Mortgage Loans

Meet Our PDCU Mortgage Specialist

Michelle Dzon

Key Features of RD/USDA Mortgages

1. No Down Payment Requirement: One of the most significant benefits of RD/USDA loans is that they typically do not require a down payment. Eligible borrowers can finance up to 100% of the home's purchase price without a down payment, making homeownership more accessible.
2. Low Mortgage Insurance: RD/USDA loans have lower mortgage insurance premiums compared to FHA and conventional loans. This can result in lower monthly mortgage payments for borrowers.
3. Flexible Credit Requirements: While RD/USDA loans have credit score requirements, they may be more lenient than conventional loans. Borrowers with less-than-perfect credit histories may still qualify for an RD/USDA loan, provided they meet other eligibility criteria.
4. Income Limits: RD/USDA loans have income limits based on the area's median income. Borrowers must meet these income limits to qualify for an RD/USDA loan. The income limits vary depending on factors such as household size and location.
5. Property Eligibility: RD/USDA loans are available for properties in eligible rural and suburban areas designated by the USDA. Borrowers can check the USDA's Property Eligibility Map to determine if a specific property is eligible for financing.
6. Loan Limits: RD/USDA loans do not have strict loan limits like FHA and conventional loans. Instead, the loan amount is based on the borrower's income, debt-to-income ratio, and the property's appraised value.

Contact PDCU to Learn More About RD/USDA Loans

A VA mortgage product is a home loan guaranteed by the U.S. Department of Veterans Affairs (VA) and available to eligible veterans, active-duty service members, National Guard members, Reservists, and certain surviving spouses. VA loans are designed to help veterans and military personnel achieve homeownership by offering favorable terms and features.

Here are some key features of VA mortgages:

1. No Down Payment Requirement: One of the most significant benefits of VA loans is that they typically do not require a down payment. Eligible borrowers can finance up to 100% of the home's purchase price without a down payment, making homeownership more accessible.
2. Competitive Interest Rates: VA loans often offer competitive interest rates compared to conventional mortgages, helping borrowers save money over the life of the loan.
3. No Private Mortgage Insurance (PMI): VA loans do not require private mortgage insurance (PMI), even with a zero-down payment. This can result in lower monthly mortgage payments than conventional loans with less than 20% down payment.
4. Flexible Credit Requirements: VA loans have credit score requirements but may be more flexible than conventional loans. Borrowers with less-than-perfect credit histories may still qualify for a VA loan, provided they meet other eligibility criteria.
5. VA Funding Fee: VA loans may require a one-time funding fee, which helps offset the cost of the VA loan program for taxpayers. The funding fee varies depending on the borrower's military status, down payment amount, and whether it's the borrower's first VA loan.
6. Loan Limits: VA loan limits vary by location and are based on the conforming loan limits set by the Federal Housing Finance Agency (FHFA). Borrowers can use VA loans to finance properties up to the VA loan limits for their area.

Overall, VA mortgages provide a valuable financing option for eligible veterans and military personnel, offering benefits such as no down payment requirement, competitive interest rates, and no PMI. Borrowers considering a VA loan should consult a VA-approved lender to determine if they meet the eligibility requirements and explore their financing options.

An FHA mortgage product is a type of home loan insured by the Federal Housing Administration (FHA), a government agency within the U.S. Department of Housing and Urban Development (HUD). FHA loans are designed to make homeownership more accessible to borrowers who may have difficulty qualifying for conventional mortgages due to factors such as lower credit scores or smaller down payments.

