Preview Our New Website!

We’re excited to announce that www.sffirecu.org is getting an entirely new look! Our new website will replace the current website on July 31, and is optimized for mobile and tablet devices.


New Rules & Guidelines for Fixed-Rate Mortgages Impact Pricing and Processing

   Quick Links

  • Factors that Impact Fees
  • 1. Loan-to-Value
  • 2. Credit Scores
  • 3. Property Type
  • 4. Taking Cash-Out

  • Changing Loan Limits
  • 1. Temporary High Balance         Loan Limits
  • 2. Permanent Loan Limits

  • Loan Processing Takes         Longer
  • 1. Locking Your Rate
  • 2. Locking After Appraisal
  • 3. $795 Flat Fee
  • 4. Begin the Application         Process Early

  • Adjustable Rate Loans Have         No Fees and Fewer         Restrictions
  • Many of our members are watching the housing and mortgage markets closely as they prepare to purchase a new home, or refinance their current home loan.

    With so much information circulating in the media, what can be overlooked are the new rules and guidelines that lenders must abide by concerning fixed-rate mortgages.

    These changes come in the wake of the “mortgage meltdown”, and are reminiscent of guidelines in place before the real estate boom of the past decade.

    We encourage all borrowers to be informed, as it helps establish realistic expectations concerning rates, fees and the actual loan process.

    Factors that Impact Fees

    We understand that members are interested in securing a low, fixed-rate mortgage, either for a new home or to refinance an existing loan.

    New fees however, are affected by many factors:

    1. the Loan-to-Value amount,
    2. your Credit Score,
    3. the Type of Property,
    4. and whether or not you’re seeking to get Cash-Out (with a refinance).

    These fees can be paid in one of three ways:

    • Paid in cash at closing,
    • Added to the amount of the loan, or
    • Converted into a rate increase on the loan itself.

    1. Loan-to-Value

    Loan-to-value can affect fees, in particular, how it correlates to your credit score, as described below. Keep in mind that the value of the property is based on the professional appraisal associated with your loan application – and not estimated property values found on real estate websites such as zillow.com or housevalues.com. For this reason, it is not possible to provide exact rates or fees at the time of application as we won’t yet have a professional appraisal, or your credit report.

    2. Credit Scores

    Credit scores can have an impact on your loan fees. Borrowers with higher credit scores and lower loan-to-value amounts will see little to no fees – while those with lower credit scores and higher loan-to-value amounts may incur a fee of up to 3% of their total loan amount.

    Additional Fee Structure based on Credit Score (Percentage of Total Loan Amount)

    Credit Score Loan-to-Value 75% – 80% Loan-to-Value 80% – 85%
    Over 740 None None
    720 – 739 0.25% None
    700 – 719 0.75% 0.50%
    680 – 699 1.50% 1.00%
    Less than 620 3.00% 3.00%

    Please note: Loans with a loan-to-value that exceed 80% will be subject to additional underwriting conditions AND private mortgage insurance—which will increase your payment but lower the additional fee.

    [Top of Page]

    3. Type of Property

    The type of property can affect your loan fees. Borrowers are who are purchasing or refinancing a condominium, investment property or multiple units will incur additional fees up to 3% of their total loan amount.

    Additional Fee Structure for Property Type (Percentage of Total Loan Amount)

    Please note: More than one “property type” fee can apply to a single loan. For example, a 2-unit investment property with a 75% loan-to-value would have an additional fee of 4%.

    Property Type Loan-to-Value 75% – 80% Loan-to-Value 80% – 85%
    Condominium 0.75% 0.75%
    Investment Property 3.00% 3.75%
    2-Unit Property 1.00% 1.00%
    3 to 4-unit Property 1.00% 1.00%

    Please note: Loans with a loan-to-value that exceed 80% will be subject to additional underwriting conditions AND mortgage insurance—which will increase your payment.

    [Top of Page]

    4. Taking Cash-Out

    Taking cash-out when refinancing can also affect fees. Borrowers who take cash-out of more than $2,000 are subject to an additional fee, which is correlated to their credit score and loan-to-value, and can be up to 3% of the total loan amount.

    Additional Fee Structure for Cash-Out (Percentage of Total Loan Amount)

    Please note: The additional fee for taking cash out is separate from the loan-to-value fee listed above.

    Credit Score Loan-to-Value 75% – 80% Loan-to-Value 80% – 85%
    Over 740 0.50% 0.625%
    720 – 739 0.75% 1.50%
    700 – 719 0.75% 1.50%
    680 – 699 1.375% 2.50%
    Less than 620 3.00%

    Please note: Loans with a loan-to-value that exceed 80% will be subject to additional underwriting conditions AND mortgage insurance—which will increase your payment.

    [Top of Page]


    Changing Loan Limits

    Temporary High Balance Loan Limits

    Temporary high balance loan limits have been implemented for loans that are applied for (and funded) in 2009. These higher loan limits are available to borrowers who meet certain criteria regarding their credit score and the loan-to-value of their mortgage.

