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1.	How do I know how much house I can afford? Answer
2.	What is the difference between a fixed-rate loan and an adjustable-rate loan? Answer
3.	How is an index and margin used in an ARM? Answer
4.	How do I know which type of mortgage is best for me? Answer
5.	What does my mortgage payment include? Answer
6.	How much cash will I need to purchase a home? Answer
7.	What are the differences between mortgage prequalification, preapproval, and final loan approval? Answer
8.	What are points? Answer
9.	What are front and back ratios? Answer
10.	What is PMI? Answer
11.	What is a Piggy-back loan? Answer
12.	How long does it take to be approved? Answer
13.	Does Penn State Federal offer mortgages outside of Pennsylvania? Answer
14.	Can Penn State Federal finance double-wide mobile homes? Answer

Q :	How do I know how much house I can afford?
A :	Generally speaking, you can purchase a home with a value of two or three times your annual household income. However, the amount that you can borrow will also depend upon your employment history, credit history, current savings and debts, and the amount of down payment you are willing to make. You may also be able to take advantage of special loan programs for first time buyers to purchase a home with a higher value. Give us a call, and we can help you determine exactly how much you can afford.

Q :	What is the difference between a fixed-rate loan and an adjustable-rate loan?
A :	With a fixed-rate mortgage, the interest rate stays the same during the life of the loan. With an adjustable-rate mortgage (ARM), the interest changes periodically, typically in relation to an index. While the monthly payments that you make with a fixed-rate mortgage are relatively stable, payments on an ARM loan will likely change. There are advantages and disadvantages to each type of mortgage, and the best way to select a loan product is by talking to us.

Q :	How is an index and margin used in an ARM?
A :	An index is an economic indicator that lenders use to set the interest rate for an ARM. Generally the interest rate that you pay is a combination of the index rate and a pre-specified margin. Three commonly used indices are the One-Year Treasury Bill, the Cost of Funds of the 11th District Federal Home Loan Bank (COFI), and the London InterBank Offering Rate (LIBOR).

Q :	How do I know which type of mortgage is best for me?
A :	There is no simple formula to determine the type of mortgage that is best for you. This choice depends on a number of factors, including your current financial picture and how long you intend to keep your house. Penn State Federal Credit Union can help you evaluate your choices and help you make the most appropriate decision.

Q :	What does my mortgage payment include?
A :	For most homeowners, the monthly mortgage payments include three separate parts: Principal: Repayment on the amount borrowed Interest: Payment to the lender for the amount borrowed Taxes & Insurance: Monthly payments are normally made into a special escrow account for items like hazard insurance and property taxes. This feature is sometimes optional, in which case the fees will be paid by you directly to the County Tax Assessor and property insurance company.

Q :	How much cash will I need to purchase a home?
A :	The amount of cash that is necessary depends on a number of items. Generally speaking, though, you will need to supply: Earnest Money: The deposit that is supplied when you make an offer on the house Down Payment: A percentage of the cost of the home that is due at settlement Closing Costs: Costs associated with processing paperwork to purchase or refinance a house

Q :	What are the differences between mortgage prequalification, preapproval, and final loan approval?
A :	Prequalification is the process where the lender will look at basic income, debt and payment information, that you supply, to determine how much mortgage you can afford. No accounts or employment information is verified. Preapproval occurs when all credit and employment is verified and the mortgage is approved, subject to the appraisal of the property you have chosen to buy. Final loan approval occurs when the property has been appraised, all documentation is in the hands of the lender and all contingencies have been met.

Q :	What are points?
A :	Points are up-front interest. An amount equal to one percent of the principal amount of the loan. Loan discount points are a one-time charge assesed at closing to lower the interest rate.

Q :	What are front and back ratios?
A :	Front Ratio: The total mortgage payment including principal, interest, taxes and insurance (PITI) as well as any condominium or homeowner association fees divided by your total GROSS income. Traditionally all ratio must be below 28%. Back Ratio: The total mortgage payment PLUS any car payments, credit card and any other loan payments divided by your total GROSS income. Traditionally must be lower than 36%.

Q :	What is PMI?
A :	Private Mortgage Insurance(PMI) is insurance written by a private company to protect the mortgage lender against loss occasioned by a mortgage default. PMI is required on most loans with less than a 20% down payment.

Q :	What is a Piggy-back loan?
A :	A Piggy-back loan is a second mortgage used to purchase the property and avoid paying monthly PMI Insurance. Usually done as 80/10/10, 80/15/5 or 80/20. Example: 80% first mortgage, 10% second Mortgage and 10% down payment. Minimum credit scores are required.

Q :	How long does it take to be approved?
A :	Initial approval can be as short as 30 minutes, the entire process can take 30-45 days. Sometimes faster.

Q :	Does Penn State Federal offer mortgages outside of Pennsylvania?
A :	Yes, please call our partner PHH Mortgage at 877-894-4493.

Q :	Can Penn State Federal finance double-wide mobile homes?
A :	Yes, with certian stipulations. Please contact our mortgage department for details.