FINDING THE HOME LOAN THAT FITS YOU, YOUR FAMILY, AND YOUR SITUATION

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2 INSIDE THIS ISSUE The Perfect Fit Finding the home loan that fits you, your family, and your situation SMARTMOVE Home-Buying Service Qualifying for Your Mortgage What Does It Take? Home Equity Loans, LOCs, and more Closing Costs What They Are, And What To Compare Become Part of the JHFCU Advisory Council Switch to a JHFCU Visa and Save! Traveling Abroad? Holiday Closings Perfect The Fit There are signs that home buying and refinancing are beginning to pick up, but consumers still need to find a mortgage that fits their budget and provides good value. One of the many benefits of a JHFCU mortgage or home loan is dealing with a trusted local lender. JHFCU services every loan here at the credit union.* Plus, we offer an extensive variety of mortgage options. Conventional Fixed Mortgage The traditional fixed-rate, fixed-term mortgage works for most borrowers. Choose from 10-, 15-, 20- and 30- year fixed-rate mortgage loans at competitive rates with no points. We also offer jumbo mortgages and point options with lower rates. Financing is available for purchases and refinancing of primary and secondary residences too. 30-year Adjustable-Rate-Mortgages (A.R.M.s). A.R.M.s start off with a fixed rate for a specified time, and then the rate adjusts once a year. JHFCU also has a unique option called the Golden A.R.M, based on the Prime rate, which could be a very attractive option as rates rise A.R.M. For the borrower who thinks they might move within 10 years, or who just wants a loan rate locked in for 10 years, the 10-1 ARM is an excellent option. JHFCU s 10-1 ARM is priced at the lower rate of our 15-year mortgage, but with a 30-year term to keep your payments affordable. The rate is locked in for 10 years, with a possible rate adjustment annually, up to 2%. Benefits of this unique product include: You get a lower rate equal to the one offered on our 15-Year Fixed Rate Mortgage. You get a lower payment with the 30-year-term as the payments are amortized over the longer period and thus affordable providing you flexibility within your budget. Your rate is locked in for 10 years, providing you the security of a fixed payment for a longer time than other ARMs. Annual adjustments after the initial 10 years are capped at 2%. You can borrow as little as $50,000. You can borrow up to $417,000; higher amounts available at a different rate. (Ask for details.) For more information or rates, call our Loan Department at Ext. 503, or ld@jhfcu.org. 2

3 FINDING THE HOME LOAN THAT FITS YOU, YOUR FAMILY, AND YOUR SITUATION NEW! JHFCU s 80/10/10 Select Mortgage This is one of the newer options on the market, letting you make a smaller down payment while avoiding private mortgage insurance (PMI). 80/10/10 financing breaks up the loan: 80% of the loan is financed as a first mortgage; 10% of the loan is financed as a second mortgage (Home Equity); the final 10% comes from a cash down payment, which is determined by the purchase price of the home. This option can get you into a home more quickly as you only have to save 10% of the purchase price for a down payment, unlike the traditional 20%. Another big advantage is that you can finance 90% of the home loan without having to pay PMI. Many homebuyers prefer to avoid paying PMI since it can be expensive and may not be tax deductible. This option may also free up some of your savings to be used for something other than a down payment - invest, pay off other debt, or even buy needed furniture for your new home. The 80/10/10 loan gives you more flexibility and allows you to save PMI costs. For more information, contact the Loan Department at , x503 or ld@jhfcu.org. *Occasionally, the Credit Union reaches a limit on the percentage of mortgage loans allowed to be held in its portfolio or cannot sell the loan and retain servicing. At that time, Financial Security Consultants can still assist members mortgage needs and obtain financing through an outside lender at the same rate offered by JHFCU. JHFCU offers mortgages in Maryland and the surrounding states (VA, PA, NJ, DE, DC, and WV). HomeFree with No Closing Costs** This loan is a very popular option for members who have paid down a substantial portion of their mortgage but still would like to take advantage of a lower rate. Traditional refinancing can be cost prohibitive; the HomeFree Home Loan allows you to get a low rate without paying closing costs.** Other details include: Rates as low as 3.375% APR*** for 6-year term. Terms up to 12 years available. Must have at least 25% equity in your home (loanto-value ratio of 75% or less). Minimum loan amount of $25,000. Maximum loan amount of $200,000. Used for primary residence only. Must maintain your own escrow for insurance and taxes. For properties in Maryland and surrounding states. Loan must be used to pay off ALL other mortgage loans on property. For more information, contact the Loan Department at , x503 or ld@jhfcu.org. **Closing costs will be added back to loan balance if the loan is paid off within three years. ***APR = Annual Percentage Rate. Rates are based on term of loan and upon refinancing your non-jhfcu loan. With a $100,000 loan at 3.75% APR for 10 years, your payment will be $1, per month. Rates are current as of 7/1/13 and are subject to change. Property and flood insurance may be required. Other restrictions may apply. Other rates available for various terms and/or refinances of JHFCU loans. SMARTMOVE Home-Buying Service A free benefit to all JHFCU members. Get a cash rebate when you buy and/or sell property through SMARTMOVE Access to professionals to answer your home selling/buying questions Pre-screened real estate agents to help you when you are ready to buy/sell property Contact SMARTMOVE before signing with a realtor. For details call or , Monday Friday between 9AM and 5PM or visit 3