Here are some key features of FHA mortgages:

1. Low Down Payment: FHA loans typically require a lower down payment than conventional mortgages. Borrowers may qualify for an FHA loan with a down payment as low as 3.5% of the purchase price.
2. Flexible Credit Requirements: FHA loans have more lenient credit score requirements than conventional loans. While specific requirements may vary by lender, borrowers with credit scores as low as 500 may be eligible for an FHA loan with a 10% down payment. Borrowers with credit scores of 580 or higher may qualify for the minimum 3.5% down payment.
3. Mortgage Insurance: FHA loans require an upfront mortgage insurance premium (UFMIP) and an annual mortgage insurance premium (MIP). The upfront premium can be financed as part of the loan amount, while the yearly premium is paid as part of the monthly mortgage payment. Mortgage insurance protects the lender in case the borrower defaults on the loan.
4. Loan Limits: FHA loan limits vary by location and are based on the median home prices in the area. Borrowers can use FHA loans to finance properties up to the FHA loan limits for their area.
5. Property Requirements: FHA loans have specific property requirements, including minimum property standards (MPS) established by HUD. These standards ensure that the property meets specific safety and habitability requirements.

Overall, FHA mortgages provide a vital financing option for borrowers who may not qualify for conventional mortgages due to credit or down payment constraints. Borrowers considering an FHA loan should carefully review the program's requirements and consult a mortgage lender to determine if it fits their needs.

A conventional mortgage is a home loan not insured or guaranteed by the federal government. Unlike government-backed loans such as FHA, VA, or RD/USDA loans, conventional mortgages are funded and serviced by private lenders, banks, credit unions, or mortgage companies.

Here are some key features of conventional mortgages:

1. Down Payment: Conventional mortgages typically require a down payment, with the amount varying depending on factors such as the borrower's credit history, the loan-to-value ratio, and the lender's requirements. While conventional loans may require a down payment of as little as 3% to 5%, a larger down payment can help borrowers secure more favorable terms, such as a lower interest rate or avoiding private mortgage insurance (PMI).
2. Credit Score: Conventional mortgage lenders typically have stricter credit score requirements than government-backed loans. While specific requirements may vary by lender, borrowers generally need a credit score of at least 620 to qualify for a conventional mortgage. A higher credit score can help borrowers qualify for lower interest rates and better loan terms.
3. Loan Limits: Conventional mortgages have maximum loan limits set by the Federal Housing Finance Agency (FHFA). These limits vary by location and are adjusted annually to reflect changes in home prices. Borrowers seeking to finance amounts above the conventional loan limits may need to consider jumbo loans, which have different requirements and typically higher interest rates.
4. Private Mortgage Insurance (PMI): If the borrower makes a down payment of less than 20% of the home's purchase price, they may be required to pay private mortgage insurance (PMI). PMI protects the lender in case the borrower defaults on the loan. Once the borrower's equity in the home reaches 20% or more, they may be able to cancel PMI, depending on the lender's policies.
5. Fixed or Adjustable Rates: Conventional mortgages offer both fixed-rate and adjustable-rate options. With a fixed-rate mortgage, the interest rate remains unchanged for the entire loan term, providing predictable monthly payments. Adjustable-rate mortgages (ARMs) have interest rates that fluctuate over time, typically after an initial fixed-rate period.

Overall, conventional mortgages provide financing options for borrowers who meet the credit and income requirements established by lenders. Borrowers should shop around and compare offers from multiple lenders to find the best conventional mortgage product for their needs.

1. Loan Limits: Super Conforming loans have loan amounts that exceed the standard conforming loan limits for the area but are still within the limits set for high-cost areas.
2. Eligibility Requirements: Borrowers must meet the lender's eligibility criteria, including credit score, debt-to-income ratio, and other factors.
3. Competitive Interest Rates: Super Conforming loans often offer competitive interest rates compared to jumbo loans, making them an attractive option for borrowers who need larger loan amounts but want to avoid the higher rates associated with jumbo financing.
4. Down Payment Requirements: Down payment requirements for Super Conforming loans may vary depending on the lender and the borrower's financial profile. However, borrowers typically need to make a down payment of at least 5% to 10% of the home's purchase price.

Benefits of Choosing a Super Conforming Mortgage

Is a Super Conforming Mortgage Right for You?

