PART ONE – MORTGAGE BASICS

Q: What is Private Mortgage Insurance (PMI)? 

A: Private Mortgage Insurance (PMI) protects the lender if a borrower fails to make payments. PMI is typically required for conventional loans with less than a 20% down payment. However, there are ways to remove PMI. Learn more about how to remove PMI and reduce your mortgage payment. 

Q: What is Homeowners Insurance (HOI)? 

A: Homeowners Insurance (HOI) is a required insurance that protects the homeowner in the event of damage, loss or liability. It is typically included in your monthly payment and paid through your escrow account but can be paid directly. Learn how the home insurance claim process works.  

 Q: What is the difference between PMI and HOI? 

A: PMI protects the lender if you stop making payments, while HOI protects you from property damage or liability. Click here to understand more about the difference between the two.  

Q: What is a 1098 Mortgage Interest Statement, and where can I find it? 

A: Form 1098 is a Mortgage Interest Statement Lenders use to report mortgage interest, points, and mortgage insurance premiums of $600 or more paid by a borrower during the tax year. Homeowners who itemize their deductions can use the information on this form to claim the home mortgage interest deduction on Schedule A of their tax return. Your Form 1098 is available in Online Banking if you are enrolled in e-statements, and a paper copy is mailed by January 31 each year. 

PART TWO – ESCROW ACCOUNTS

Q: What is an escrow account? 

A: An escrow account is used to collect and pay your property taxes and homeowners insurance. Each month, a portion of your mortgage payment automatically goes into this account so the funds are available when those bills come due. 

Q: What is an escrow analysis? 

A: An escrow analysis, also called a "Tax and Insurance Account Disclosure Statement,"  is a review of your escrow account to confirm that enough funds are available for projected taxes and insurance. The statement includes an analysis of the prior year's escrow account history comparing projected account activity with actual escrow activity, and a page of estimated future escrow payments and disbursements. It’s important to note that this analysis could result in an increase or decrease in your mortgage payment. Learn more about escrow statements and the annual escrow analysis process.  

Q: Why do I have an escrow shortage? 

A: An escrow shortage occurs when there is not enough money in your escrow account to cover upcoming property tax or insurance payments. This can happen if taxes or insurance premiums increased, or if there was an unexpected expense such as a mid-year insurance change. If your account has a shortage, it can be paid in full or spread out over a 12-month period. Learn more about how to manage an escrow shortage. 

Q: Why do I have an escrow deficiency? 

A: An escrow deficiency means your escrow account had a negative balance at some point, typically because funds were not sufficient to cover required tax or insurance payments. Desert Financial typically advances funds to your account so that those payments are still made on time. Similar to an escrow shortage, you may repay the deficiency in full or over a 12-month period. Learn more about how to manage an escrow deficiency.  

Q: Why do I have an escrow surplus? 

A: An escrow surplus occurs when there is more money in your escrow account than needed for projected escrow expenses. This can occur for many reasons, including a decrease in property taxes or insurance premiums, or perhaps an extra payment was made to your escrow account. If your surplus is $50 or more, Desert Financial will issue a refund to you. If it is less than $50, the amount will remain in your escrow account. Learn more about how to manage an escrow surplus. 

PART THREE – MORTGAGE PAYMENTS AND TERMS 

Q: Where can I find my mortgage statement? 

A: If you’re enrolled in e-statements, you can access your monthly statements through Online Banking. If you opted out of e-statements, then paper statements are physically mailed to your address on file.  

Q: Can I change my mortgage due date? 

A: No. Mortgage payments are due on the 1st of each month with a 15-day grace period. Due dates cannot be changed.  

Q: What should I do if I am struggling to make my mortgage payments? 

A: If you are having difficulty making payments, contact Desert Financial as soon as possible at (602) 335-6295. The earlier we hear from you, the more we can help.  

Q: What is loss mitigation? 

A: Loss mitigation refers to assistance options available if you are struggling to make your mortgage payments. Common options include repayment plans, forbearance, loan modifications, deeds in lieu of foreclosure and short sales. Call Desert Financial at (602) 335-5676 and let us walk you through the options. 

Q: Why did my mortgage payment change? 

