Mortgage Loans

The standard down payment is 20 percent of the home’s value, but some loans—like those backed by the Veteran’s Administration and the Federal Housing Administration—have much lower, or no down payment. Our mortgage lending team works with you to find the best mortgage solution for your situation.

A good rule of thumb is to have a mortgage payment that does not exceed 28% of your income. But lenders also look at your debt-to-income ratio. If you add up your monthly debts—student loans, credit cards, auto loan payments, etc.—and divide them by your gross monthly income, that will give you your debt to income ratio. Most lenders look for a ratio of 36% or less. Use our calculators to see what kind of mortgage you might qualify for or contact our mortgage lending team for more help.

In addition to the down payment and the monthly payment, you also have:

• Closing costs which may be between 1 percent and 5 percent of the loan.
• Property taxes
• Home insurance
• Mortgage insurance, when the down payment is less than 20 percent.
• Plus, as a homeowner, you’re responsible for upkeep and maintenance and it’s a good idea to have extra money budgeted for those expenses.

The first step would be to visit with a mortgage lending specialist and get pre-qualified for a loan. Our mortgage lending team can find out what loan amount you may qualify for, and help you pick the best type of loan for the home you hope to buy. They can also advise you on strategies for coming up with a down payment, and getting your finances in order for buying a home.

These mortgages typically have the lowest payment options. They also give you the best tax advantage, since interest on home mortgages is often tax deductible. The best benefit, however, comes with getting a 30-year mortgage from a lender like CUTX that charges no pre-payment penalty. With a 30-year loan you are obligated to a small payment, but you have the option of paying extra on your premium when you have it. This pays the loan off more quickly, rapidly builds equity, and reduces your overall interest expense. This can help with the biggest disadvantage of a 30-year mortgage which is the accrual of more interest than with shorter-term mortgages.

Fifteen-year mortgages can save thousands in interest, build equity quickly, and at the end of 15 years you’re virtually free from one of the biggest life expenses: housing costs. Finally, lenders often give borrowers a lower interest rate for 15-year mortgages. On the other hand, that reduces your tax benefit if you’re eligible to deduct the interest from your mortgage. And 15-year mortgage payments are significantly more expensive every month—though not double.

Get a copy of your credit report. Many reports have errors on them or old debts that have been paid but not cleared on the report. Fixing errors can improve your credit score. Check out our articles on strategies for budgeting and for coming up with a down payment. Improve your debt-to-income ratio by making extra payments to remove debts more quickly. Start a savings plan for a 20 percent down payment.