FIRST TIME HOME BUYERS

Home ownership offers tax benefits*, builds your credit, and allows you to say goodbye to nuisances such as rent increases and canceled leases. And, when you own your home, you build home equity as you pay your mortgage—a smart way to prepare for the future, today.

From terms like "amortizing" and "escrow" to "qualifying" and "closing costs," home buying seemingly comes with its own language. We understand it's a complex endeavor, so we support first-time homebuyers by offering:

• Our Home Buyer's Guide eBook. This free resource focuses on helping members understand the difference in loan options so they can make informed financing decisions. Our eBook also covers how mortgages work, identifies mortgage costs, tells you what you need to know before you begin your search, provides tips on selecting the right agent, and much more! Download your guide today!
• Home Buying Seminars. Learn the basics of financing a home at one of our complimentary Home Buyer Seminars. Our real estate experts will discuss your mortgage options, such as term length, fixed vs. adjustable rates, and low down payments. You'll also learn how to avoid excessive "junk" fees and what to look for when making an offer. View our upcoming seminar dates and let's get started.

Follow these steps to make sure you are on the right path:

1. Check your credit history and get your credit in shape if necessary. Order a current copy of you credit report and address any outstanding issues.
   
   We evaluate scores from the three major credit reporting agencies: Experian, Equifax, and TransUnion. AnnualCreditReport.com is just one of many sites that offer free credit report services.
2. Determine how much you can put toward a new home. Generally, lenders recommend that people look for homes that cost no more than three to five times their annual household income (assuming the home buyers plan to make a 20% down payment and have a moderate amount of other debt).
3. Use our payment calcuLator to estimate monthly payments and try out different scenarios based on your income specifics. Your monthly payment will usually also include an amount for property taxes and homeowners insurance. And, if your down payment is less than 20%, you’ll generally also need to get private mortgage insurance(PMI).
4. Get prequalified. This is the best way to determine how much money you can borrow, and will give you an idea of the price range you should stay within as you're considering your home purchase.
5. Consider using a real estate agent. While you could try navigating the house-buying waters alone, you receive invaluable information and guidance by working with a licensed real estate agent. Our Right Move® program offers a 20% rebate from the commission of a participating First Team Real Estate agent who represents you. Plus, enjoy other financial benefits, including a 20% discount on escrow services and a 10% discount on a home warranty.

Here are some terms you'll encounter throughout the home-buying process:

Annual Percentage Rate (APR): The yearly rate of interest for your loan. The APR can be variable or non-variable.

Debt-to-income ratio: The percentage of your monthly income that you spend on monthly debt payments. Mortgage program guidelines vary, but a good rule of thumb is to keep your total debt level at or below 36% of your gross monthly income.

Down-payment: The initial payment you make when purchasing a home.

Fees: The homebuyer is generally expected to cover the many costs associated with the purchase process. "Fees" is a catchall term that can include costs for an appraisal of the home, a credit report on the borrower(s), title search, attorney's fees, transfer taxes, recording the deed, property taxes, and much more. Many times, fees are negotiable.

Interest rate: The percentage of your loan amount the lender charges to borrow money. Interest rates are typically based on current market conditions, your personal credit score, your down payment amount, and the type of mortgage chosen. Check today's rates¹

Loan term: The period of time you have to pay off your mortgage balance. Shorter loan terms typically mean higher monthly mortgage payments, but often have lower interest rates.

Monthly mortgage payment
Your monthly mortgage payment is typically made up of four parts:

• Principal. The part of your payment that reduces the outstanding balance of your mortgage.
• Interest. The part of your payment that pays your lender for use of the borrowed funds.
• Taxes. The portion of your payment that pays the property taxes charged by your local government.
• Insurance. The part of your payment that pays for homeowners or hazard insurance, which protects against losses from property damage.

Depending upon your property location, property type, and loan amount, you may have other monthly or annual expenses such as mortgage insurance, flood insurance, or homeowner association fees.

Origination charge: A fee that lenders and brokers receive for overseeing the loan process, from application status to completion. The charge includes document preparation, underwriting costs, and other fees.

Points: Fees paid to the lender or broker for the loan. One point equals 1% of your mortgage amount.

PMI (Private Mortgage Insurance): Insurance that covers borrowers who offer a down-payment less than 20% of the home's value. PMI protects the lender if the borrow fails to pay back the loan.

Use our payment calcuLator to estimate monthly payments and try out different scenarios based on your income specifics.

