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May 18, 2016
by: Financial Fitness Series

Understanding Your Mortgage Options

Every year, millions of people set goals and resolutions to become more fit. Many of these aspirations have to do with losing weight, eating better, or just becoming a healthier person in general. This year, Kohler Credit Union is paving the way for people like you to become fit… when it comes to your finances and financial decisions. We are proud to introduce our Financial Fitness series of blog posts… aimed to help others manage their finances, borrow smarter, grow their money and protect their future. Check out our latest blog post on understanding what different mortgage options are available and what you need to apply for a mortgage.

Choosing and applying for a mortgage can be daunting, especially for first-time home buyers.

The best preparation for obtaining that dream home is understanding the different types of mortgages available and knowing what information is needed for the application process.

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What Mortgage Options Are Available?

Basically, all mortgage plans include a form of conventional or government loan in either a

fixed or adjustable rate. Kohler Credit Union’s mortgage services loan portfolio includes the

following products: 

Conventional: These are fixed or adjustable, but are traditionally a 15-, 20- or 30-year fixed-rate mortgage. They typically offer the best terms but have strong qualifying requirements such as a minimum credit score and down payment, and private mortgage insurance. Conventional loans are ideal for borrowers with excellent credit who can afford a down payment of 3% or more.

A.R.M.: An Adjustable Rate Mortgage (ARM) is a loan with an interest rate linked to an economic index and is fixed for just a certain period of time…generally for 10 years. After the fixed interest rate period is over, the interest rate, and your payments, are periodically adjusted up or down as the index or market conditions change. The borrower benefits if the interest rate falls but is at a disadvantage if the interest rate increases. Rates for an ARM are typically lower than a conventional loan and are fixed for a certain period of time

WHEDA: Wisconsin Housing and Economic Development Authority (WHEDA) is a government backed loan program offering Wisconsin residents a low cost, fixed-rate mortgage option with reduced or no Private Mortgage Insurance (PMI), low or no down payment,  job loss protection and down payment assistance up to 3% of the purchase price.

FHA: A mortgage loan insured by the Federal Housing Administration (FHA) that has lower down payment requirements and is easier to qualify for than conventional loans. Only for single-family homes, the benefit of this government-backed loan is that a lower interest rate and a lower down payment requirement (as low as 3.5%) make it possible for the buyer to afford a higher-priced home.

Additionally, first time home buyer programs make purchasing a home a reality for many. Kohler Credit Union’s program is available not only for first time home buyers, but for anyone who has not owned a home in the last three years. Your down payment can be made with cash, a gift or even an unsecured loan from Kohler Credit Union, and you only need 3% down.

What You Need to Apply for a Mortgage:

Having the appropriate paperwork available makes the pre-approval and application process a breeze. Here’s a comprehensive list of necessary documents to help streamline the process:

• Employment history — name and address of all employers for the previous 24 months and most current pay stub s (for the previous 30 days) .

• Social Security number(s) and dates of birth for all borrowers.

• Most recent depository account statement (for the previous 2 months). This includes checking, savings, money market, certificates of deposit, mutual funds, and other brokerage statements.

• Open credit account information, including creditor name, account number(s), payment amount and current balance. (Information will be pulled from credit report.)

• Federal income tax returns for the previous two years, including business tax returns if applicable.

• Real estate owned — most recent mortgage statement.

• Child support or alimony — if the borrower chooses to use income from this source as a basis for repayment, provide 12-months history of receipt and legal order stipulating payment.

Kohler Credit Union’s mortgage experts are well-versed in helping determine which mortgage option best fits your personal needs and more importantly, are happy to guide you through one of the most exciting times of your life. Call 888.528.2595 or visit our mortgage page