# Loan Payment FAQs (Frequently Asked Questions)

## FAQs

Certificates of deposit (CD)

Q:  What is the penalty for terminating a certificate of deposit before its maturity date?

A: There is a penalty for each certificate that is terminated before its maturity date. The penalty consists of two months of interest for all certificates of \$25,000 and more. All certificates under \$25,000 the penalty is \$50 for each \$5,000 amount. Please see examples below.

EXAMPLE

Certificate for \$5,000.00 @ 3% interest for five years.

In this case, the penalty is \$50.00.

Certificate for \$10,000.00 @ 3% interest for five years.

In this case, the penalty is \$100.00.

Certificate for \$20,000.00 @ 3% interest for five years.

In this case, the penalty is \$200.00.

Certificate for \$50,000.00 @ 3% interest for five years.

50,000.00 at 3% is \$1,500.00 per year

1,500.00 divided by 12 months is \$125.00 per month

Two months at \$125.00 each month is \$250.00.

In this case, the penalty is \$250.00.

*Please note the situation changes from one certificate to another due to the amount of the certificate and interest rate paid.

Q: Can a portion of CD be terminated before maturity as opposed to terminating in full?

A: A minimum of \$5,000 is required to maintain a CD, as such a portion can be terminated given the remaining balance is a minimum of \$5,000.

Mortgage Loans

Q: How does interest apportionment per payment positively correlate with remaining loan balance?

A: The term Interest Apportionment refers to the manner in which a payment is split or applied between loan interest and loan principal.

Once you begin paying down your loan, you may notice that the interest apportionment per payment varies from month to month; it shrinks or grows based on the timing and amount of your previous payment. This is because the interest apportionment is positively correlated with the remaining principal balance on the loan. In effect, if you are on-time with payments and meet the minimum payment on your loan each month, the principal loan balance and the interest apportionment will consistently shrink. Timely payments and payments made in excess of the monthly minimum will equate to less interest (and more principal) per payment. Adversely, missed, late, or insufficient payments will result in increased interest per payment.

Q: How do I pay down the principal balance of my mortgage loan?

A:  If you plan to make payments in excess of the monthly minimum, you may wish to have the excess applied exclusively towards the principal. If so, please use a separate check to make that excess payment.

For example, use auto-pay or a check to pay your std. monthly minimum, then use an additional check to pay the excess.

You may enclose them in the same envelope or send the excess payment after the minimum payment.

When using this method, the interest will be apportioned (split up) only for the first check or the auto-pay, but the second check will go exclusively towards principal (no split). Please write “Principal payment” in the memo of your check.

Q: What is a manual payment?

A: Making a manual payment on your mortgage entails paying with any method other than our auto-pay system. For example, drafting a check, paying in cash, or using a money order.

Q: How to make a manual payment?

A: Please make manual payments out to Penn South Federal Credit Union (PSFCU). Also, remember to write your Account # in the memo. Cash payments may be accepted only in person (handed off to the Teller during Credit Union hours). We will not accept very large cash payments.

*NEVER DROP YOUR LOAN PAYMENT IN THE MAINTENANCE BILL DROPBOXES; it will get misapplied to your carrying charges if you do so (those envelopes are sent to housing company’s billing agency)

MANUAL PAYMENT DELIVERY OPTIONS:

1. DROP OFF IN-PERSON:you may drop off your payment with the receptionist at 321 Eighth Avenue, New York, NY 10001. Make sure to enclose your payment in an ENVELOPE CLEARLY MARKED “CREDIT UNION.” Do not use this method for cash payments (unless you are doing it during our hours of operation).
2. MAIL-IN: You may mail your payment to the following address:Penn South Federal Credit Union 321 Eighth Avenue, New York, NY 10001.

Q: How to set up automatic payments?

A: Drop by (during credit union hours) after the closing with a blank/voided check and fill out the Credit Union’s auto-pay form. Select a date (between the 1st & 10th of the month) that you would like the funds to be withdrawn on. Upon completion of the form, attach the voided check to it. Once the Credit Union receives your completed form, we will create an auto-pay account on our computer system and transfer your data to the automatic billing company. From that point, it typically takes two to three months for the automatic payments to take effect (so you’ll have to make [2-3] manual payments in the interim).You will get a slip in the mail once the auto-pay takes effect, but keep checking your bank balance (between the 1st & the 10th) that month to ensure that it has been deducted.

Q: What is the distinction between the loan due date and auto-pay date?

A: Your payment is due every month on the same date that your apt. closing (initiation date/first payment = 1 month after closing), but your auto-pay date is scheduled independent of that fact (you should keep the due date in mind when scheduling the deduction date, and make sure that it falls before the due date, but auto-payments can only come out within a certain date range [the first 10 days of the month] so you will not always be able to match the exact due date.

Q: How do I access my payment amount and due date information?

A: You received an amortization statement with the amount due (it is a schedule of all forecasted payments), the minimum monthly dollar amount due is listed on that document. Your due date is the same as your closing date. More specifically, your first due date is exactly one month from your closing date and every month thereafter until the loan balance has been satisfied. WE DO NOT SEND OUT BILLS.

Members Account

Q: Are my savings federally insured?

A: Your savings federally insured to at least \$250,000 and backed by the full faith and credit of the United States Government. For more information please click here.