What You Didn’t Know About Home Loans

If you’re in the market for a new house, learn all you can about home loans before going too far into the process.

Here are some things you may not know about home loans:

Rates fluctuate daily

If you’re looking for a new home, you may be checking mortgage rates as often as some people check their Twitter feeds, but rates fluctuate daily. Know that the rate you see today may be different than the one you actually get when you get approved for your loan.

The cheapest interest rate does not guarantee the cheapest loan

An adjustable-rate mortgages (ARM), which can be the loan boasting the lowest interest rate, may not have the lowest rate a few years down the line after it adjusts. Understanding the terms of when you are subject to an interest rate change and what the limitations to those changes is important.

A fixed-interest rate mortgage can ultimately cost you more

A fixed-rate mortgage can have a higher interest rate, however it would not be subject to a future change later in your term. If rates drop further throughout your loan’s term though, you won’t be able to take advantage of the new rates unless you refinance. In the event that you wished to refinance, you may be subject to another set of closing costs.

A lower credit score will cost the borrower

A high credit score can translate into tens of thousands of dollars in interest payments saved over the life of a home loan. A credit score difference of 100 points can increase a monthly mortgage payment by $150 or more.

The housing market impacts rates

Lenders need to turn a profit from their loans, which means the higher the volume of loans they process, the less they need to earn from each one to remain profitable. When the housing market is booming, and lenders are granting loans on a frequent basis, they will be more inclined to offer lower interest rates to borrowers.

You can have your mortgage payments automated

Missing a mortgage payment or paying it late can have serious consequences. Avoid that by signing up to have your monthly mortgage payments automatically deducted from your checking account.

If you apply for a home loan through Olean Area Federal Credit Union, and have a checking account with us, you can set up autopay for your monthly payment. Explore our mortgage loan options today!

All You Need to Know About Closing Costs

If you’re in the market for a new home, don’t forget to budget for closing costs! This includes all fees and charges incurred while officially transferring a property from one owner to another.

Here’s all you need to know about closing costs:

How high will my closing costs be?

Closing costs usually amount to 2-5 percent of the home’s price. For example, if you’re purchasing a $130,000 home, your closing costs can be anywhere from $2,600 to $6,500.

What kind of charges can I expect as part of my closing costs?

Application/Underwriting/Origination fees: Compensation for the administrative costs associated with processing a mortgage loan.
Appraisal: Covers the fee of a professional appraiser to provide your lender with an estimate of your home’s true value.
Attorney fee: In some states, the closing documents must be reviewed by an attorney before they become binding. This charge covers the attorney’s fee.
Closing fee or escrow fee: The cost of the title company, escrow company or attorney for facilitating the closing.
Credit check: Some lenders charge a fee to examine your credit history.
Escrow deposit: You may be asked to make your initial escrow deposit at closing, to ensure the financial institution has the funds to pay property taxes and/or mortgage insurance for the first twelve months.
Home inspection: The cost of a professional inspection of your entire home and property.
Homeowners’ insurance: Many lenders require you to pay the first year’s worth of homeowners insurance premiums prior to closing.
Lender’s title insurance: Title insurance insures the outstanding balance of a mortgage in the event there is a financial loss due to a defect in the title to the property.
Prepaid interest: Most lenders require buyers to prepay the interest that will accrue from the day of closing until the date of the first mortgage payment.
Primary Mortgage Insurance (PMI): If you need to pay PMI on your loan, the first month’s premium is due at closing.
Title fees: This covers the cost of a title search, in which your lender hires a title company to look for possible legal claims on your property.

Should I choose the “no-closing-costs” option?

Before signing up for a no-closing-cost loan, it’s important to understand that there’s no such thing as a mortgage without closing costs. In a no-closing-costs loan, these fees will could be rolled into the mortgage. In this scenario, you would be paying interest on your closing costs throughout the life of the loan. Also, lenders usually raise the interest rates on no-closing-costs mortgages.

The Credit Union Difference – A Look at Loan Interest Rates

One of the most beneficial advantages we offer our members here at Olean Area Federal Credit Union is lower interest rates on loans. Let’s take a look at some of the most popular loan types and how the rates at credit unions differ from the industry average.

Auto loans

Looking for a new set of wheels? Look no further than Olean Area Federal Credit Union! With rates that fall far below the industry average, you can sign confidently, knowing you’re getting a fantastic deal.

Used Car Loan, 48 months:

Average industry rate: 5.44%APR (Annual Percentage Rate)

Average credit union rate: 3.50%APR

Used Car Loan, 36 months:

Average industry rate: 5.39%APR

Average credit union rate: 3.37%APR

New Car Loan, 60 months:

Average industry rate: 5.10%APR

Average credit union rate: 3.45%APR

New Car Loan, 48 months:

Average industry rate: 4.99%APR

Average credit union rate: 3.32%APR

You can explore current Auto Loan Rates at Olean Area FCU by clicking here.

Credit Cards

Why pay a steep interest rate on a new credit card when you can get one at Olean Area Federal Credit Union at a rate that’s nearly two points lower than the national average?

Average industry rate on new credit cards: 13.15%APR

Average credit union rate on new credit cards: 11.54%APR

Click here to discover current credit card rates offered by Olean Area FCU!

Home Equity Loans

Looking to fund a home renovation or expansion? Consider a home equity loan, or a home equity line of credit (HELOC) at Olean Area Federal Credit Union.

Home Equity Loan, 5 years, up to 80% of the home’s value:

Average industry rate: 5.21%APR

Average credit union rate: 4.65%APR

Home Equity Line of Credit, up to 80% of the home’s value:

Average industry rate: 5.05%APR

Average credit union rate 4.56%APR

Home Loans

When you apply for a home loan at Olean Area Federal Credit Union, you’ll enjoy personalized attention throughout the loan process, quick, professional service and interest rates that beat the industry average no matter what kind of mortgage you choose.

