Understanding mortgage closing costs
While interest rates are slowly going up after reaching record lows in 2010, they still remain low enough for people to consider refinancing their current mortgage or purchasing a new home.
Besides considering interest rates, current or prospective homeowners should also understand the variety of fees associated with securing a mortgage. Most closing fees are actually pass-through fees, meaning the money goes to third parties, such as government entities, other financial institutions or title companies. These fees are paid when closing, or finalizing, your mortgage.
Here’s an explanation of some of those closing fees and what they cover:
- Application fee. According to the Federal Reserve Board, institutions charge between $65 and $640. Some, like Mid American, charge lower fees. At Mid American, we charge a nominal fee of less than $20 for processing your credit report to start the application process.
- Origination fees. These fees cover underwriting, document preparation and costs to deliver paperwork to other financial institutions.
- Title fees. In order to process a mortgage, a property’s title must be free and clear of any liens or claims. A title company is hired to check this.
- Registration and tax fees. The cost of these fees is related to the amount of the mortgage loan. These fees cover the processing of showing ownership and paying property taxes to the county.
- Recording fees. All properties must be recorded with the register of deeds, a government entity.
- Appraisal fees. The value of the property has to be determined, since it plays a part in your mortgage and equity, as well as how your property tax is assessed.
- Points. One can purchase “points” to lower a mortgage interest rate. The industry standard is that the cost of each point is 1 percent of the loan amount. For example, on a $100,000 loan, one point would cost $1,000. Whether one should buy points depends on how long they intend to keep the loan.
Mid American will celebrate its 75th anniversary in 2011. Here are just a few of the highlights of your credit union’s history.
1936 – Opens as the Kansas Federal Credit Union to serve employees and volunteers of other Kansas credit unions
1972 – Law changed to allow Kansas credit union employees, volunteers full access to their own credit unions
1979 – Name changes to Mid American Credit Union and charter changes from federal to state
1988 – Mid American implements MATT, a telephone account access system
1989 – Mid American opens offices within Wichita’s Coleman Co. plants
2007 – Greensburg branch destroyed in EF5 tornado
2009 – Business loans offered; Sunflower CU in Arkansas City merges with Mid American
2011 – Mid American to open second partnered credit union in northeast Wichita
75 years and counting
In 2011, Mid American Credit Union will mark its 75th anniversary. We’ll share reaching a significant milestone with our state — Kansas will celebrate its 150th year of statehood.
It was because of a federal law that Mid American opened its doors in 1936 in Wichita. At that time, employees and volunteers of credit unions in Kansas could not borrow from their own
credit union. We began as a federally chartered credit union, known as Kansas Federal Credit Union, to serve those employees and volunteers of Kansas credit unions.
When federal legislation changed allowing employees and volunteers full access to their own credit unions, we became state chartered, opened our field of membership and in 1979 changed our name to Mid American Credit Union.
Because the qualifications for our membership changed, we needed to identify a niche for ourselves and we have successfully done that over the past three decades. We are a credit union that works with Kansas employers to be the credit union of choice for serving their employees’ financial needs — be it a place to directly deposit paychecks, to finance a home or a vehicle or even obtain financial education at a seminar.
We now work with approximately 300 employers, who are known as our employee groups. Most of you have joined our credit union through that avenue. Some of our more than 23,000 members nationwide have come to us through the variety of options we have continued to add throughout the years.
Although we have undergone changes by acquiring branches and enhancing services, one thing has remained a constant: We opened to serve Kansans and provide access to a member-owned, nonprofit cooperative offering financial products and services with better rates on savings and loans and lower fees and charges. This essential mission remains unchanged.
So as we celebrate our 75th anniversary in 2011, I want to take this time to thank you, our members and owners, for your continued confidence in this credit union. We look forward to serving you for many more decades.
- Jim Holt, president/CEO
Protecting your valuables: Tips for reviewing homeowner’s insurance policy
Don’t wait until a disaster hits to find out whether your homeowner’s insurance policy has got you covered.
According to the nonprofit Insurance Information Institute, there are four major events that should trigger a review of your policy.
- Policy renewal time. Review your coverage to ensure it is adequate enough to repair or replace your home, as well as adequately cover your personal belongings and liability. Most companies provide coverage for personal belongings of 50 to 70 percent of the amount of insurance you have on the home’s structure. Liability covers homeowners and the family members in that home in lawsuits for bodily injury or property damage. Limits usually start at $100,000 but some experts recommend at least $300,000 worth of protection.
