Your Guide to Mortgages!

Securing your home loan doesn’t have to be difficult. Our mortgage experts will work with you through the process, answering your questions and offering advice every step of the way. Whether you’re just getting started, exploring your options, or managing your existing loan, here’s everything you need to know!

Let’s start out with the basics, what is a mortgage? A mortgage is a loan that you take out to buy a home. The lender gives you the money to purchase the home, and you repay the loan over time, usually in monthly installments.

Our biggest question is “how do I get started?” or “where do I begin?”. A great starting point is getting pre-approved, this will determine how much you can borrow for your next home!

How do I get pre-approved? To get pre-approved, you’ll need to provide Picatinny FCU with information about your income, credit history, and assets. Then we will assess your financial situation and determine how much you can afford to borrow. This depends on a few different factors such as: 

• Income
• Debt
• Credit score
• Down payment 
• Interest rate

This leads us into our next question, how do I apply for a mortgage? Go online to picacreditunion.com to start your application. During the process it will ask you to provide specific documents. What documents do I need to provide? You can easily upload the following documents:

• 30 Days of Paystubs
• 2 Years of W-2s
• Tax Returns and all schedules if self-employed
• Band Statements (2 months all pages even if blank)  Assets that are being used for down payment & closing cost
• Identification such as a drivers license 

If you are self employed you will need a minimum of 2 years and supply tax returns for 2 years.

After you are approved, you can start the exciting journey of house hunting! If you need a realtor that knows the in’s and out’s of the home buying process, we have the perfect connection for you! Our HomeAdvantage program provides you with a range of online tools to make home buying a breeze, and even earn rewards! 

Now that you started your house hunt, you need to start thinking of your down payment. A lot of new homeowners ask how much do I need for a down payment? The down payment is the amount of money you pay upfront when you buy a home. The required down payment varies depending on the type of mortgage you choose. A Conventional Loan is usually around 3% – 20% down payment. But as a Picatinny member, you could qualify for our 100% First Mortgage Program which offers you the option to finance the entire purchase price with no down payment!

There are also different types of mortgages such as fixed or adjustable-rate mortgages. 

• Fixed-rate mortgages: The interest rate stays the same throughout the life of the loan.
• Adjustable-rate mortgage (ARMs): The interest rate can change over time, often based on a benchmark index. For example, 5/1 ARM is fixed for 5 years and can adjust after the 5th year up or down depending on the terms of the program.

Once you find a home that you love and are ready to put in an offer, you have to consider the term of your loan. You have to ask yourself, what term is best for you? A shorter term has higher payment but the amount of interest you pay over time will be lower. A longer term, like a conventional 30 year mortgage, will have a lower payment and more flexibility. Plus, you can always pay extra towards the principal if you want to pay it off earlier! 

You will also what to start thinking about your closing costs. What are closing costs? These are different fees that are paid at the time of closing on a home purchase. They can include things like appraisal fees, title fees, and attorney fees. We offer a Flat Fee Mortgage Program, which offers members a flat fee of $999 which is a set fee that covers all your closing costs. This program includes many fees such as: application fee, credit report, flood certification, appraisal up to $415*, lender’s attorney review, processing/underwriting.

You will also want to tell your lender if you receive any monetary gifts towards the purchase of your new home! How can I use my gift funds? You can use these funds towards the down payment and/or closing costs depending on the loan type. You will need to provide documentation to verify the gift.

Managing Your Mortgage

Once you’re settled into your new home, it’s important to manage your mortgage responsibly by making payments on time, keeping important documentation about your new home organized, and monitoring interest rate trends.

Many members consider refinancing. What is refinancing? Refinancing allows you to replace your existing mortgage with a new one. Members often choose to refinance when:

• Interest rates have decreased
• They want to lower their monthly payment
• They want to change the term of their loan

Our mortgage team can help you evaluate whether refinancing makes sense for you.