Mortgage Education

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Decoding Construction Loans: Your Roadmap

If you're planning to build your dream home or renovate extensively, understanding construction loans is essential. In this blog, we'll outline the key differences from traditional mortgages, explain the workings of construction loans, and offer crucial insights.

Differences Between Construction and Mortgage Loans

Traditional mortgages, like those offered by TVFCU, provide a lump sum upfront. Construction loans, on the other hand, disburse funds in phases as your project advances, whether it's new construction or a major renovation.

How Construction Loans Operate

Construction loans follow project milestones, such as land clearing, foundation, framing, and more. While they usually have a 12-month term, this can be adjusted.

Loan Terms and Rates

Construction loans have a typical 12-month term, allowing you to secure an interest rate at the outset. After project completion, the loan becomes permanent financing, known as a construction-to-permanent loan.

Essential Considerations

• Planning: Expect a comprehensive planning phase, involving builder selection, plan finalization, and document preparation, taking around 60 to 90 days.
• Construction Start: Never begin construction until the loan has closed to avoid potential title issues.

Common Mistakes to Avoid

• Budget Overruns: Account for fluctuating material costs and inflation by collaborating with your builder to set aside reserves for unforeseen expenses.
• Realistic Planning: During the planning phase, align your budget with your project goals and maintain transparent communication with your builder.

 

Timing Matters in Home Buying: Is Now the Right Time to with Bryan Fryer

Is it the perfect time to become a homeowner? In our TVFCU Mortgage Moment, we explore the factors to help you decide.

• Timing Is Unique: Your financial situation and future plans are key.

• Interest Rates: Rates are reasonable but fluctuate. Match them to your goals.

• Market Trends: Keep an eye on the ever-changing market.

• Financial Health: Your credit and finances determine eligibility.

• Long-Term Vision: Plan for your future - family, schools, retirement.

• Budgeting: Find what's affordable with expert guidance.

• Job Stability: Secure employment is crucial for mortgage approval.

• Local Market: Different areas, different costs. Choose wisely.

• Rental Impact: Rental prices affect home costs, watch this trend.

In a nutshell, it's all about timing and your unique circumstances.

 

Unleashing the Power of Home Equity: Tips from TVFCU's Bryan Fryar

Are you curious about how to leverage your home's equity to its fullest potential? Look no further! In our latest TVFCU Mortgage Moment, we're diving deep into the world of home equity. Let Bryan Fryar, the expert from TVFCU, guide you through the process of harnessing your home's hidden treasure.

Understanding Home Equity: The Key to Financial Freedom

Home equity might sound complex, but Bryan Fryar simplifies it for us. Home equity is essentially the difference between your home's value and any outstanding liens or debts against it. Imagine your home is appraised at $300,000, and your mortgage balance is $200,000. The math is straightforward: $300,000 - $200,000 = $100,000 of home equity waiting to be unlocked. 

 

 

Mastering Mortgage Basics: Understanding Debt-to-Income Ratio

In today's Mortgage Moments, we're breaking down the crucial concept of Debt-to-Income Ratio (DTI). DTI is a critical factor in your mortgage journey, helping determine how much home you can afford.

What's DTI? DTI, or Debt-to-Income Ratio, measures your income against your expenses. Lenders use it to assess your ability to manage a new mortgage payment.

Regulatory vs. Credit Union Flexibility While industry standards and regulations often cap DTI at 43%, at our credit union, we can often work with a more flexible 50% debt ratio.

The First Step: Prequalification Before house hunting, start with prequalification:

1. Application: Apply online or by phone, granting permission to check your credit.

2. Credit Assessment: We evaluate your credit, income, and assess Loan-to-Value (LTV) ratios.

3. Evaluation: We analyze all data to guide you through the process, ensuring your comfort with the financial aspects of your home purchase.

Understanding DTI is crucial for mortgage success. It sets your budget and secures your financial stability.

 

 

Demystifying Appraisals in the Mortgage Process

Welcome to Mortgage Moments, where we shed light on the intricacies of the residential appraisal process:

What Is an Appraisal? It's a report estimating a home's market value, essential for lenders in property financing.

Why Are Appraisals Necessary? For buyers, it ensures a fair deal. For lenders, it protects their investment and ensures regulatory compliance.

Navigating Regulations: Appraisers are trained professionals bound by ethical standards and regulatory guidelines.

The Dynamic Market: Home values fluctuate with market dynamics; appraisals provide a snapshot in time.

The Role of Appraisal Management Companies (AMCs): They act as intermediaries to ensure impartiality and regulatory compliance.

 

 

TVFCU's Unique Credit Union Loans: Your Financial Advantage

Let's unlock the secrets of credit union loans, specifically those from Tennessee Valley Federal Credit Union (TVFCU). We'll explore what makes these loans distinct from traditional bank loans and how TVFCU supports its members.

The Power of Financial Education

Financial education is essential. Eric Weakly, VP of Mortgage and Consumer Lending, stresses that knowledge is the key to financial success. It empowers individuals to make informed decisions and control their financial future.

Credit Union Loans vs. Bank Loans

Credit unions, like TVFCU, operate as nonprofit corporations with members as shareholders. Unlike banks, credit unions use members' funds to lend money. This unique setup allows them to keep most loans in-house, differing from banks that often sell loans on the secondary market.

While credit unions, including TVFCU, offer government-backed loans, they retain a significant portion of loans within the credit union, offering a more personalized lending experience.

TVFCU's Member-Centric Benefit: Appraisal Coverage

TVFCU goes the extra mile by covering appraisal costs. In 2021, TVFCU paid around $1.2 million, saving members an average of $567 per transaction. This underscores TVFCU's commitment to its members' financial well-being.