30-Year Fixed-Rate Mortgage:

Average industry rate: 3.79%APR

Average credit union rate: 3.71%APR

15-Year Fixed-Rate Mortgage:

Average industry rate: 3.36%APR

Average credit union rate: 3.23%APR

5/1 Year Adjustable Rate Mortgage (ARM):

Average industry rate: 3.79%APR

Average credit union rate: 3.28%APR

3/1 Year ARM:

Average industry rate: 3.74%APR

Average credit union rate: 3.26%APR

1 Year ARM:

Average industry rate: 3.61%APR

Average credit union rate: 3.48%APR

Discover current mortgage rates offered by Olean Area FCU by clicking here.

Unsecured loans

When you need a bit of extra cash for a reason that doesn’t fit neatly into any other category, consider taking out an unsecured loan at Olean Area Federal Credit Union.

Average industry interest rate on fixed 36-month personal/unsecured loans: 10.21%APR

Average credit union interest rate on fixed 36-month personal/unsecured: 9.28%APR

You can find out about your unsecured loan options by calling an Olean Area FCU lender at (716) 372-6607, or by filling out the “Contact Us” form.

All You Need to Know About Home Loans

If you’re in the market for a new home, you’ll likely need to take out a home loan or mortgage. Let’s take a closer look at home loans and the application process.

What is a home loan?

A home loan enables you to buy a home without having to pull all the cash directly from your pocket at the time of purchase. You’ll need to make a down payment, which is typically between 3.5-20% of the home’s value, along with closing costs and some other fees. The lender will finance the rest. You’ll then repay the loan, along with interest, generally over the course of 15 to 30 years.

Are all home loans alike?

There are several kinds of home loans, each with its own attributes. Here are three common types:

1. 30-year fixed-rate mortgage. The interest rate on this 30-year mortgage remains fixed despite any changes to the national rate.

2. 15-year fixed-rate mortgage. This fixed-rate mortgage will only last 15 years. Monthly payments will be higher, but the overall interest paid on the loan will be much lower.

3. Adjustable-rate mortgage (ARM). An ARM will give the borrower a lower interest rate in the early years of the loan, followed by a gradual rate increase over the rest of the life of the mortgage.

What do I need to know before applying?

To qualify for a mortgage, you’ll need to prove you are financially responsible and you can afford the monthly mortgage payments.

The primary way lenders gauge your financial responsibility is through your credit score. This number tells lenders how you’ve handled your past debts. Most lenders will grant a home loan to borrowers with a score of 650 or more. To boost yours, pay your bills on time and keep your credit card usage to a minimum. A higher score will help you get approved and will net you a lower interest rate on your loan.

Another factor in determining your eligibility is your debt-to-income ratio (DTI). Lenders want to know how big your collective outstanding debt will be in relation to your income if you receive the home loan. Most lenders allow a maximum DTI of 36%.

When should I apply?

It’s a good idea to start the mortgage process before you begin house hunting. Your lender will let you know whether you can expect to be approved for a loan and will provide you with an estimate of how much house you can afford. At this point, you can also ask for a pre-approval letter, which confirms you are qualified for a mortgage and shows sellers you’re a serious buyer.

How do I apply?

To apply for a home loan at Olean Area Federal Credit Union, contact a representative to help you get started. Make sure to have all of your financial documents in order.

Am I Really Ready to Buy a House?

Q: I’ve saved up for a down payment and drawn up a wish list of what I’m looking for in a new home, but I’m getting cold feet. How do I know if I’m really ready to buy a house?

A: It’s normal to feel hesitant about going through with what may be the biggest purchase of your life. To help put you at ease, we’ve compiled a list of questions to ask yourself before buying a new home.

Can I afford to buy a house?

Before viewing properties, remember that purchasing a home will cost more than just the down payment. You’ll also need to cover closing costs, which typically run at 2-4 percent of the total purchase, as well as moving costs and possibly new furniture and renovations for your new home.

Can I afford the monthly mortgage?

Most lending companies will grant a loan to a homebuyer if the monthly mortgage payments do not push the buyer’s debt-to-income ratio above the recommended 43 percent. Work out the total for your pre-mortgage debt before applying for a loan so you have an idea of how much house you can afford.

Am I ready to settle down?

Buyers who don’t plan on staying in their homes long-term may end up incurring a loss. Consider factors like your career, family planning and evolving demographics of a neighborhood when trying to answer this question.

Does buying a house in my neighborhood make sense?

In some neighborhoods, rentals are relatively cheap while houses sell for far more than they are worth. In these neighborhoods, buying a home may not be the logical choice.

Is my credit score high enough?

Most lenders will only grant a mortgage to borrowers with a credit score of 650 or higher. If your score doesn’t make the cut, you can boost it by being super-careful about paying your bills on time, paying credit card bills in full each month and keeping credit utilization low.

Do I have a plan in place for repairs?

When a renter has a leaky faucet, they call the landlord and the problem becomes theirs. When a homeowner has a leaky faucet, it’s their own problem. They can either fix it or hire someone to do the job, but it’s a good idea to have a plan in place before the first thing in a new home needs fixing. If you’re handy enough to make repairs on your own, you’ll need to be willing to give up some free time to tend to such things. Otherwise, it’s best to have a tidy sum put away to pay for necessary repairs before purchasing a home.

If you’re ready to get started on your home loan application, contact Olean Area Federal Credit Union today to hear about our fantastic home loan options.