How much can I borrow?
What will be the interest rate?
Are there any restrictions on the CalSTRS home
loan?
Am I required to carry Mortgage Insurance (MI)
with a CalSTRS Home Loan? Can't I decline MI insurance, or take out a term life
insurance policy in lieu of MI?
What other types of insurance should I know
about?
My loan is a CalSTRS second, how does it differ
from a CalHFA second?
Can my CalSTRS second be assumed?
Do I have to pay back my second loan?
How do I obtain payoff information?
Can I make payments on my "Silent" or "Deferred"
loan(s)?
Can I get payment coupons or a monthly statement
for my second and third loan(s)?
What are closing costs?
How does the Zero Down Program differ from the
other CalSTRS Home Loan Programs?
How does the 80 - 17 Program differ from the
other CalSTRS Home Loan Programs?
What counts in the loan application
process?
What does it mean to have 0, 1, or 2
points?
How do I find out more about the CalSTRS Home
Loan Program?
How do I get started?
Does CalSTRS offer a Reverse Mortgage
program?
What are the typical costs involved in obtaining
a Reverse Mortgage?
Does CalSTRS offer a Mortgage program that would
allow me to use a portion of my pension fund balance as a down
payment?
How do I find a qualified real estate agent to
help me purchase a home? Does CalSTRS offer any kind of real estate
assistance?
How can I find out more information about
SMARTMOVE?
The CalSTRS Home Loan Program consists of agreements with lenders who provide
30-year and 15-year fixed-rate loans for the purchase and refinance of single
and various multi-family dwellings. These loans are purchased by CalSTRS.
Countrywide Home Loans, who serves as the program administrator, will be the
servicer for all CalSTRS loans that are reserved on or after July 26, 2004. See
our Advantages page
on how the CalSTRS Home Loan Program can serve you.
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Loan limits can vary from $417,000 to $650,000 depending on the program.
Please see the Program
Summary page for details of each program.
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Although quoted interest rates for applications will change with market
conditions (see CalSTRS Rates), once your loan closes, the interest rate will be
fixed for the term of your loan.
Different mortgage loan financing options may have different rates (see Interest Rates).
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Yes. Some of the restrictions are:
- The home must the member's primary residence.
- The home must be located in California.
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The lender requires MI protection unless your down payment is 20 percent of
the loan value or greater. The MI protection has nothing to do with your health,
life or death. MI reimburses the lender, while a mortgage life insurance policy
is designed to protect the survivor by furnishing cash to pay off the loan
should you or your spouse die. While you do have a choice with a life insurance
policy, it will not absolve you of the requirements of MI insurance,
particularly if you are participating in the CalSTRS Home Loan Program.
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Title Insurance ?#8364;” This is included in the closing costs to insure that
no other party can claim title to your property, protecting you and lender
against such a claim.
Hazard Insurance ?#8364;” A contract that protects you from any financial
losses on your property that might result from fire, flood, or any other
hazards.
Mortgage Life Insurance ?#8364;” Like Term Life Insurance, only this policy
pays off your mortgage in the event of your death.
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The CalSTRS Down Payment Assistance Program has two Notes and two Deeds of
Trust. The second Note is deferred for a five year period. During this five year
period, no payment is required on the second loan. At the beginning of the sixth
year, payment on the second loan and the accrued interest will begin to amortize
and payments will begin until the loan is paid in full.
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No, CalSTRS does not allow assumption of their loans.
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Yes: Under CalSTRS Down Payment Assistant Programs, you will sign two
Promissory Notes and two Deeds of Trust. Both loans will be secured by a
recorded lien on the property. If you pay off the first by selling the property,
refinancing the first mortgage, or at maturity of the first mortgage, or
transfer title to the property, both loans become due and payable. These loans
are not forgivable, nor do they go away after a period of time.
The CalSTRS deferred second loan must be paid off when the first mortgage
loan is refinanced.
The CalSTRS second loan must be paid off when the first is refinanced.
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Or, if you prefer, you may:
- Call the Customer Service Department - (800) 669-6607
- FAX the demand request to (805) 577-3897
- To submit a payoff payment to Countrywide, please mail to us
overnight (see "overnight mailing instructions") at the following address:
Countrywide Home Loans
400 Countrywide
Way
Mailstop SV-41, Attention: Payoffs
Simi Valley, CA 93065
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Yes. Payments can be made by sending a check or money order to:
Silent Second or Deferred Second (loans reserved after
7/26/2004)
Countrywide Home Loans
P. O. Box 10219
Van Nuys, CA
91410-0219
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Since these loans are "Silent" or "Deferred" (no payments required) we do not
issue coupons. You can call Countrywide or e-mail ("Contact Us") a request for
an Activity Statement and it will be mailed out to you. In addition, an Annual
Statement will be sent to you each year.