A construction mortgage, also known as a construction-to-permanent loan, is designed to finance the construction of a new home or major renovations to an existing property. This type of loan differs from a traditional mortgage because it funds the construction process rather than purchasing a completed house.

Here's how a construction mortgage typically works:

1. Construction Phase: During construction, the borrower receives funds in stages or "draws" as construction progresses. These draws are typically based on milestones such as completing the foundation, framing and finishing work. The borrower pays interest only on the amount drawn during this phase.
2. Conversion to Permanent Mortgage: Once construction is complete, the construction mortgage is converted into a permanent mortgage, also known as an end loan. This permanent loan pays off the construction loan and becomes the borrower's long-term mortgage for the completed home.

Construction mortgages can be structured in various ways, but they generally offer the following benefits:

1. Financing for Custom Homes: Construction mortgages provide funding for building custom homes tailored to the borrower's preferences and needs.
2. Interest-Only Payments: During the construction phase, borrowers typically make interest-only payments on the amount drawn, which can help manage cash flow during the construction process.
3. Single Closing: Some construction-to-permanent loans feature a single closing, which simplifies the process and eliminates the need for borrowers to requalify for a mortgage once construction is complete.

However, construction mortgages also come with some potential downsides, including:

1. Complexity: Construction mortgages are more complex than traditional mortgages and may require additional documentation and oversight.
2. Potential for Cost Overruns: Construction projects can encounter unexpected delays and cost overruns, which may require additional financing or adjustments to the loan terms.
3. Higher Interest Rates: Interest rates on construction loans may be higher than rates for traditional mortgages due to the increased risk associated with financing a construction project.

Overall, construction mortgages can be a valuable financing option for borrowers looking to build their dream home or undertake major renovations. However, borrowers should consider the risks and benefits carefully and work closely with their lenders and builders to ensure a successful outcome.

A HomeReady® mortgage is a type of home loan product offered by Fannie Mae, one of the government-sponsored enterprises (GSEs) in the United States. The HomeReady® program is designed to make homeownership more accessible and affordable for low to moderate-income borrowers, particularly first-time homebuyers and those purchasing homes in underserved communities.

Key features of the HomeReady® mortgage program include:

1. Low Down Payment Options: HomeReady® mortgages offer low down payment options, allowing eligible borrowers to purchase a home with as little as 3% down. This can make homeownership more attainable for borrowers who may not have substantial savings for a large down payment.
2. Flexible Income Requirements: The program offers flexibility in income requirements, including allowing income from non-borrower household members, such as parents or other relatives, to be considered in qualifying for the loan. This can help borrowers with lower individual incomes qualify for a mortgage.
3. Affordable Mortgage Insurance: HomeReady® mortgages typically offer lower mortgage insurance premiums than conventional loans, helping to reduce borrowers' monthly housing costs.
4. Credit Score Flexibility: While HomeReady® mortgages have credit score requirements, they may be more flexible than traditional loans, allowing borrowers with less-than-perfect credit histories to qualify for financing.
5. Homebuyer Education: Fannie Mae requires borrowers to complete an online homebuyer education course to qualify for a HomeReady® mortgage. This course provides valuable information and resources to help borrowers navigate home-buying and become successful homeowners.

Overall, the HomeReady® mortgage program aims to expand access to affordable homeownership opportunities for borrowers facing barriers to traditional financing. It offers flexible features and requirements to accommodate diverse financial situations while promoting sustainable homeownership.

A Home Possible® mortgage is a type of home loan product offered by Freddie Mac, one of the government-sponsored enterprises (GSEs) in the United States. The Home Possible® program is designed to make homeownership more accessible and affordable for low to moderate-income borrowers, particularly first-time homebuyers and those purchasing homes in underserved communities.