4 Qualifying for Your Mortgage What Does It Take? The mortgage meltdown crisis several years ago not only caused a recession, it also resulted in some tougher mortgage underwriting rules. The good news is that your Credit Union is here for you with a common sense, not just rules-based, approach to underwriting that considers your entire financial picture, so you shouldn t be too alarmed by the tighter qualifying standards. However, checking where you stand with each of the mortgage underwriting criteria below can be helpful if you re considering buying or refinancing a home. Your Credit History The minimum credit score for a standard first mortgage is now 620. Your credit should show no recent bankruptcies, foreclosures or short sales. If you need help bringing your credit score up to this standard, the Credit Union offers a credit counseling service for our members through Accel. Visit our website or call ACCEL. Your Savings If you re purchasing a home, funds for your down payment and closing costs can come from your own savings, a gift from a relative, a loan against a retirement plan or other financial asset, or a combination of the above. You ll need 3% of the purchase price in your own money unless you can make a down payment of at least 20% of the purchase price. If you can put more than 20% down, all of the funds can come from a gift. If you re refinancing, you may not need to contribute any money except for the cost of a credit report and home appraisal. For both purchases and refinances, the credit union currently lends up to 90% of the purchase price or value of the home. See the article on closing costs on page 6 for more information on what you can expect there. Your Debts Mortgage lenders look at your new mortgage payment, including taxes, homeowners insurance and any homeowners association fees, as well as the minimum monthly payments on other loans and credit cards you have, and compare the total to your monthly pre-tax income. (Student loans in deferment are also included in the monthly debt calculation even though payments may not have begun yet.) The lower your percentage of debt to income, the better qualified you are. If your own rough calculation puts your debt to income percentage close to 4 or above 40%, we suggest you contact us for advice prior to buying or refinancing. We ll review your situation and see if there are ways to reduce your monthly debt burden so that you are better qualified for your mortgage. Keep in mind that any effort you make to consolidate your debt should make sense on its own for example, refinancing a car loan for a longer term with a higher interest rate may not be the best move for you even if it does lower your total monthly outlay. Talk to us first before you restructure your debt to make sure it really makes sense for you. Your Employment History Ideally, you should have at least a two-year history of employment (not necessarily all with the same employer) or attendance at an educational institution. A shorter time period or a gap between jobs will need to be explained. If you re self-employed or need commission income to qualify, that income will need to be documented by the most recent two years tax returns verifying receipt of the income. Other Income Other income, such as pensions, social security, rent, dividends and interest, and other similar items can also be used to qualify. Documentation requirements may include retirement income award letters, 1099 tax statements, or actual tax returns. Your Next Step If you re considering purchasing or refinancing, your next step should be to call our loan department at Ext. 503, or ld@jhfcu.org. We ll be happy to help you explore your first mortgage options.

5 Home Equity Loans, LOCs, and more Home Equity Lines of Credit Restructured to Offer a New Lower Rate Coming Soon! No closing costs* and rates lower than those of other lenders make the JHFCU Home Equity line of credit a great borrowing tool. Use the line for home improvement, tuition, a vehicle, or to pay off high-rate credit card bills, and enjoy the possibility of a tax advantage!** Choose from three Home Equity lines of Credit: A standard line with a rate as low as Prime+0%*** A low-equity line that allows you to borrow up to 90% of your home s equity Jumbo Equity line that allows you to borrow $150,000 and greater Fixed-Rate Home Equity Loans Benefit from the stability of a fixed interest rate and no closing costs,* plus a potential tax deduction** with the JHFCU 10-year or 15-year fixed-rate 80% LTV, 90% LTV, 100% LTV or Jumbo Home Equity loans.**** Receive the proceeds of the loan at settlement and start using it for purchases right away. *The closing costs will be added back to the loan payoff balance if the loan is paid off within the first 3 years and are only paid by JHFCU one time per property. Access your home equity line via Online Banking, Telebranch 24, special Home Equity checks, or in person. Property and flood insurance may be required. Rates are based on applicants credit and may vary. Property and flood insurance may be required. **Consult a tax advisor for specifics. ***Subject to a floor rate. ****LTV=Loan to Value. A $100,000 fixed-rate home equity loan, at 5.875% APR for 15 years, would be $ per month for 180 months. A $100,000 fixed-rate home equity loan, at 5.625% APR for 10 years, would be $ per month for 120 months. 5

