Frequently Asked Questions
- Mortgage Application FAQ
- Mortgage Servicing FAQ
- Home Equity and Home Equity Line of Credit (HELOC) FAQ
- Does HFCU offer loans for investment properties, multi-family dwellings, condominiums, or mobile homes?
No, at this time HFCU does not offer loans for these types of properties.
- Does HFCU offer VA or FHA mortgage loans?
No, not at this time, but check back as we hope to start offering them soon!
- Does HFCU offer adjustable interest rate mortgages (ARMs)?
No, at this time HFCU does not. Currently, we offer fixed rate mortgages only.
- Does HFCU offer Jumbo Loans (loans for properties where the financed loan amount is above $510,400.00 and is too expensive for a conventional conforming mortgage loan.)
No, at this time HFCU does not offer jumbo loans.
- What are discount points (aka: paying points) and should I pay for them?
When a lender offers and you decide to pay a discount point, you are essentially paying part of your interest to the lender up front. By paying the discount point, you will lower your overall mortgage interest rate—as well as your monthly payment—over the life of the loan.
One discount point is always equal to 1% of the loan amount.
For example, one point on a $100,000.00 loan would require payment of $1,000 in order to pay the discount point at closing. The longer you plan to remain in a property or stay in your mortgage, the more advantageous it may be to pay points.
There is no requirement to pay discount points; whether or not you decide to pay points is completely up to you.
- Can I cancel my loan my loan application once it is started?
If you no longer want to pursue a loan with HFCU, you may cancel/withdraw your loan application at any time by contacting your loan officer.
- What if I cancel my loan application and then decide later I want to reopen the application?
By federal regulation, if, within 14 calendar days from the date we process your cancellation/withdrawal request, you decide you want to reopen the application, we may reopen the application at no additional cost to you.
If a cancelled loan application is reopened within 14 days of the cancellation, you, the borrower will receive your original rate, loan terms, and rate lock expiration date.
After 14 calendar days has elapsed, HFCU is no longer permitted to reopen a cancelled/withdrawn application, and you will need to start a new application and obtain a new rate lock.
- What is a mortgage refinance?
A mortgage refinance is where a borrower/s applies for a new mortgage loan to replace the mortgage loan you currently have on your home.
- What are the benefits of refinancing a mortgage?
You may want to consider refinancing your mortgage in order to better the loan terms if rates have dropped since you did your previous mortgage, or if you have equity in your home and you are interested in paying off high-interest-rate debt, shortening the length of your repayment term for your mortgage, or lowering your monthly mortgage payment.
- When should I consider refinancing my mortgage?
Generally speaking, one or more of the following conditions needs to be present before you should consider refinancing your mortgage:
Mortgage interest rates are falling
Your home has significantly appreciated in market value
You’ve been making payments on your original 30-year mortgage for less than ten years
- Can I refinance my mortgage to take equity/ cash out of my home’s value?
Yes. HFCU offers a variety of mortgage options that allow you to tap into your home’s equity and take cash out. Consult an HFCU Mortgage Loan Officer for the best cash-out refinancing option for you.
- Do I need to have my house appraised in order to refinance?
Yes, in most cases you will need to have your house appraised in order to determine its current value in order to refinance. However, depending on the circumstances, an appraisal may not be required. Your loan officer can determine if your circumstances require an appraisal before you start the refinancing process.
There is a difference between a property inspection and an appraisal. An appraisal is required by most mortgage lenders in order to support the value of the real estate and the terms of the mortgage agreement.
- Does HFCU require property inspection?
No, HFCU does not require an inspection, but if you’re purchasing a home, we highly recommended that you obtain a property inspection and make your purchase offer contingent on the findings of that inspection.
- Do I need an attorney in order to close on my mortgage or home refinance?
Texas does not require an attorney to close a mortgage or mortgage refinance. South Carolina does require a mortgage and mortgage refinance to close with an attorney. If you’re not sure of your state’s requirements, check with your mortgage loan officer.
- What is the minimum down payment required for a conforming, conventional mortgage?
Conventional, fixed-rate mortgage loans are available with HFCU with a down payment as low as 3%.
Please keep in mind, with a down payment under 20%, mortgage insurance (aka: MI, aka: PMI) will be required on your loan, which will increase the cost of the loan and will increase your overall monthly payment.
HFCU’s mortgage loan officers can explain the options available to you based on your circumstances, so you can choose what option works best for you and to ensure eligibility.
- What aspects of a mortgage and home ownership are tax-deductible?
Some types of mortgage and homeowner’s costs may be tax-deductible: discounted points, interest paid on a home loan, and property taxes may qualify for tax-deduction.
