Frequently Asked Questions
About Homeownership Program

How are interest rates determined?

Interest rates fluctuate based on a variety of factors, including inflation, the pace of economic growth, and Federal Reserve policy. Over time, inflation has the largest influence on the level of interest rates. A modest inflation rate will almost always lead to low-interest rates, while concerns about rising inflation normally cause interest rates to increase. Our nation’s central bank, the Federal Reserve, implements policies to keep inflation and interest rates relatively low and stable.

An adjustable-rate mortgage, or an “ARM” as they are commonly called, is a loan type that offers a lower initial interest rate than most fixed-rate loans. The trade-off is that the interest rate can change periodically, usually in relation to an index, and the monthly payment will go up or down accordingly.

For many people in a variety of situations, an ARM is the right mortgage choice, particularly if your income is likely to increase in the future or if you only plan on being in the home for three to five years.

Selecting a mortgage may be the most important financial decision you will make, and you are entitled to all the information you need to make the right decision. Don’t hesitate to contact a Mortgage Loan Originator if you have questions about the features of our adjustable-rate mortgages.

You can lock in your interest rate as soon as your loan is approved, and you pay the application deposit to cover the cost of your appraisal and credit report. The application deposit is not another fee, it’s just the appraisal cost estimate and will be credited to the actual appraisal cost at your closing. If you complete your application today, and your request is approved, you’ll have the opportunity to pay the application deposit and can lock in your great rate immediately.

If we need to review your information before providing your loan approval, a Mortgage Loan Originator will contact you and you’ll have the opportunity to lock your rate.

Is there a fee charged or any other obligation if I complete an online application?

There’s no cost or obligation at all for completing our online application. We will provide a Loan Estimate disclosing the fees associated with the loan and collected at closing. After reviewing, you can decide if you would like to move forward with your application.

Are there any prepayment penalties charged for these loan programs?

None of the loan programs we offer have penalties for prepayment. You can pay off your mortgage at any time with no additional charges

A home loan often involves many fees, such as the appraisal fee, title charges, closing fees, and state or local taxes. These fees vary from state to state and from lender to lender. Any lender should be able to give you an estimate of their fees.

The function of a title insurance company is to make sure your rights and interests in the property are clear, that the transfer of title takes place efficiently and correctly, and that your interests as a homebuyer are fully protected.

Private mortgage insurance makes it possible for you to buy a home with less than a 20% down payment by protecting the lender against the additional risk associated with low down payment lending.

The mortgage insurance premium is based on loan to value ratio, type of loan, and amount of coverage required by the lender. Usually, the premium is included in your monthly payment and one month of the premium is collected as a required advance at closing.

It may be possible to cancel private mortgage insurance at some point, such as when your loan balance is reduced to a certain amount – below 80% of the property value. Recent Federal Legislation requires automatic termination of mortgage insurance for many borrowers when their loan balance has been amortized down to 78% of the original property value. If you have any questions about when your mortgage insurance could be canceled, please contact your Mortgage Loan Originator.

Can I apply for a loan before I find a property to purchase?

Yes, applying for a mortgage loan before you find a home may be the best thing you could do! If you apply for your mortgage now, we’ll issue an approval subject to you finding the perfect home. You can use the pre-qualification letter to assure real estate agents and sellers that you are a qualified buyer. Having a pre-qualification for a mortgage may give more weight to any offer to purchase that you make.

When you find the perfect home, you’ll simply call your Mortgage Loan Originator to complete your application. You’ll have an opportunity to lock in our great rates and fees then and we’ll complete the processing of your request.

Credit scores used for mortgage loan decisions range from approximately 300 to 900. Generally, the higher your credit score, the lower the risk that your payments won’t be paid as agreed.

Some of the things that affect your credit score include your payment history, your outstanding obligations, the length of time you have had outstanding credit, the types of credit you use, and the number of inquiries that have been made about your credit history in the recent past.

Using credit scores to evaluate your credit history allows us to quickly and objectively evaluate your credit history when reviewing your loan application. However, there are many other factors when making a loan decision and we never evaluate an application without looking at the total financial picture of a customer.

An abundance of credit inquiries can sometimes affect your credit scores since it may indicate that your use of credit is increasing.

But don’t overreact! The data used to calculate your credit score doesn’t include any mortgage or auto loan credit inquiries that are made within the 30 days prior to the score being calculated. In addition, all mortgage inquiries made in any 14-day period are always considered one inquiry. Don’t limit your mortgage shopping for fear of the effect on your credit score.

There is no charge to you for the credit information we’ll access with your permission to evaluate your application online. You will only be charged for a credit report if you decide to complete the application process after your loan is approved.

Yes, you can borrow funds to use as your down payment! However, any loans that you take out must be secured by an asset that you own. If you own something of value that you could borrow funds against such as a car or another home, it’s a perfectly acceptable source of funds. If you are planning on obtaining a loan, make sure to include the details of this loan in the Expenses section of the application.

Generally, the income of self-employed borrowers is verified by obtaining copies of personal (and business, if applicable) federal tax returns for the most recent two-year period.

We’ll review and average the net income from self-employment that’s reported on your tax returns to determine the income that can be used to qualify. We won’t be able to consider any income that hasn’t been reported as such on your tax returns. Typically, we’ll need at least a full two-year history of self-employment to verify that your self-employment income is stable.

Generally, only income that is reported on your tax return can be considered when applying for a mortgage.

If you own rental properties, we’ll generally ask for the most recent two year’s federal tax return to verify your rental income. We’ll review the Schedule E of the tax returns to verify your rental income, after all expenses.

