $1,742. In Year 16 of the loan, you pay $5,090 in interest, which saves you $1,272 in taxes. In Year 24 of the loan, you pay $2,925 in interest, which saves you $731 in taxes. (Always consult your tax professional for the most current information.)
When you sell your home, you can exclude up to $500,000 in capital gains if you are married and filing a joint return. (The exclusion limit is $250,000 for other tax filers.) You will need to pass the IRS's ownership and use tests to show that the home has been your primary residence for at least two of the past five years. In addition to mortgage interest, you can also deduct your local property taxes on your income tax return. (Always consult your tax professional for the most current information.)
As a homeowner, you can tap the equity in your home in the future with a home equity loan or line of credit. Interest expense that you pay on up to $100,000 in home equity debt is tax-deductible ($50,000 if you are married and filing a separate return).
Yet, renting does have some advantages. For one, renting doesn't require you to make a down payment, which can range from 3% to 20% of the price of the home. A total monthly payment for rent is generally cheaper, too, when you include all the other costs of owning a home. In addition to paying off a loan with interest, homeowners routinely pay homeowner's insurance and property taxes. They may also be required to buy private mortgage insurance (PMI). Finally, homeowners face maintenance and home-improvement costs that renters avoid.
In general, renting has a lower financial burden, requiring smaller monthly outlays. With the extra cash that you save each month, you may be able to invest and earn a rate of return that compensates for missed opportunities of homeownership. Renting may be a wiser course of action if you plan to relocate to another city soon or are in uncertain financial circumstances. For persons fresh out of school or newly divorced, renting may be the best option.
A good way to start your search for the mortgage that's right for you is by reviewing your credit profile. Lenders will look to see if you have an established track record of repaying your debts on time. Credit Reporting Agencies compile a record of your debts and how you have repaid them. This information makes up your credit report. The bureaus gather their information from credit card companies, banks, department stores, utility companies, and other firms.
Once you have submitted an application, your credit report will be reviewed (with your permission) to verify your monthly debt payments, the amount of your current long-term debts, and how long it will take you to pay off your current debts. Your credit history demonstrates whether or not you are willing to repay your mortgage loan. Having a good credit record means, among other things, that you pay your rent and other bills on time. This shows lenders you use your credit responsibly.
Some additional questions: Do you have the required financial resources to buy a home? Do you have enough money for a down payment, closing costs, and a monthly mortgage payment, as well as sufficient funds to pay taxes, insurance and other costs associated with owning a home?
Your lender can help you calculate your buying power, based on your total income, debts, credit history, and other factors. Remember that all persons applying for the loan must have their credit report reviewed, and his or her debts will be factored into whether you both can get a mortgage.
A lender's pre-approval is a limited-time commitment to fund your mortgage loan. A pre-approval may include an interest rate lock. To obtain a pre-approval, a lender evaluates your credit history, and calculates your housing and debt ratios. You should expect to verify your income, length of employment and source of down payment.
A pre-approval legitimizes you as a serious buyer. It also gives you additional negotiating leverage to negotiate a sale price, especially if the seller cannot find other pre-approved buyers.
When seeking a pre-approval, it's important not to misrepresent the facts on your application. If a lender learns later that you've misrepresented or omitted information on your application, your pre-approval may be rescinded.
As part of the pre-approval process, a lender obtains your credit report. You should be familiar with the contents of your credit reports from all three major credit bureaus:
If a lender denies your pre-approval, you should investigate immediately. Without a pre-approval, your chances of obtaining a mortgage loan are jeopardized. If a lender bases the decision, in part, on information in your credit report, you have the right to receive a free copy of the report.
Homeownership is key to a lifetime of financial health, as well as a vital component of sustainable communities. We're here to help you learn how you can make it a reality.