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US mortgages FAQs

Applying for a US mortgage

You may be planning to use proceeds from the sale for your new home purchase. In such cases, we need to verify that you will have the funds to cover the closing costs. 

We can verify this information if we have a copy of your settlement statement (HUD 1) or Closing Disclosure. You will receive these documents once you finalize the sale of your home. Please send us a copy. 

The closing of your current home and new home may be scheduled for the same day. Make sure the sale of your current home closes before your scheduled closing for the new home. This way, you will have the required documentation to close on your new home.

Copies of your recent pension check stubs, or statements from your financial institution (if other than UNFCU), will help us verify your income. Some pension or retirement plans do not provide income for life. In such cases, we will also need to verify that your income will continue for at least three years. We can contact your pension or retirement plan provider for this verification. You can also provide us with a social security award letter or a 1099 form for pensions.

We will review copies of your personal federal tax returns for the most recent two-year period. If applicable, we will also require the most recent two-year tax returns for your business. We will not be able to consider any income that has not been reported on your tax returns.

There is no fee to apply. We also offer free pre-approvals.

A pre-approval confirms that you are “credit” approved for a mortgage. This means that we have analyzed your income, assets, and other key factors to determine that you qualify for a mortgage. As a result, the pre-approval also tells you the amount for which you qualified. You can then look for a home within your budget.  

Since a pre-approval is evidence of your ability to obtain financing, it is useful for real estate agents and sellers. It indicates that you are a qualified buyer. Contact a mortgage representative to start the pre-approval process.

We do not require an engineer’s home inspection. You may choose to obtain one to have peace of mind that there are no issues with your new home. View our guide for helpful tips on making the most of your home inspection. In the event that the inspection uncovers any issues, you will have time to determine how you want to proceed. 

An appraisal is required. It will determine if the price you are paying for the home aligns with its current market value. The cost of the appraisal is covered by you. We have a network of professionals we work with for this service.

Yes. Please include all loans that you may be required to repay. We may ask for additional information regarding the repayment of these loans.

We will consider all income disclosed in your tax filings and pay statements if they are likely to continue.

This depends on the purpose of your mortgage, how you will use the home, and the mortgage product you choose. Contact a mortgage representative to discuss your options.

Tax requirements vary by location. Since this is not our area of expertise, we do not provide tax guidance. We recommend that you consult a tax advisor.

Escrow

An escrow account is set up at closing. The purpose of an escrow account is to help you budget for expenses such as property taxes and insurance. If you are in a special flood hazard area, your flood insurance will also be covered by the escrow account. 

To fund the escrow account, we add a portion of your property taxes and insurance premiums to your monthly mortgage payment. When your tax or insurance amounts are due, we pay the amounts from your escrow account. This saves you time. It also gives you peace of mind that your tax and insurance bills will be paid on time.

If your property is located in a special flood hazard area, we are required to escrow for flood insurance. Other than flood insurance, you can waive the escrow if you meet certain conditions. Email us at loanservicing@unfcu.com to find out if and how you can waive the escrow requirement.

The initial amount in the account will be based on the latest tax and insurance bills paid on the property. If we are notified of a change in dues, we will update our projection for the following year. Without such information, our projection is based on how much was paid in the prior 12 months. We then apply the monthly payment to 13 months. The additional month allows us to cover any increases. 

For example: 

You paid $3,000 in property taxes and $1,200 for your homeowner's insurance. Your annual cost was therefore $4,200. We will look at this cost once you open an escrow account. If there are no rate changes, we will project payments to your escrow account to cover $4,200 in bills over 12 months. 

We will therefore add $350.00 per month to the escrow portion of your mortgage payment. Since we require an extra month’s payment, we would add $29.17 to your monthly payment for a total of $379.17. You may also choose to pay us $350.00 directly to cover the shortage. 

Your insurance provider will notify us of any changes to your policy and premiums. 

Tax authorities will notify you directly when there is a change to your tax amount. Authorities do not share your tax bill with us. We are notified of your tax bill only when it is due. 

We also work with a tax authority vendor who tracks property taxes across the US. Our vendor tells us where taxes are most likely to increase or decrease, and by how much.

This analysis includes projections for the next 12 months. It shows you how much money you need to maintain in your escrow to cover your anticipated payments. If there is too little being collected, we will increase the escrow payment to make up the difference. If there is too much money, we will send you a refund. The analysis also shows how our projections will impact your mortgage payments. This information is presented in your escrow account disclosure statement

Changes in your escrow payments may be due to changes to your insurance premiums or tax rates. Your real estate taxes may also change if you build or expand your home. Keep in mind that the initial amount in the account was based on the latest tax and insurance bills paid on the property. Your actual payment amounts may differ from this initial projection.