Consult a tax advisor for advice about your situation.
- What is an interest rate?
An interest rate is the cost to borrow money expressed as a yearly percentage. It’s based on the principal amount of the loan and is used to calculate the monthly principal and interest payment. Note: The annual percentage rate (APR) also represents the cost to borrow money as a yearly percentage, but it’s a more complete measure of a loan’s cost than the interest rate alone. That’s because the APR includes the interest rate, plus discount points, fees, and other credit charges you need to pay to borrow money.
- What factors may affect the interest rate I qualify for?
Lenders, like HFCU, consider a variety of factors when determining a mortgage interest rate and costs of that mortgage loan. The process of reviewing these factors to determine your rate is called “risk-based pricing.” Typical factors lenders look at include:
Credit profile: a credit report that shows your current debts and payment history. The report mortgage lenders pull will also include an average credit score based on your overall credit history on all three major bureaus (Equifax, Experian, and Transunion.)
Loan to Value ratio (LTV): The amount of money you want to borrow to purchase a home, compared to the appraised value of the property. Generally, the lower your LTV ratio, the lower the risk of the loan, and the lower your interest rate and loan costs will be.
Debt to Income ratio (DTI): The amount of your mortgage payments and total debt payments compared to your income. A higher DTI ratio may mean a higher risk loan, and therefore higher interest rates and costs to you.
The type of mortgage loan: a mortgage purchase loan versus a mortgage refinance loan, or a cash-out refinance mortgage versus a rate-and-term refinance mortgage may affect overall risk and interest rate.
Additional risk factors: We may also consider other risk factors when determining your interest rate and costs, including previous bankruptcies, foreclosures, or unpaid judgments.
- What if I want a lower interest rate than HFCU offers me?
You may be able to lower your interest rate by making changes that lower your risk factors described above.
Here are some of the things you may want to consider:
Putting more money down and lowering the LTV ratio.
Clearing any errors on your credit report that are causing your score to be lower.
Adding a co-borrower or co-signer with additional income and/or a higher credit score to support the loan. (For this option, you may need to start a new loan application.)
Changing the number of years on your mortgage loan term.
You also may be able to lower your rate by paying discount points.
- How does HFCU determine what mortgage interest rate to charge?
Interest rates are influenced by the financial markets and can change multiple times a day. The changes are based on many different economic indicators in the financial markets.
- What is an interest rate lock and how does it work?
Mortgage interest rates may change many times every day. The rate lock feature allows you to stop the clock on the interest rate and keep it the same, regardless of what is going on in the market, for up to 30 days.
When you lock your interest rate, the rate stays the same from the time of the rate lock until the rate lock expiration date (as long as there are no changes to your loan application that would affect your rate).
If you don’t lock your interest rate, it can move up or down based on market conditions. This is called “floating” the interest rate.
Even if your rate is locked, it can still go up or down if there are changes to your application, such as:
The type of loan you are applying for or your down payment amount changes.
The appraisal on the home you want to buy or refinance comes in higher or lower than expected.
Your credit score changes when your credit is repulled before loan closing.
Some of your income information, such as bonus or overtime income, cannot be verified by the lender.
- Will homeowners insurance be required at closing?
Proof of homeowners insurance will be required before you can close your mortgage loan. Typically, you will need to present an insurance binder to your lender and pay for one year’s worth of homeowner’s insurance coverage up front. A homeowners insurance (or hazard insurance) policy covers loss from damages to your home, your belongings and accidents as outlined in your policy.
- What is Mortgage Insurance? (aka: MI, aka: PMI)
Mortgage insurance is required if you have less than 20% equity or down payment in your home at the time of the loan. It is required if the LTV of the home is less than 80%. It protects the mortgage lender from losses if a borrower is unable to make payments and defaults on the loan.
- When can I remove my MI/PMI?
You may have options to cancel your PMI based on the original value of your home or by ordering a new appraisal to indicate that the loan amount of your mortgage is less than 80% of the value of your home.
- What is title insurance?
Title insurance protects the borrower and/or the lender from errors, disputes, and omissions regarding the title/deed of the home being purchased. The coverage for the borrower applies only if they purchase their own separate policy, called owner’s coverage) against any loss resulting from a title error or dispute.
- Is purchasing title insurance mandatory?
All mortgage lenders, including HFCU, require lender’s coverage title insurance for an amount equal to the mortgage loan. The title insurance coverage for the lender lasts until the loan is repaid. As with mortgage insurance, it protects the lender, but the borrower pays the premium for the cost of the coverage at closing.