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Once a loan has been approved, the borrower is asked to go to settlement (or
"escrow") to sign final papers and the loan process is then finished. There are
certain closing costs (other than points) involved in closing a real estate
transaction, which can amount to anything from 1.5% to 3.5% of your mortgage
loan. For example, if your mortgage loan is $85,000, your closing costs could
range from $850 to $2,550. These closing costs will be in addition to your down
payment on the house. The lender will charge a fee, which is called the
Origination Fee, to cover the administrative cost of processing your loan. This
is usually a small percentage of the loan amount. Many loan types require you to
deposit in advance for some items that will be due after closing. These pre-paid
items usually include real estate taxes and first year insurance premiums for
hazard and mortgage insurance. These fees are called Paid in Advance items or
Prepaid Escrows. It is necessary for a title insurer to examine a title to make
sure there are no problems that would prevent you from having a CLEAR legal
title. It is then necessary to get title insurance in case someone else should
try to claim title to your property. Fees for title examination and title
insurance are included in the closing costs and are called Title Charges. A
record of your home purchase will be placed on file with your local government.
There is a small fee to cover the cost of paperwork. These charges by the local
government are called Recording and Transfer Charges. The settlement or escrow
fee covers the cost of a closing officer to prepare and review all of the
documents needed to close your escrow.
Each lender can provide you with a "Good Faith Estimate" of what your closing
costs will be.
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Under the CalSTRS Zero-Down Preferred Program (95/5), the borrower will pay
only the closing costs. Secondary financing for the down payment will come in
the form of a deferred second loan. In other words, the borrower will sign two
notes: one for the first mortgage of 95% and another note for 5%. The 5% is
deferred because the loan payment is deferred for the first five years of the
loan.
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Mortgage Loans made under this program are similar to those of the Zero-Down
(95/5) Preferred Program with the following exceptions:
The maximum loan-to-value ratio will be up to 97% for purchases and
refinances.
A 3% down payment is required.
A minimum of 1% must come from the borrower's own funds. The remainder may
come from a gift from a relative where repayment is not required or a grant from
a government agency or an employer - assisted housing program, which has been
approved by Countrywide.
Interest Rate - The interest on the second mortgage is deferred simple
interest for the first five years of the loan.
Closing Costs - The closing costs and prepays can be paid from following
sources:
- Borrower's own funds
- Seller contributions up to 3%
- Gift from relative
- Unsecured grant from a government agency or an employer -
assisted housing program, which has been approved by Countrywide.
The borrower (after closing) must have available cash reserves that equal at
least two monthly mortgage payments. Funds from individual retirement accounts
(IRA/Keogh accounts) and tax-favored retirement accounts (401k accounts) may be
considered as cash reserves.
Secondary financing for the down payment will come in the form of a deferred
second loan. In other words, the borrower will sign two notes: one for the first
mortgage of 80% and another note for 17%. The 17% is deferred because the loan
payment can be deferred for the first five years of the loan.
The borrower does not have to repay on the second note for the first five
years of the loan. However, the second note will have accruing interest that
will be added to the principal balance at the end of the five-year deferred
period. The new second mortgage loan balance will then be amortized with regular
monthly, principal and interest payments due.
Under both programs, the interest rate on the second mortgage loan is the
same rate as the first mortgage. If the home is refinanced or sold at a later
date, the second note must be paid in full.
Certain documentation will be required to support your application.
Generally, the higher your down payment, the less documentation will be needed.
These may include credit reports, the loan application, an appraisal of the
property, income verification, asset verification and various other documents
depending on the complexity of your personal financing situation.
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- The amount of income you make
will determine the amount of money you can borrow to purchase your home. For
example, if a person makes $5,000 a month and spends $1,600 on a mortgage loan,
including property taxes, mortgage insurance and hazard insurance, the housing
expense ratio is 32% (1,600 divided by 5,000). Normally, 33% of your income is
the general rule to be spent on your mortgage, but this can vary depending upon
the amount of down payment (or equity for a refinance loan), your credit
history, etc.
- Mortgage companies and banks will
look at your monthly debts such as loans, charge cards, child support, etc. made
monthly by you. The percentage of debts to income is known as the debt-to-income
ratio. A good goal is to spend about 38% of your income on all debts, including
the contemplated new mortgage payment.