6 Closing Costs What They Are, And What To Compare The second question most people ask when they re considering a first mortgage is What are the closing costs? (The first question is always What s the interest rate? ) The closing cost question is not as easy to answer as it sounds. While a good rule of thumb is that closing costs on a purchase will be about 5% of the purchase price, and closing costs on a refinance will be 2.5% - 3% of the loan amount, closing costs will vary depending on the type of mortgage transaction, the type of property, the area you live in, and other factors. And not all lenders will answer your question the same way. Some will only tell you about lender fees. Some will tell you lender fees and title company fees. Some will include property taxes and insurance, and some will not. So it s important to know what to ask so that you can make a valid comparison. (Once you actually apply for a mortgage, you ll get a Good Faith Estimate, which is a document that formally lists your anticipated closing costs. Those costs can vary only by certain limited percentages as required by law when you reach the settlement table.) First of all, you should know that your closing costs are not the same as the money you need to bring to settlement. If you re refinancing and the value of your home is high enough, you can choose to include all of your closing costs in your new loan amount and bring no money to settlement. If you re purchasing, the cash you need to bring to settlement will include not only closing costs, but your required down payment. The good news for purchasers is that often you can negotiate for sellers to pay a portion of your closing costs to reduce the cash you need to bring to the settlement table. Secondly, you should understand that some of your closing costs will vary depending on where you get your mortgage and what title company conducts your settlement, and other closing costs will be the same wherever you go. Closing costs that will remain the same regardless of where you get your mortgage or conduct your settlement are the fees that are paid to the state and county where the property is located. These fees are called transfer taxes, recordation taxes, and document stamps. They are based on the purchase price of the property and the amount of your mortgage. Calculating these can be Become Part of the JHFCU Advisory Council JHFCU has created a volunteer Advisory Council to help us spread the word about JHFCU s benefits and to provide insight to JHFCU. We know that word of mouth is often the best way to communicate, and that our members have innovative ideas. We are seeking interested members to expand the Council. Applicants should be engaged members who utilize JHFCU s services and who are genuinely interested in the Credit Union, its members, and its success. Members of the Advisory Council must be willing to advocate for JHFCU, including educating potential members on the benefits of Credit Union membership and encouraging them to join, and enlightening current members about services they might not know about. The Advisory Council representatives should be willing to serve as a voice of other members, asking questions and providing feedback on JHFCU products and services, and delivery of those services. Visit us at jhfcu.org for more details or to apply! 6

7 somewhat complex since the calculation changes if the property is a principal residence as opposed to a second home or rental property, if the property is a one-unit home versus a multi-unit home, if an existing mortgage is being paid off and closed, and if the purchaser is a first-time home buyer, for example. You ll want to find out what these are for your own loan transaction, but don t waste time trying to compare these from one lender to another. Likewise, funds that must be brought to closing to pay property taxes and insurance and to fund an escrow account to provide for next year s payment of these items will not vary by lender your property taxes are your property taxes no matter where you get your financing! So find out how much this will be, but don t bother trying to shop this category, referred to as pre-paids and escrows. Lender points and fees are a closing cost category that will change from lender to lender. Points, origination fees, broker fees, tax service fees, underwriting fees, documentation preparation fees, and similar items can seem bewildering and hard to compare, particularly since a loan with a low rate may have higher lender fees than a loan with a higher rate, and it can be hard to tell which is better for you. These lender fees must be considered in the Annual Percentage Rate or APR for the loan. The APR is a calculation that takes into account not only the interest rate, but also certain fees payable in connection with the loan. If you re trying to compare two loan offers with different interest rates and lender fees, ask about the APR on each. The lower the APR, the better the deal, as a general rule. Do keep in mind that to calculate the APR, the lender will need to ask you some questions specific to your transaction, so expect to spend some time on the phone! The last broad category of closing costs is title costs. Again, these can vary depending on the title company or attorney who closes your loan, so you may want to shop around. Keep in mind, though, that you do get what you pay for. If a title company s fees are far below market, this may indicate that they cut costs by not doing as thorough a job, and this could mean problems for you later when you try to sell or refinance and don t have clear title because work was not done properly the first time. The bottom line? Closing costs are an important consideration when you re shopping for a mortgage, and you should definitely consider the lender and title company fee categories when you re making your choice but don t forget about interest rate, service reputation, stability of the financial institution and ease of doing business there. Make sure you choose your mortgage lender for ALL of the right reasons! If you re considering purchasing or refinancing, call our loan department at Ext. 503, or ld@jhfcu.org for more information on how your credit union can help. Visa Platinum as low as 7.9% APR* 9.4% 7.9% Visa Platinum Rewards as low as 9.4% APR* PLUS earn points for premium merchandise, gift cards, and more! *APR=Annual Percentage Rate. Rates are based on applicants credit and the type of credit card and may vary. Limits are based on applicant(s) credit and total unsecured loan balances. 7