Learn more about the different loans and program we offer here.

Income
Before you start, have the following income information on hand:

• Most recent pay stubs for your last 30 days of employment
• Past two years’ W-2 forms and/or 1099s for each borrower
• Past two years’ 1040 Federal Tax Returns
• Past two years’ Federal Business Tax Returns and/or K1s (for self-employed borrowers)

Assets
Gather important information regarding your assets, including:

• Past three months’ bank statements, including checking, savings, money market, CDs, stock portfolios, etc.
• Past three months or quarterly statement for retirement accounts

Avoid delays by submitting legible, complete documents as soon as possible.

Get started through any of these convenient ways:

• Call us at (877) 670-5860, Monday-Friday, 9:00 am – 5:00 pm Pacific Standard Time.
• Complete the online contact form to have a home mortgage consultant contact you.
• Start you prequalification and application online, using our simple application process.

Your home mortgage consultant will follow up on your application and ask for the financial and property information you’ve gathered.

Your home mortgage consultant will:

• Order a credit report and request any additional documents that we’ll need from you.
• Provide important disclosure documents to review, sign, and return, including (but not limited to):
• A Good Faith Estimate that gives a breakdown and estimate of your closing costs.
• A Truth-In-Lending Disclosure that shows terms of the loan, the monthly payment, the annual percentage rate (APR), and the costs of making and closing the loan, including your finance charges
• Notice of Intent
• Check, or completed Withdraw Authorization Form, to cover appraisal and credit report
• Request any additional information—depending on where you are in your home buying process— which may include:
• A Purchase Contract
• Agent and escrow contract information
• Homeowners Association (HOA) contact information or statement to verify monthly dues (condos only)

Avoid delays by submitting legible, complete documents as soon as possible, along with any required fees.

With USC Credit Union’s mortgage team by your side, home is closer than you think. Our special first-time homebuyer loan program and one-on-one guidance reduce the challenges you may experience as a first-time buyer. We want to be your lender for life!

Well done! Completing a mortgage application is no small feat. Here’s what happens next in the process. Your lender will:

1. Evaluate your credit report, which will help support your history of on-time bill and debt payments;
2. Verify your employment, income, and financial information;
3. Evaluate your current and future ability to make payments;
4. Evaluate your cash reserves, which includes your cash on hand, savings and investments;
5. Order a home appraisal, title insurance, and flood certification;
6. Send you a list of conditions, upon loan approval, that must be met before you can prepare to close your loan;
7. Issue you a Commitment Letter, which serves as final approval of your mortgage loan and details the terms of your loan approval.

You’ll need homeowners insurance to close your loan. Get competitive quotes from multiple insurance providers, including Trojan Insurance Services.

Closing or “settlement” is when you sign the final mortgage documents, and the property is legally transferred to your ownership.

Before your closing, you will have received the final figures for the transaction, which include closing costs, escrow costs and the down payment amount. If money is due at the time of signing, it’s best to obtain a cashier’s check.

Your lender will send the closing documents to your closing agent. On your closing day, review the documents carefully with your agent, then sign and date them. Some these important documents will include:

• The Mortgage Note (your contract)
• The Mortgage or Deed of Trust
• The final Truth-in-Lending Disclosure
• Affidavits and Declarations
• The HUD-1 Statement

IMPORTANT TIPS:

• You are allowed to read the documents prior to closing. Your real estate agent can go over them with you prior to the closing date to help you understand everything you’re required to sign. Don’t be afraid to ask questions!
• To help your mortgage close on time, make sure you provide accurate information on your loan application. Discrepancies in your credit history, employment history, or current bank account balances could delay your application.
• Promptly submit any additional documentation as requested.
• Do not make big purchases, take on additional debt or make large deposits or transfers unrelated to your loan until after your closing.
• Consider having an attorney review your loan documents or attend the closing with you.

• View your balance, principal and interest payments, current interest rate, and escrow information; or
• Get comprehensive tax and interest data

As a USC Credit Union member you automatically receive online statements. If you’re still receiving statements by mail, you can go paperless here. You can switch back to paper statements at any time. Online statements have all the information you see on the paper versions, and are more secure than paper statements.

• Pay your mortgage from a checking or savings account at USC Credit Union or another financial institution;
• Make free same-day payments to your mortgage account; or
• Set up a single payment or an automatic schedule
• You can access our loan servicing provider online 24/7 to obtain current loan statements, make payments, print coupons, view loan history, and obtain 1098 tax information at year end.