A: Even with a fixed interest rate, your total mortgage payment can change if your property taxes or home insurance premiums increase or decrease. These bills are paid through your escrow account, so adjustments are made to ensure that enough funds are available. Learn more about what causes mortgage payments to change.  

Q: Can I cancel my PMI to reduce my mortgage payment? 

A: Yes, you can. Private Mortgage Insurance (PMI) can be cancelled in one of two ways.

1. Borrower-requested cancellation: You may request that PMI be removed once your principal balance reaches 80% of the home’s original value. A good payment history, proof of home value and no subordinate liens are required.
2. Automatic Termination: Your PMI will be removed automatically once your principal balance reaches 78% of the original home value based on the original amortization schedule. Note that additional payments made to your principal will not be included in the automatic termination schedule.  

Learn more about how to remove PMI.  

Q: What is a mortgage recast, and how is it different from refinancing? 

A: A mortgage recast allows you to apply a one-time lump-sum payment to your principal. Your monthly payment is then recalculated based on the lower balance, while your interest rate and term remain the same. Refinancing replaces your existing loan with a new one and may change your interest rate, loan type or term. Learn more about your options to recast or refinance.  

Q: What is a principal payment, and how can it help me reduce my mortgage? 

A: A principal payment is an additional amount you pay directly toward your loan's principal balance. Principal payments help pay off your mortgage faster and reduce total interest paid. They do not reduce your required monthly payment unless you recast. Learn more about how extra mortgage payments can save you thousands.  

Q: Can I make bi-weekly payments? 

A: Desert Financial does not offer a formal bi-weekly payment program, but you can manually make bi-weekly payments by paying half your monthly amount every two weeks. This results in one extra full payment per year, helping pay off the loan faster. Learn more about how bi-weekly payments can help shorten your mortgage term.  

Q: Can I pay off my mortgage early? 

A: Yes. Desert Financial has no prepayment penalties on mortgage loans. You may make additional payments or pay off your loan in full at any time without fees.  

Q: Is my mortgage loan assumable? 

A: No. Desert Financial first mortgage loans are not assumable. 

Q: Can I remove a borrower from my mortgage? 

A: No. A borrower cannot be removed unless the loan is paid in full or refinanced. 

PART FOUR – HOMEOWNERS INSURANCE AND LIABILITY  

Q: I changed my homeowners insurance company — what should I do?  

A: If you change insurers, please send your new declaration page to Desert Financial. It must include policyholder name, property address, coverage dates, premium amount, loan number and list the mortgagee clause: 
 
Desert Financial Credit Union   
ISAOA/ATIMA   
P.O. Box 2130   
Sioux City, IA 51104 
 
If your insurance is escrowed, deposit any refund from your old policy back into your escrow account to avoid an escrow shortage.  
 
To make updates, log on to myinsuranceinfo.com and update your account with new policy information, or email it to firstmortgageservicing@desertfinancial.com. 

Q: What should I do if my home is damaged by fire, storm or theft? 

A: Contact your insurance company immediately to file a claim. An insurance adjuster will visit your home to examine the damages and file an adjuster’s report, which will document the amount of loss. If the insurance company agrees, they will issue a check based on the adjuster’s recommendation. Learn more about the insurance claim process and how to file a claim step-by-step.

PART FIVE – MORTGAGE SERVICING   

Q: Does Desert Financial service my mortgage?   

A: Yes, Desert Financial retains servicing on most mortgage loans except FHA loans. Learn more about the value to you when Desert Financial services your mortgage.  

Q: What advantages do I have when Desert Financial services my loan? 

A: Desert Financial Credit Union offers local mortgage servicing through a team of in-house underwriting and processing experts, which can lead to quicker closings and more attentive service for our members. This local approach provides benefits such as: 

• In-house loan decisions: Loan decisions are made in-house by our staff, who are familiar with local market and economic trends. 
• Faster decisions: With a centralized local staff, our team is able to make quicker decisions and get processes started faster. 
• In-house processing: We handle our own underwriting and processing, which helps streamline the mortgage process.  
• Arizona-focused: We’re the largest local credit union headquartered in Arizona, catering specifically to residents in the state.