Mortgage Terms • Agent Info • Home Inspection Info 

MORTGAGE CENTER

The purchase of a home is a great step in any individual's life.  Whether buying the perfect "starter" home; a home that fits the needs of the entire family; or scaling down into a retirement home, a house is both a major financial asset and commitment.  It is therefore a purchase that requires much consideration and research.  At EMU Credit Union, we understand how difficult it can be to research mortgages while also confronting the task of locating a new home.  We have therefore partnered with CU Members Mortgage.  With over 50 years of experience in the mortgage industry and the credit union-like philosophy of providing exceptional, personal service, CU Members Mortgage serves only credit unions and their members.  With a vast range of mortgage products, a loan consultant at CU Members Mortgage is sure to get any member into the mortgage program that's best for their current and future needs.  Committed to keeping the process stream-lined, CU Members Mortgage will facilitate the mortgage process with online loan applications and tracking options.  In this manner information is available to any applicant 24 hours a day/7 days a week!

For more information, click here to visit them online!

There's something about the real estate market that prompts lenders and realtors alike to start using jargon that isn't always clear to the layman.  Here's a few of the most common terms you may hear:


LTV - An abbreviation for Loan-To-Value.  This is a term most often used by lenders to describe the ratio of the mortgage to be placed on a home to the home's appraised value (or selling price, whichever is less).  For example if an individual borrows $90,000 towards a home valued at $100,000, the home will have an LTV of 90%.  Generally speaking the lower the LTV will be, the more attractive the loan is to prospective lenders.

PMI - An abbreviation for Private Mortgage Insurance.  This is an insurance product that many, if not most, lenders require anytime the LTV (see term above) exceeds 80%.  Private Mortgage Insurance is an insurance that protects the LENDER if the borrower defaults on the loan.  Although it protects only the lender, the monthly premium cost is the responsibility of the borrower.  Therefore, although it is not always feasible, it is in the best interest of the borrower if PMI can be avoided.

Escrow/Impounds - How your lender uses this term will depend on the state in which you are buying a home.  Regardless, these are terms used to describe the account to which borrowers may deposit funds with the lender for payment to various companies.  Some of the most common include tax payments and insurance payments, both homeowners and PMI, if applicable.

ARM - An abbreviation for Adjustable Rate Mortgage.  This term refers to a type of loan program offered by lenders.  In an ARM, the rate is not fixed but adjusts periodically over the life of the loan.  There are limits to how much the rate may adjust in any given period and over the life of the loan.  An ARM program may be a good choice for an individual looking to qualify for more funds on a mortgage initially, as it often signs at a lower rate.  This is especially relevant if the purchaser does not intend to be in the home for a long term.  However, market fluctuations may make them a riskier option.  For specific information, be sure to ask your loan agent.

Assessed Value - This term refers to the value of a home determined by local officials for taxation purposes.  It may or may not equal the appraised value.  When ownership of property changes, the officials mentioned above will re-evaluate the assessed value and make any adjustments accordingly.  If a buyer is considering a home that has not had an assessment in a number of years, the value may be increased significantly from that of the previous owner.  As property taxes are assessed semi-annually, this is very relevant information to a prospective buyer or lender, as it will be part of the expense of owning the home.  For those accounts in escrow/impound (see above), the mortgage payment will be increased by the funds necessary for payment of these taxes.

Points - A point is equal to one percent of the principle amount of a mortgage.  For example, one point on a $100,000 mortgage is $1,000.  Various loan programs allow borrowers to pay points to the lender at closing for a reduced interest rate on their mortgage.  Points may or may not be in the best interest of a borrower, depending on the length of time a borrower believes they may be in the home and the amount that is being put down on the home.  For specific information, be sure to ask your loan agent.

For a more comprehensive list of terms and definitions, visit CU Member Mortgage's Glossary by clicking the link on their home page.

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So you've hashed out the details and are ready to begin.  What's the first step?  For many it's choosing a real estate agent.  Although there is some debate over the benefits and pitfalls of utilizing a realtor, they know the most current legislation and the necessary steps in the process.  Additionally, they will assist with communication between the other party or their realtor, appraiser, title company, even the lender (as a buyer's agent).  The decision is ultimately a personal one.  There are several questions you may wish to ask a prospective agent before you sign a contract with him/her.  Some basic ones are as follows:

• How long have you been a real estate agent?

• Are you licensed by the Department of Real Estate?

• What will your responsibility be to me as your client?

• Once there is an accepted offer, how will you keep informed of the progress of the transaction?  How often will you contact me with details?

• What is your marketing philosophy?

• Do you have past customers that I may call for references?

• What is your commission percentage?

There are additional questions you may wish to ask depending on whether you will be buying a property or listing one with the agent.  Regardless of how many questions you wish to ask, NEVER feel embarrassed.  You are entering into a contractual obligation with the agent, and they should make every effort to put you at your ease and give you their full cooperation.

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Whether selling or buying, a home inspection by a certified inspector may be a useful tool in the process.  As a seller, a home inspection may prepare you for what may be found by a prospective buyer.  You may even wish to rectify any items found before listing to increase the likelihood of a successful offer and perhaps increase the purchase price.  Furthermore as a buyer, it is wise to have put an inspection clause into any offer you may make on a property.  An inspection may reveal information about the house that is not visible to the naked eye.  For example, inspectors will climb into attics; onto roofs; in crawl spaces; under front porches; and just about anywhere else they can fit themselves into.  In these types of places they may see damage not visible during a tour of the home.   A thorough inspection can reaffirm a wise investment or reveal a "money pit".  There are several web sites that assist consumers in locating reputable inspectors, but be sure to conduct your own interview.  Recent information indicates that you should be sure to use a non-partial third party inspector, as some feel there is a conflict of interest in using an inspector referred by a real estate agent.  To ensure you have recourse in the event of an error or ommission, be certain that the inspector is both insured and licensed!

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Eastern Michigan University CU
761 Jenness St
Ypsilanti, Michigan 48197
(734) 487-1033
Fax: (734) 487-1951
credit.union@emich.edu