Whether you’re moving into your second home, or buying your very first, People’s Community Credit Union is here for you! We offer the same mortgage rates for all of our members, and that is very different from other lenders. Mortgage and approval rates can vary significantly across lenders, so we’ve put together a helpful guide on how mortgages typically work, and how mortgages work with us!
What is a Home Mortgage Loan?
A mortgage loan is a specific loan for a home, given to you by a credit union or mortgage company. Pretty straightforward, right? Here is the basic process of obtaining a mortgage loan and buying a house:
- Look at your credit score and finances. Lenders look closely at your credit score when you apply.
- Ask yourself: “How much house can I afford?” Take into account your current debt, your current savings, your income, and any closing costs for a house.
- Get pre-approved for a mortgage. Now that you have a solid understanding of your finances, you’re ready to talk to a credit union! Take a look at several rates for mortgages, as they can vary widely. Keep in mind that a credit union can offer you rates that a big bank can’t.
- Begin looking at houses! Now that you have a solid idea of what kind of loan you can get, and for how much, you can feel free to shop around for your dream home.
- Choose the right loan, with the right lender.
- You’ve taken a look at several lenders. You know what kind of rate you want, what kind of mortgage term you want, and you know how much loan you can afford.
- Submit your application.
- You found the perfect lender, with the perfect type of mortgage. You’re ready!
- The underwriting process begins.
- This is when the lender will look at your credit score, your credit history, your income-to-debt ratio, and other factors that will determine their approval.
- During this time, it’s best to keep your finances as stable as possible. Don’t switch jobs, don’t make a large purchase, and keep your credit cards under control.
- You’ll also schedule a home appraisal, so the lender can determine whether or not the loan size and terms are acceptable.
- If you were approved, and the underwriting was successful--it’s time to close on your brand new house!
Mortgage Loans for Bad Credit
All of this is relatively simple, if you have good credit. But what if you have bad credit? There are two options that are typically used: Government-backed home loans, and conventional home loans with larger down payments.
- Government-backed home loans, like Federal Housing Administration Loans, can help people with bad credit obtain a mortgage. These loans require mortgage insurance for the life of the loan, which is a requirement that most conventional loans do not have.
- Conventional home loans can be approved by a lender if there’s a larger down payment provided. Each lender has different requirements for the accepted down payment amount, and this is why getting pre-approved for a mortgage is so important.
Should I Apply for a Fixed-Rate or Adjustable Rate Mortgage?
Fixed-rate is generally the preferred method of taking out a home loan. Adjustable rates are home loan rates than vary over time. Adjustable rates tend to be unstable, and can be affected by factors out of your control.
People’s Community Federal Credit Union offers fixed-rate mortgages in varying term lengths, rather than adjustable rates. Fixed-rate mortgages are stable long-term, because you always know what your monthly payment will be.
Choose a Credit Union for Your Mortgage
When you apply for a mortgage with People’s Community Federal Credit Union, you’ll get the same rate as everyone else. Your credit does determine approval, but we’re typically more flexible than bigger banks. While we can’t approve mortgages if you have certain lower levels of credit, we can work with you to figure out a home mortgage loan solution that works for you and your budget. At People’s Community, you’re a person--not a number!