8 Traveling Abroad? MONEY MATTERS Summer 2013 Georgean C. Smith Chairman of the Board Sharon A. Kemp Vice Chairman William Carruth Treasurer Rhonice Burnett Secretary Members: 38,568 Assets: $346,574,000 Michael J. Mesta President Lynn M. Gregory Sr. Vice President Marketing & Member Services Holly K. Shek Marketing & Outreach Manager - Editor JHFCU MONEY M AT T E R S is published by the Credit Union office staff and Board of Directors. The views expressed do not necessarily reflect those of The Johns Hopkins Hospital or University administration. Address all correspondence to: Editor, MONEYM AT T E R S Johns Hopkins Federal Credit Union 2027 E. Monument Street Baltimore, Maryland JHFCU-70 jhfcu.org Homewood Branch Charles Commons 4 E. 33rd Street Baltimore, MD M, T, F, 8:30 a.m. 4:00 p.m. W, 10:00 a.m. 4:00 p.m. Th, 8:30 a.m. 5:00 p.m. Bayview Branch 5201 Alpha Commons Dr. Baltimore, MD M, T, F, 8:30 a.m. 4:00 p.m. W, 10:00 a.m. 4:00 p.m. Th, 8:30 a.m. 5:00 p.m. East Baltimore Branch 2027 E. Monument St. Baltimore, MD Fax: M, T, F, 8:30 a.m. 4:00 p.m. W, 10:00 a.m. 4:00 p.m. Th, 8:30 a.m. 5:00 p.m. Eastern Branch 1101 E. 33rd St., Room 303A Baltimore, MD Hours: Th, 8:30 a.m. 4:00 p.m. Phone Services Department M, T, Th, F, 8:30 a.m. 5:00 p.m. W, 10:00 a.m. 5:00 p.m. Lost or Stolen ATM Card , M F 8:30 a.m. 4:00 p.m. Lost or Stolen Visa Check Card , M F 8:30 a.m. 4:00 p.m.; after business hours call Lost or Stolen Visa Credit Card or Whether you re going on a vacation or on a business trip overseas, save time and money by ordering your foreign currency before you go. Arrive prepared for taxi fares, tips and other immediate expenses and avoid overseas credit card withdrawal fees and potential language barriers exchanging abroad. With JHFCU, you have three convenient options: 1. JHFCU Branch Delivered safe and secure, the next business day, to the branch of your choice (East Baltimore, Homewood, or Bayview) 1 * 2. Online for Home Delivery Visit jhfcu.org and click on our Travel tab to order 50+ major foreign currencies online 24/7, delivered to your doorstep 1 ** 3. Coming Soon! Order a prepaid Foreign Currency Debit Card (Cash passport) in 10 major foreign currencies. Staying home but need to send funds abroad? Use JHFCU s International Wire Transfer Service. Convert or send a foreign currency wire to over 50+ countries. Visit jhfcu.org/site/travel or call JHFCU does not have the ability to purchase back any unused foreign currency. *Applicable charges apply. Exchange amount must be $20 to $5000 per transactions. Branch deliveries occur only on business days. **Applicable shipping charges apply. Exchange amount must be $250 to $3000 per transactions. Delivery will be mailed to the registered address of your preferred payment method and must be hand-delivered, including signature. Ask About Our Competitive-Rate STUDENT LOANS Holiday Closings Thursday, July 4, Independence Day Monday, September 2, Labor Day FOLLOW US ON Visit jhfcu.org for Current Rates Traveling Soon? If you have travel plans, please notify us by visiting jhfcu.org and downloading the JHFCU Cardholder Travel Notice Form found under Applications/ Forms. This form helps to prevent fraud and issues with your Check Card while traveling abroad, since we are expecting your foreign activity. You can access your accounts via the Internet Branch, TeleBranch 24, our mobile apps, and ATMs. Federally Insured by NCUA /13