Loan FAQs

What’s the difference between a Fixed-Rate and Adjustable-Rate Mortgage (ARM)?
A fixed-rate loan keeps the same interest rate for the life of the loan. An ARM starts with a lower rate that adjusts periodically based on an index, with caps to prevent large increases.

How can my payment change with an ARM?
Your monthly payment may rise or fall each year based on rate changes defined in your loan terms.

What’s the difference between Pre-Qualification and Pre-Approval?
Pre-Qualification is an initial financial check; Pre-Approval means the loan has been fully underwritten and is ready to close.

What’s the difference between interest rate and APR?
The interest rate is what you pay on the loan; APR includes interest plus fees, giving a fuller picture of the loan’s cost.

What are points?
Points are upfront fees you pay to lower your loan’s interest rate. One point equals 1% of your loan amount.

What is the origination fee?
A fee the bank charges for processing your loan, usually a percentage of the loan amount.

Do I have to live in Tucumcari to finance through Tucumcari Federal?
No. We serve Quay County and several surrounding counties in NM and the Texas Panhandle.

Do I have to be prequalified to buy a home?
Not required, but helpful to understand your budget before house hunting.

How much money do I need to buy a home?
Typically, 10–20% of the home price plus closing costs.

What is a down payment?
The amount you pay upfront toward your home’s purchase price. The loan covers the rest.

How long does it take to get a mortgage?
Usually 45–60 days from application to funding.

Can I choose my own Title Company, Pest Inspector, or Appraiser?
Yes for title and pest inspection. Appraisers must be from our approved list.

What documents are required to get a loan?
Usually includes pay stubs, W-2s, tax returns, bank statements, and ID.

What does the underwriter do?
Reviews your financials, verifies documentation, and checks for risk to approve the loan.

What are closing costs?
Fees for processing your loan, including appraisal, inspections, insurance, taxes, and title.

How much are closing costs?
They vary, but we aim to keep them low. Appraisal and pest inspection are fixed; the rest depends on your loan.

When is my mortgage payment due?
Payments are due on the 1st. Auto-pay is available from the 1st–15th, but late after the 15th.

How does an Escrow Account work?
Part of your monthly payment goes into escrow to cover taxes and insurance, which we pay for you when due.

How does an appraisal work?
An unbiased estimate of your home’s value based on condition, comps, and location.

What does a pest inspector do?
Inspects your home for signs of pests, mold, and wood decay. Treatment may be required if issues are found.

What does a home inspector do?
Examines your home’s systems and structure. If issues are found, repairs may be needed before closing.

What is a credit score and how can I improve it?
A number that shows how likely you are to repay debt. Improve it by paying on time and managing credit well.

What should I avoid concerning credit during home buying?
Avoid new credit lines or large purchases—they can affect your score and loan approval.

What are front-end and back-end ratios?
Front-end: % of income spent on housing. Back-end: % of income spent on all monthly debts.

What’s the difference between mortgage insurance and homeowners insurance?
Mortgage insurance protects the lender; homeowners insurance covers your property from damage or loss.

What’s an escrow account and what does it do?
It collects part of each mortgage payment to cover taxes and insurance, which we pay on your behalf.

How do you protect my financial information?
We verify identity, monitor for fraud, and secure your information under strict privacy policies. Let us know if you see suspicious activity—we’re here to help.