- Major purchases, including home improvements. If you’ve renovated your kitchen or bath or enclosed a porch to make a new room, report those improvements so you’re not underinsured. And don’t forget about outside improvements, such as a new gazebo or tool shed or a hot tub. If you’ve bought a new computer, jewelry or acquired other major items, you’ll want to consider if you have enough insurance for those additions. Consider purchasing a special policy, called a floater or endorsement, to adequately cover items such as jewelry and other valuables. Floaters also cover losing an item.
- Safety improvements. If you’ve installed a new alarm system or upgraded heating, plumbing or electrical systems, ensure your company knows about this. Some offer discounts.
- Major lifestyle changes. The amount of items you have or want to cover can be impacted by divorce or having children move out or back in. If your dream job is working at home, make sure you’re covered for equipment and liability.
Experts recommend keeping receipts of major purchases with the rest of your insurance documentation, including an annual inventory of your possessions. The inventory should include a visual record, such as photographs or a video. Store the inventory in a safe deposit box and consider mailing a second one to an out-of-town friend or relative, experts say.
We keep responsibility for your mortgage
By Jim Holt, president/CEO
The Midwest is often accused of lagging the national trends. I prefer to say we make sure they are solid ideas before we adopt them. More often we lead the nation. For example the Midwest is experiencing record low mortgage rates. That has led to an increase in members refinancing their mortgages at Mid American Credit Union.
Several years ago, Mid American helped start Member Mortgage Services (MMS). MMS is owned by about 20 Kansas credit unions who decided to not turn to outsiders to handle their members’ mortgages. MMS was established in 2004 with the vision of being our members’ preferred mortgage provider.
Mortgage loan ownership and the handling of payments and escrow (often called mortgage servicing) may be handled by two different institutions. MMS usually sells the mortgage loan ownership to Fannie Mae, a federal government-sponsored agency chartered by Congress. MMS keeps the servicing, which means we continue to be responsible for the day-to-day management of your mortgage account.
We use the technology provided by MMS to make sure our processing of member applications is handled expeditiously and meets industry standards of privacy and care. When you apply for a mortgage loan through the Mid American website, you are immediately linked to one of the most highly regarded mortgage processing engines in the industry at MMS’s site.
Consider refinancing your mortgageSince mortgage rates began sliding this summer to historic lows, refinancing activity is up nationwide and at Mid American Credit Union.
According to a national trade group, refinancing activity has jumped 70 percent nationally since June.
At Mid American, we remain very competitive with the rates for conventional mortgages. Check out our mortgage rates in the rate box (found in the left-hand member login column).
A number of our members are taking advantage of the lower rates to lower their mortgage terms. Many have an eye toward the future and are trying to pay off mortgages before entering retirement. Some may choose to lower their payments and set aside the difference between their previous mortgage payment and their new one into savings, given the current economy.
If you’re interested in another financial product, Mid American continues to have low rates for home equity or second-mortgage loans. Members can receive a $100 Lowe’s gift card for loans $10,000 or higher, or a $200 gift card for loans $20,000 or higher.
No-surcharge ATM access in Winfield, Ark City available
Mid American Credit Union members will have ATM access, beginning Monday, Oct. 25, 2010, at locations in Arkansas City and Winfield. Mid American members can use Ark Valley Credit Union ATMs located at 1515 N. Summit in Arkansas City and at 118 W. 9th in Winfield with no surcharge.
Mexico Now Added to List of Countries and U.S. States for Debit Card Restrictions
Due to a high rate of fraudulent transactions occurring in Missouri, Florida, Canada, Great Britain, Ireland and Mexico, Mid American has put restrictions on signature-based debit card transactions in those states and countries.The restrictions don't affect PIN-based transactions, but they do apply to Internet transactions, as well.
Cards are being counterfeited with actual account information but do not contain a member's actual name or other information.
"This has nothing to do with us being breached. It has to do with unscrupulous people taking member information," said Connie White, Mid American's compliance manager.
One of the most common ways in which cards are compromised is when a person pays for a restaurant bill. That's when the card leaves a person's sight and can be run through a second scanner, which is swiping the data from the card's magnetic stripe.
Members are reminded to be diligent about sharing their financial information or conducting card transactions.
Members who travel should notify Mid American of their travel plans. Mid American's anti-fraud area review account transactions for suspicious use, and the notification will help ensure members can conduct transactions, even in those restricted areas.
Mid American members can also access their accounts in Florida and Missouri through shared branches. Go to http://www.cuservicecenter.com/ to locate one of the nearly 4,000 branches in the Credit Union Service Center network, in which Mid American participates.
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