With all the different terms, requirements, and loan types out there, it’s no wonder home loans can feel overwhelming. That’s why we’re here to break it all down and help you feel more confident about your options. We’ve rounded up some of the most common home loan terms you’re likely to hear — so you can better understand what they mean and make informed decisions along the way.

Mortgage Loan: 4-1-1:

Interest or Interest Rate:

The percentage charged by the lender for borrowing the money.

Escrow:

An account used to hold funds for property taxes and homeowners insurance, often included in monthly mortgage payments.

Amortization:

The process of gradually paying off a loan through scheduled payments of principal and interest. An amortization schedule typically shows you the decreasing principal of your loan over time.

Loan-to-Value Ratio (LTV):

A percentage that compares the loan amount to the appraised value of the property.

Pre-Approval:

A formal evaluation to determine how much a borrower may qualify to borrow. The pre-approval process typically involves ECU reviewing income, credit history, debts, and assets, and typically results in a pre-approval letter that strengthens a buyer’s offer when shopping for a home.

Closing Costs:

The fees and expenses paid at the final stage of the mortgage transaction. This number typically includes expenses like an appraisal, title insurance, and attorney fees.

Term:

A term is the length of time it will take to pay off your mortgage. Mortgage loans are usually made for terms between 10 – 30 year terms. A shorter term results in a higher payment but lower interest charges over the course of the loan.

Private Mortgage Insurance (PMI):

Insurance that protects the lender if the borrower defaults, typically required on all Mortgage Loans if the down payment is less than 20%.

Conventional loans:

These are one of the most popular types of home loans and abide by rules established by Fannie Mae and Freddie Mac. Neither of these entities make loans themselves – instead they set the approval standards and encourage consistency from one lender to another across the country. These types of loans also do not require private mortgage insurance (PMI) for the life of the loan like many types of government loans, thereby potentially saving you money over the life of the loan.

Home Equity & Home Improvement:

If your house could use a facelift — a new kitchen, bathroom, or even just a refresh — a Home Improvement Loan might be just what you need. We’ll work with you and your contractor to fund the upgrades that turn your house into your dream home.

Built some equity in your home? Put it to work! With a Home Equity Loan, you can use the value you’ve built in your home for things like:
● Big medical bills
● College tuition
● Home renovations
● A well-earned vacation
● Or paying down credit card debt

Not sure you’ll qualify?

Check out our H.E.L.P. Loan, designed to open doors for folks who might think homeownership is out of reach. ECU Mortgage Team partners with the Federal Home Loan Bank of Dallas to aid qualifying individuals with their first-time home buying journey. It’s helped many people in our community become homeowners — it could help you too.

Mortgage Loans: Bank vs Your Credit Union?

It’s true that we offer many of the same types of loans you will find at area banks, so what’s the difference in the loans with us versus a bank?

Service, first and foremost. You’re not a customer, you’re a member-owner, and we work for YOU throughout the entire process. We’re here to help you learn more, so you can live more!

Ready to get started?

We’ve got easy-to-use home loan calculators to help you estimate payments and figure out what you can afford before you even apply.

Ready to visit with our local team? Contact us today!

NCUA Education Credit Union NMLS# 729181