You can view frequently asked questions on the following topics:

Home Equity
Mortgage
Click here for more information about EZbank Online Banking

FREQUENTLY ASKED HOME EQUITY QUESTIONS
We have assembled some frequently asked questions that members generally ask us regarding Home Equity products. If you have questions, scan through this list. If you still have questions or concerns, contact one of our representatives today.

1. How does the Credit Union determine the equity available for a fixed loan or line of credit?
   We will loan up to 90% of the appraised/tax assessed value, less any outstanding mortgages or liens.

2. Are there limits on the amount the credit union will loan?
   The minimum loan or line is $15,000, and the maximum is $250,000. Loans over 80% Loan-to-Value are restricted to a $100,000.00 maximum.

3. How much are application fees and closing costs?
   There is no application fee, and the Credit Union pays the closing costs. However, if a member refinances their Credit Union equity within 12 months they will be responsible for paying the costs incurred with the new loan.

4. Is interest paid on the loan deductible for tax purposes?
   The interest paid may be tax deductible. Consult your tax advisor to be sure.

5. What is the rate on the line of credit?
   Our rate is currently set at prime minus .25%. It is based on the prime rate as published in the Wall Street Journal on the last Thursday of each month. The rate is adjustable, reviewed monthly.

6. Is there a maximum the rate can increase on the line of credit?
   The maximum cap is set at 18%.

7. How is the payment determined on the line of credit?
   The rate is calculated at 1.85% of the balance at the time of each advance. (ex: on $10,000, the payment would be $185.)

8. What is the rate for a fixed equity loan?
   The rate differs depending on the term of the loan. It can be set up over 5, 10, 15 or 20 years. Check our current rates, or call the Credit Union.

9. Are there any restrictions on how the money can be used?
   Proceeds of the loan can be used for any legal purpose.

10. Is there a pre-payment penalty?
    No. The loan can be paid off at any time. Principal only payments can also be applied.

11. How are the funds accessed on a line of credit?
    Checks are provided with all home equity lines of credit.

12. What happens if more money is needed after the loan closes?
    For a line of credit, it is necessary to re-apply for an increase in the limit. For a fixed equity, a new application would have to be submitted for additional funds. If the request is made within one year after the closing, the member would need to pay the closing costs.

13. What happens if there is already a second mortgage on the property?
    Generally, the Credit Union requires the equity lien be in second place. If there is a loan that will not be paid off with the equity, then that lien holder is requested to subordinate to third place. If they do not agree, the Credit Union cannot process the loan.

14. Can a member have both an equity loan and a line of credit?
    Yes, provided there is sufficient equity and member can afford the payments for both.
    

Top

FREQUENTLY ASKED MORTGAGE QUESTIONS
The process of buying or refinancing a home can bring about many questions for people. UMassFive has taken some frequently asked Mortgage questions and provided answers for you. If you still are unsure about something, or need more information, contact one of our representatives.

1. What types of mortgages are available?
   We offer FIXED and ADJUSTABLE rate loans. Loans are generally 15 or 30 years, but other options are available. Loans over 15 years are at the 30 year rate.
   
   

2. What types of property do we mortgage?
   We will mortgage 1 to 4 family OWNER OCCUPIED properties, condos and second homes occupied by the owner for part of the year. We offer Jumbo mortgages for some higher-cost single & multi-family dwellings. WE DO NOT FINANCE TIME SHARES OR MOBILE HOMES.
   
   

3. What are the rates?
   Rates are reviewed daily and are subject to change after 10:00 a.m.. If an application has been submitted, and member wants to lock-in the rate, they should contact the Mortgage Department. No rate can be locked in until we have a completed application.
   
   

4. What are the fees?
   We estimate the total cost from start to close to be about $3,500 to $5,000 on most loans, but it depends on the dollar amount of the loan.
   
   

5. What are points?
   A point is 1% of the amount borrowed. Our fixed rates are offered at 0, 1, or 2 point options. The more points paid, the lower the rate. The mortgage department can go over figures to help determine if it is worth paying the points. Different point options are also available for Adjustable Rate Mortgages (ARM).
   
   

6. Are there limits on how much we will lend?
   The Credit Union adheres to the limits established by the secondary market (Fannie Mae and Freddie Mac). The current conventional loan limit for a single family home or condominium is $417,000. Anything over that is considered a JUMBO loan, and is subject to a different rate structure. Contact the Credit Union for limits on 2-4 family, owner occupied homes.
   
   

7. What is needed for a down payment?
   Generally, as little as 5% down is needed for the purchase of a home. For refinancing, the loan to value is determined by the purpose, up to 90% of the loan-to-value. Down payment funds can come from different sources, but generally 5% must be the members own funds. Gifts from family members are an acceptable source of funds. If the full 20% down payment is in the form of a gift, the member will not need the 5% of his/her own funds, but should have shown an ability to save.
   
   

8. How does one go about submitting an application?
   If you are from the Amherst area, we prefer that you call and make an appointment. Otherwise, the application can be mailed or dropped off. Call back in a day or two to see if there are any questions. Worcester members can deliver applications to their branch. No matter where you are, you can apply for a loan through MortgageClick®, our online Mortgage application and approval center, 24 hours a day 7 days a week.
   
   

9. How does one lock-in the rate?
   The rate can be locked in at application, or any time during the process. The rate must be locked in at least 5 days prior to closing. A lock in fee of 1 point is required. It is not an extra charge, and will be refunded when the loan closes. Rates are locked for 45 days.
   
   

10. How long does the process take?
    With the implementation of automated underwriting, the decision will be made quickly, but you should allow 3-4 weeks for the whole process from application to closing. Contact the Mortgage Department if a shorter time period is required.
    
    

11. What about a lawyer?
    The Credit Union includes a list of approved attorneys in our application packet. However, if you already have a lawyer you would like to use, you may do so, provided that lawyer is experienced in Real Estate closings.
    
    

12. Does the Credit Union offer pre-qualifications or pre-approvals?
    Yes! Pre-qualification is a quick process that can be done over the phone, but it is suggested an application be completed because it requests more information. Pre-qualification is used to determine the amount a member MAY be eligible for. It is not a commitment for a loan because nothing has been verified. There is no cost for this service. A pre-approval requires the completion of the application and all other documents. It is reviewed and approved, based on a maximum amount, contingent upon the selection of a house, at which time an appraisal is completed. The pre-approval is good for 120 days. If a house hasn't been found by then, information will need to be reverified. The cost is $25 to cover the cost of the mortgage credit report and automated underwriting fee.
    
    

13. Is there a prepayment penalty?
    There is no prepayment penalty. Members can make principal only payments at any time. This does not change the payment amount itself, but it will save on interest over the life of the loan.
    
    

14. Are VA and FHA loans available?
    They are not available at this time.
    
    

15. When are payments due?
    Payments are due the first day of each month. Payments can be made automatically from your Credit Union account, or the members may receive a coupon book.
    
    

16. Are the mortgages sold to an investor?
    Some of our loan products are sold. This means the member makes the payments elsewhere but the terms of the loan do not change. We work with a small mortgage company that is easily accessible. If the loan is sold, payments can be automatically deducted from your UMassFive account. We are always here to help if there is problem with the mortgage that needs to be resolved.
    
    

17. What is the difference between "Contract Rate" and "Annual Percentage Rate "(APR)?
    The contract rate is the rate at which interest is calculated (ex: 6.875% with 2 points). The Annual Rate is a comparison rate that includes prepaid interest and certain other one time charges (ex. 7.089% 2 points). If two institutions have the same rate, the APR may vary due to the charges.

Top

For questions or assistance, please contact a Representative or email us today!