- Mortgage lenders or
banks are more likely to lend money on more favorable terms to people who have
worked several years at the same job or the same type of job. A verification of
employment document may be requested to verify your work history.
- Each borrower has a
credit history that is on file with many different Credit Reporting Agencies.
The credit report is used to determine your ability and willingness to pay your
debts as a borrower. If you have been late on your various payment obligations,
the late payment will show up on a credit report. Each person's credit history
is unique, but generally the better the credit history, the better the loan
terms.
- The mortgage company or bank
will want to know the value of the prospective home. The loan amount approved
will depend on the value of the property to be determined by a certified and
licensed real estate appraiser. This is to ensure that the asset is worth the
money that you will borrow.
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A point is one percentage of the loan amount. The lenders offer rates that
may be lower, but require paying points. A rate of 7.875% with 1 point for a
loan of $100,000 would require the borrower to pay a total of $1,000 to the
lender upon closing of the loan. A rate of 8.000% with 0 points will require no
payment to the lender, but the interest rate is slightly higher. Points will
lower the interest rate and are of most benefit if you intend to keep the loan
for a long time. Under the CalSTRS Program, the borrower will not pay discount
points because buy-downs are not allowed.
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Visit one of the Approved
Lenders or our web page for more information and updates.
You may also call our toll free Home Loan Program Administrator at (866)
384-4HLP (4457).
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On the list of Approved
Lenders , select your county and choose a local lending office. Call your
chosen lender and ask for a loan agent who can help you with the CalSTRS Home
Loan Program. You can also contact the CalSTRS Home Loan Program Administrator
at (866) 384-4HLP (4457) or by email at CALSTRSHLP@countrywide.com.
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CalSTRS does not currently offer a Reverse Mortgage program, nor does it
endorse a Reverse Mortgage product for all potential mortgagees. If you are
interested in obtaining more information on this type of product, please click
here for
a list of informative web links.
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Although CalSTRS does not currently offer a Reverse Mortgage program, we have
researched this product in order to answer your questions and provide you with
general and unbiased information. Regarding the costs of a Reverse Mortgage, to
begin with you can expect to pay some of the same fees as you do with a regular,
or forward mortgage, including title or escrow fees, appraisal fee, and a
document preparation fee. In addition, almost all lenders charge an origination
fee, which can range from 0.5% to 2% of the home value or maximum lending
amount. FHA's Home Equity Conversion Mortgage (HECM) requires a mortgage
insurance premium, which is charged in two parts:
- 2% of your home's value charged at closing and
- 0.5% is added to the interest rate charged on your rising loan balance.
There is also a monthly servicing fee which can range from $15 to $35
per month, depending on the lender and the program. In most cases all of the
fees involved in obtaining a Reverse Mortgage can be "financed," that is, they
can be paid from the proceeds of the loan.
It is important to shop around and compare costs. Reverse Mortgage lenders
should provide you with a total amount loan cost or TALC rate which is the
projected annual average cost of a Reverse Mortgage, including all itemized
costs. As more lenders enter the Reverse Mortgage marketplace, there should be
more competitive costs associated with these programs.
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CalSTRS does not offer a mortgage program that involves the usage of any
portion of your CalSTRS pension funds. Instead, we offer the Zero-Down, 95/5 and
the 80/17 down payment assistance programs, which do not put any portion of your
retirement funds at risk.
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CalSTRS now offers the services of SMARTMOVE to provide you with the
opportunity of receiving high-quality, professional real estate assistance and
CASH REBATES. When you contact a SMARTMOVE Coordinator, you will receive a
knowledgeable counselor serving as your advocate and central contact throughout
your transaction. Based on your needs your SMARTMOVE coordinator can match you
with a real estate professional in your current area to help you sell your home,
and a real estate professional at your destination to help you find your new
home. All real estate professionals in the program are experienced and have been
specially trained to offer the quality of service required by CalSTRS and
SMARTMOVE
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You can call SMARTMOVE at 1-888-778-2168 and mention you are a member of
CalSTRS, and have applied for a CalSTRS Home Loan. A SMARTMOVE Coordinator will
explain the program guidelines in order for you to qualify for a cash rebate.
Whether you are buying, or selling, you will receive a cash rebate for EACH
transaction. **
**(This program is available nationwide. Although rebates are prohibited in
some states, members are eligible to receive real estate services. In some
cases, rebates on new construction purchases are calculated on base price, not
upgraded price).
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