Key features of the Home Possible® mortgage program include:

• Low Down Payment Options: Home Possible® mortgages offer low down payment options, allowing eligible borrowers to purchase a home with as little as 3% down. This can make homeownership more attainable for borrowers who may not have substantial savings for a large down payment.
• Flexible Credit Requirements: The program offers flexibility in credit requirements, including allowing for non-traditional credit histories and considering alternative sources of credit, such as rental payments and utility bills.
• Affordable Mortgage Insurance: Home Possible® mortgages typically offer lower mortgage insurance premiums than conventional loans, helping to reduce borrowers' monthly housing costs.
• Income Limits: While Home Possible® mortgages are targeted towards low to moderate-income borrowers, there are income limits based on the area's median income. Borrowers must meet these income limits to qualify for the program.
• Homebuyer Education: Freddie Mac requires borrowers to complete a homebuyer education course to qualify for a Home Possible® mortgage. This course provides valuable information and resources to help borrowers navigate home-buying and become successful homeowners.

The Home Possible® mortgage program aims to expand access to affordable homeownership opportunities for borrowers facing barriers to traditional financing. It offers flexible features and requirements to accommodate diverse financial situations while promoting sustainable homeownership.

Fannie Mae and Freddie Mac are both government-sponsored enterprises (GSEs) created to provide stability and liquidity to the mortgage market, but they have some key differences:

Creation and Purpose:

Fannie Mae (Federal National Mortgage Association) was established in 1938 as a government agency but was later privatized in 1968. Its primary purpose is to provide liquidity to the mortgage market by purchasing and securitizing mortgages from lenders.

Freddie Mac (Federal Home Loan Mortgage Corporation) was established in 1970 to expand the secondary mortgage market and increase homeownership. Like Fannie Mae, Freddie Mac purchases mortgages from lenders and packages them into mortgage-backed securities (MBS) for sale to investors.

Regulation:

Fannie Mae and Freddie Mac are regulated by the Federal Housing Finance Agency (FHFA), which oversees their operations, ensures their safety and soundness, and sets guidelines for their activities.

Ownership and Structure:

Fannie Mae and Freddie Mac have different ownership structures. Fannie Mae is a publicly traded company with shareholders. At the same time, Freddie Mac was also publicly traded until it was placed into conservatorship by the U.S. government in 2008 during the financial crisis. Since then, Freddie Mac has been under government control.

Product Focus:

While Fannie Mae and Freddie Mac purchase and securitize various mortgage products, they may have slightly different product focus or guidelines. For example, they may have different underwriting standards or eligibility criteria for the loans they purchase.

Market Impact:

Fannie Mae and Freddie Mac are significant players in the mortgage market and play a crucial role in providing liquidity and stability. Their actions and policies can significantly impact mortgage rates, underwriting standards, and overall market conditions.

Fannie Mae and Freddie Mac serve important functions in the mortgage market and have their strengths and weaknesses.

A Fannie Mae Fixed Rate Mortgage product refers to a type of mortgage loan that is originated, funded, and serviced by a lender but is ultimately sold to Fannie Mae, a government-sponsored enterprise (GSE) established to provide stability and liquidity to the mortgage market.

With a Fannie Mae Fixed Rate Mortgage, the interest rate remains constant for the entire term of the loan, offering borrowers predictability and stability in their monthly mortgage payments. These loans typically have terms ranging from 10 to 30 years, allowing borrowers to choose a repayment schedule that best suits their financial situation.

Fannie Mae Fixed Rate Mortgages are popular among homebuyers and homeowners who prefer the security of knowing that their mortgage payments will remain the same over time, regardless of changes in the broader economy or fluctuations in interest rates.

Similar to Freddie Mac, Fannie Mae does not directly lend money to consumers. Instead, it purchases mortgage loans from lenders and packages them into mortgage-backed securities (MBS) that are sold to investors. This process helps to provide liquidity to the mortgage market and promote homeownership by ensuring that lenders have the funds they need to continue originating new loans.