If you haven’t owned the rental property for a complete two years, we’ll ask for a copy of any leases you’ve executed, and we’ll estimate the expenses of ownership.

Do I have to provide information about my child support, alimony, or separate maintenance income?

Information about child support, alimony, or separate maintenance income does not need to be provided unless you wish to have it considered for repaying this mortgage loan.

Typically, income from a second job will be considered if a two-year history of secondary employment can be verified.

I’m getting a gift from someone else. Is this an acceptable source of my down payment?

Gifts are an acceptable source of down payment if the gift giver is related to you or your co-borrower. We’ll ask you for the name, address, and phone number of the gift giver, as well as the donor’s relationship to you.

If your loan request is for more than 80% of the purchase price, we’ll need to verify that you have at least 5% of the property’s value in your own assets.

Prior to closing, we’ll verify that the gift funds have been transferred to you by obtaining a copy of your bank receipt or deposit slip to verify that you have deposited the gift funds into your account.

If you’ve had a bankruptcy or foreclosure in the past, it may affect your ability to get a new mortgage. Unless the bankruptcy or foreclosure was caused by situations beyond your control, we will generally require two years have passed since the bankruptcy or foreclosure. It is also important that you’ve re-established an acceptable credit history with new loans or credit cards

Any student loan should be included in the application. If you are not sure exactly what the monthly payment will be at this time, enter an estimated amount.

What happens at a loan closing?

During the closing, you will be reviewing and signing several loan papers. The closing attorney conducting the closing should be able to answer any questions you have, or you can feel free to contact your Mortgage Loan Originator if you prefer.

Yes, copies of the documents you will sign can be requested in advance by contacting your mortgage loan originator.

The closing will take place at the office of an attorney who will act as our agent. If you are purchasing a new home, the seller will also be at the closing to transfer ownership to you.

We use a network of attorneys to conduct our loan closings. We’ll schedule your closing to take place in a location that is located near your home for your convenience.

We’ll deliver our loan documents to the attorney prior to closing so they’ll have plenty of time to prepare for your closing.

Can I make monthly payments with an automated debit from my checking account?

Automated monthly payments are available. Your Mortgage Loan Originator will discuss your payment options with you prior to your loan closing.

What is an appraisal and who completes it?

To determine the value of the property you are purchasing or refinancing, an appraisal will be required. An appraisal report is a written description and estimate of the value of the property. National standards govern not only the format for the appraisal; they also specify the appraiser’s qualifications and credentials. In addition, most states now have licensing requirements for appraisers evaluating properties located within their states.

As soon as we receive your appraisal, we’ll update your loan with the estimated value of the home. As a standard practice, we will provide a copy of your appraisal prior to your closing.

Since the value and marketability of condominium properties is dependent on items that don’t apply to single-family homes, there are some additional steps that must be taken to determine if condominiums meet our guidelines.

One of the most important factors is determining if the project that the condominium is in is complete. In many cases, it will be necessary for the project, or at least the phase that your unit is in, to be complete before we can provide financing. The main reason for this is, until the project is complete, we can’t be certain that the remaining units will be of the same quality as the existing units. This could affect the marketability of your home.

In addition, we’ll consider the ratio of non-owner-occupied units to owner-occupied units. This could also affect future marketability since many people would prefer to live in a project that is occupied by owners rather than renters.

We’ll also carefully review the appraisal to ensure that it includes comparable sales of properties within the project, as well as some from outside the project. Our experience has found that using comparable sales from both the same project as well as other projects gives us a better idea of the condominium project’s marketability.

Depending on the percentage of the property’s value you’d like to finance, other items may also need to be reviewed.

Both a home inspection and an appraisal are designed to protect you against potential issues with your new home. Although they have totally different purposes, it makes the most sense to rely on each to help confirm that you’ve found the perfect home.

The appraiser will make note of obvious construction problems such as termite damage, dry rot or leaking roofs or basements. Other obvious interior or exterior damage that could affect the salability of the property will also be reported.

However, appraisers are not construction experts and won’t find or report items that are not obvious. They won’t turn on every light switch, run every faucet or inspect the attic or mechanicals. That’s where the home inspector comes in. They generally perform a detailed inspection and can educate you about possible concerns or defects with the home.

Accompany the inspector during the home inspection. This is your opportunity to gain knowledge of major systems, appliances, and fixtures, learn maintenance schedules and tips, and to ask questions about the condition of the home.

Federal Law requires all lenders to investigate whether each home they finance is in a special flood hazard area as defined by FEMA, the Federal Emergency Management Agency. The law can’t stop floods. Floods happen anytime, anywhere. But the Flood Disaster Protection Act of 1973 and the National Flood Insurance Reform Act of 1994 help to ensure that you will be protected from financial losses caused by flooding.

We use a third-party company who specializes in the reviewing of flood maps prepared by FEMA to determine if your home is in a flood area. If it is, then flood insurance coverage will be required since standard homeowner’s insurance doesn’t protect you against damages from flooding.

Licensed appraisers who are familiar with home values in your area perform appraisals. We order the appraisal as soon as the application deposit is paid. Generally, it takes 10-14 days before the written report is sent to us. We follow up with the Appraisal Management company to ensure that it is completed as soon as possible. An interior inspection of the home is necessary. The appraiser should contact you to schedule a viewing appointment. If you don’t hear from the appraiser within three days of the order date, please inform your Mortgage Loan Originator or Processor. If you are purchasing a new home, the appraiser will contact the real estate agent, if you are using one, or the seller to schedule an appointment to view the home.