If you have a surplus of more than $50.00, we will credit the amount to your UNFCU account. We can also issue a check. If you have a surplus of $50.00 or less, it will remain in your escrow account.

Making US mortgage payments

No, there is no pre-payment penalty.

You have a 15-day grace period from when your payment is due. You will be charged a late payment fee if you do not make your payment within this grace period.

For a mortgage, you will be charged 2.00% of the total principal and interest amount that is late.

PMI is required if your mortgage amount is more than 80% of the value or purchase price of your home. The value of your home may not cover the amount due if you are unable to repay the mortgage. This insurance gives the lender added protection in such cases. You pay the PMI each month until the value of your property reaches a certain percentage. Depending on the percentage that is reached, we will either automatically cancel the PMI or you can request a cancellation.

We will automatically cancel the PMI once your principal mortgage balance reaches 78% of your home's original value. You can also request a cancellation on or after the date when your principal mortgage balance is 80% of your home's original value. To view the requirements for such cancellations, email us at loanservicing@unfcu.com

Modification & refinance

A mortgage refinance is a new mortgage with new terms that replaces your original mortgage. With a mortgage refinance, you can choose a new rate and repayment period. Choose lower monthly payments over a longer period of time or higher payments over a shorter period of time. 

If you only want to change your mortgage interest rate, you may want to consider a mortgage modification. Unlike a refinance, a mortgage modification allows you to choose a new rate without changing the other terms of your mortgage agreement. If you qualify for a mortgage modification, it is faster and costs less than a mortgage refinance.

A mortgage modification reduces your interest rate without changing the other terms of your mortgage agreement. This way, you can make lower monthly payments while paying off your mortgage within the original timeframe. 

A modification requires less time and money than a mortgage refinance. The one-time processing fee is based on the outstanding principal amount of your mortgage. There are no mortgage fees or closing costs. 

Consider a mortgage modification if: 

  • You have had a mortgage with us for at least 12 months, and 
  • Your mortgage payment has not been more than 30 days late in the last 12 months, and
  • Your mortgage payment has not been late more than one time in the last 24 months, and
  • All of your UNFCU accounts are in good standing, and 
  • The loan-to-value ratio of your home is 90% or less. 

Additional eligibility criteria may apply.

A mortgage modification is available for most UNFCU fixed and adjustable rate mortgages. Email us at loanservicing@unfcu.com to see if you qualify. 

Typically, a refinance costs 3.00–6.00% of the outstanding mortgage principal. You will also need to pay standard mortgage fees and closing costs. If you have had your mortgage with UNFCU for at least 12 months, you may want to explore a mortgage modification.

Yes. If UNFCU is your lender, we can add refinance costs to your new mortgage, based on certain guidelines. Contact a mortgage representative to discuss your situation.

Mortgage tax must be paid on all New York properties, except cooperatives. The mortgage tax ranges from 0.50–2.55% of the mortgage balance at the time of closing. You may be able to reduce this tax when you refinance. Contact a mortgage representative to discuss your options. 

A mortgage refinance requires standard income, asset, and credit history documentation. If the mortgage you are refinancing is with UNFCU, you may need fewer documents.

A mortgage refinance typically needs a new appraisal. You may qualify for a waiver if the mortgage you are refinancing is with UNFCU.

Yes, contact a mortgage representative to discuss your options. 

Your mortgage closing

Yes. Upon your request, a UNFCU closing representative will send you all the closing documents prior to your scheduled closing date. Your representative will review the documents with you and explain the final breakdown of your closing costs.

We will schedule your closing in a location within the US that is convenient for you.

If someone you trust is able to attend, you can complete a power of attorney. This will give them the rights to sign documents on your behalf. We will need to approve the power of attorney form prior to closing. Please allow three business days for us to review and approve the completed form. Contact your mortgage representative to discuss other options.

You are not required to hire an attorney. In certain jurisdictions, it is customary and sometimes advisable to have an attorney represent you throughout the home buying process. Please discuss this with your mortgage representative.

You can use money gifted to you from a relative, domestic partner, or fiancée to pay for your down payment. We will need a letter from the individual who gave you this gift confirming the amount and their relationship to you. The letter should specify that you do not need to repay the amount you received as a gift. We also need a bank statement from the individual to show that they have the ability to give this gift. As a final step, we need to confirm that the money was transferred to your account.  

If financing more than 80% of the home's price, you must have at least 5% of the amount yourself. This would exclude any monetary gifts you receive.