A Freddie Mac fixed-rate mortgage product refers to a mortgage loan that is originated, funded, and serviced by a lender but is ultimately sold to Freddie Mac, a government-sponsored enterprise (GSE) established to provide stability and liquidity to the mortgage market.

With a Freddie Mac fixed-rate mortgage, the interest rate remains constant for the entire loan term, providing borrowers with predictability and stability in their monthly mortgage payments. These loans typically have terms ranging from 10 to 30 years, allowing borrowers to choose a repayment schedule that best fits their financial situation.

Freddie Mac fixed-rate mortgages are popular among homebuyers and homeowners who prefer the security of knowing that their mortgage payments will remain the same over time, regardless of changes in the broader economy or interest rate fluctuations.

It's worth noting that while Freddie Mac purchases these loans from lenders, it does not directly lend money to consumers. Instead, Freddie Mac facilitates the flow of funds from investors to lenders by buying mortgage-backed securities (MBS) backed by pools of mortgages, including fixed-rate mortgages, which helps to provide liquidity to the mortgage market and promote homeownership.

An Adjustable Rate Mortgage (ARM) Loan is a type of home loan where the interest rate can change periodically based on the performance of a specific benchmark or index. This means that the monthly payments can fluctuate over time. Here are the key features of an ARM:

1. Initial Fixed-Rate Period: The loan starts with a fixed interest rate for an initial period, typically 3 to 10 years. During this period, the monthly payments remain stable.
2. Adjustment Periods: After the initial fixed-rate period ends, the interest rate adjusts at predetermined intervals, usually annually. The new rate is calculated based on the index plus a margin specified in the loan agreement.
3. Rate Caps: ARMs often include rate caps that limit how much the interest rate can increase or decrease at each adjustment period and over the life of the loan. These caps help protect borrowers from significant payment shocks.
4. Potential for Lower Initial Rates: ARMs usually offer lower initial interest rates than fixed-rate mortgages, making them attractive to borrowers who plan to sell or refinance before the adjustable period begins.
5. Risk and Reward: While ARMs can provide lower initial payments and potential savings if interest rates remain stable or decrease, they also carry the risk of higher payments if interest rates rise.

Overall, an Adjustable Rate Mortgage can be a good option for borrowers who anticipate changes in their financial situation or plan to stay in their home for a short period. However, it's essential to understand the terms and potential risks associated with ARMs before deciding if it's the right mortgage for you.

The NMLS ID# (Nationwide Multistate Licensing System & Registry Identification Number) is a unique identifier assigned to mortgage loan originators (MLOs) and institutions involved in mortgage lending. This system was established to improve supervision and regulation of the mortgage industry by creating a standardized, centralized database for tracking and managing licensing information.

Here are the key points about NMLS ID#:

• Unique Identifier: Each mortgage loan originator and institution receives a unique NMLS ID# that remains with them throughout their career or operations.
• Licensing Information: The NMLS database includes detailed information about the licensing status, employment history, and any regulatory actions taken against MLOs and institutions.
• Transparency and Accountability: The system promotes transparency and accountability in the mortgage industry by making licensing information accessible to regulators, consumers, and industry participants.
• Compliance: Mortgage professionals are required to include their NMLS ID# in advertising materials, on loan documents, and in communications with clients to ensure compliance with federal and state regulations.

People Driven Credit Union offers the following mortgage products:

Conventional Products:

• Freddie Mac Fixed Rate
• Fannie Mae Fixed Rate
• Adjustable-Rate Mortgages
• Home Possible (Freddie Mac)
• Home Ready (Fannie Mae)
• Construction
• Super Conforming

Government Products:

• FHA
• VA
• RD/USDA

• Copy of your driver’s license
• Last 2 years W2’s
• Most recent 30 days span of paystubs
• Last 2 years Federal Tax Returns
• Most recent two months bank statements, all pages
• Contact information for homeowner’s insurance agent