    To qualify for the Temporary High Balance Loan Limit, any loan-to-value greater than 75% will require a credit score higher than 700; any loan-to-value less than 75% will require a credit score higher than 660.

    Loan limits vary by county, and you can view California’s Temporary Loan Limits here.

    Permanent Loan Limits

    Permanent loan limits dictate the maximum allowable loan amount for borrowers who do not meet the credit score and loan-to-value criteria listed above.

    These loan limits also vary by county, and you can view California’s Permanent Loan Limits here.

    Loans Less than $417,000 Qualify for Conforming Rates

    Borrowers will typically see two types of advertised mortgage rates. Conforming Rates apply to loans less than $417,000. Jumbo Rates (sometimes referred to as High Balance) apply to loans that are greater than $417,000. Conforming rates are typically lower than their jumbo rate counterparts. Being aware of this can help you better understand advertised rates – and have realistic rate expectations.

    [Top of Page]


    Loan Processing Taking Longer

    When the housing market slowed down in late 2007 and 2008, the appraisers and title companies who provided services to process loans eliminated a significant portion of their workforce. The current purchasing and refinancing “boom” – and a return to stringent guidelines – has left these companies woefully understaffed and slow to respond to demand. A process that once took several days now requires weeks and has impacted the time needed to process your loan.

    A Typical Schedule for Processing a Loan

    • Week 1 – You’ll receive a contingent loan approval and a disclosure, including estimated rate and fees
    • Week 2 – Credit Union awaits official credit report, verifications and other paperwork requested of the borrower
    • Week 3 – Title policy and appraisal are ordered
    • Week 4 – Title and appraisal pending
    • Week 5 – Title and appraisal received by Credit Union
    • Week 6 – Loan processed by the Credit Union
    • Week 7 – Finalized loan approval including the option to lock rate and fees
    • Week 8 – Loan processing completed, and document signing at the title company (or a location convenient to you) can be arranged. Scheduling is contingent on the title company’s availability

    [Top of Page]

       Quick Links

  • Factors that Impact Fees
  • 1. Loan-to-Value
  • 2. Credit Scores
  • 3. Property Type
  • 4. Taking Cash-Out

  • Changing Loan Limits
  • 1. Temporary High Balance         Loan Limits
  • 2. Permanent Loan Limits

  • Loan Processing Takes         Longer
  • 1. Locking Your Rate
  • 2. Locking After Appraisal
  • 3. $795 Flat Fee
  • 4. Begin the Application         Process Early

  • Adjustable Rate Loans Have         No Fees and Fewer         Restrictions
  • Locking Your Rate

    Members who are watching rates and trying to anticipate the right time to “lock” need to know that doing so is more involved than contacting us when they see a low advertised rate that appeals to them. As outlined above, there are many factors that impact the final pricing of a loan that are not known at the time of application. Getting the process started early puts you in a better position to act quickly and get the best possible pricing.

    Rates Can Be Locked Upon Completion of Appraisal

    Once the Credit Union has received and reviewed your appraisal (usually by week 4 – see above), it is in a position to quote a rate and fees.

    At that time you will have the option to lock – but are not required to do so until the time documents are drawn by the Credit Union. Rate-sensitive borrowers should understand that once they’ve exercised the option to lock the rate they are committed to it. Making a change to the rate after the lock can result in substantial fees and delays in the loan process.

    $795 Loan Processing Flat Fee for Fixed-Rate Mortgages

    Beginning May 1st, the Credit Union’s flat fee for processing fixed-rate mortgage will be $7951, which will include:

    • Appraisal
    • Appraisal Review
    • Courier / Fed Ex
    • Credit Report
    • Document Preparation
    • Flood Zone Certification
    • Underwriting
    • Tax Service
    • Wire Transfer
    • Processing

    1 Applies to California properties only, and does not include title and escrow fees. The flat fee for adjustable rate mortgages remains at $575 (see details below2).

    Begin the Application Process Early

    Whether buying or refinancing, it’s a good idea to get started earlier rather than later. If you’re trying to get the best rate possible, be aware of the new guidelines so you have realistic expectations. You can apply for a SF Fire Credit Union home loan – and check the status of an existing application – online, 24 hours a day, seven days a week here.

    [Top of Page]


    Adjustable Rate Loans with No Fees & Fewer Restrictions2

    Borrowers who are overwhelmed with the new fees (or can’t qualify under the new guidelines) associated with fixed-rate mortgages should remember that SF Fire Credit Union continues to offer adjustable rate mortgages with attractive rates, fewer restrictions and none of the fees outlined above. You can learn more about our adjustable rate mortgages here.

    2 With the exception of SF Fire Credit Union’s flat fee of $575, which includes: appraisal, credit report, underwriting, document preparation, appraisal review, processing, tax service, wire transfer, flood zone certification and courier service. Flat fee does not include title and escrow fees.