Your Property
When you buy or refinance a home, the property is used as collateral for the loan. Here's what the lender is looking for and why.-
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. Usually the appraiser will inspect both the interior and exterior of the home.
After the appraiser inspects the property, they will compare the qualities of your home with other homes that have sold recently in the same neighborhood. These homes are called "comparables" and play a significant role in the appraisal process. Using industry guidelines, the appraiser will try to weigh the major components of these properties (i.e., design, square footage, number of rooms, lot size, age, etc.) to the components of your home to come up with an estimated value of your home. -
Are there any special requirements for condominiums?
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 located in is complete. In many cases, it will be necessary for the project, or at least the phase that your unit is located 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 insure 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. -
I'm purchasing a home, do I need a home inspection AND an appraisal?
Huron Community Bank does not require a home inspection, but does recommend one to protect your against potential issues with your new home. Although both a home inspection and an appraisal are designed to protect you against potential issues with your new home, they have different purposes.
The Appraisal will note obvious construction issues or problems that the appraiser notices with the home that may affect the salability of the property. 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.
Some borrowers like to join the inspector at the home during the 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.
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I've heard that some lenders require flood insurance on properties. Will you?
Federal Law requires all lenders to investigate whether or not 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 located 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.
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How long does it take for the property appraisal to be completed?
Licensed appraisers who are familiar with home values in your area perform appraisals. We order the appraisal as soon as all documentation is received and you have provided the intent to proceed. Generally, it takes 10-14 days before the written report is sent to us. We follow up with the appraiser to insure that it is completed as soon as possible. If you are refinancing, and 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 seven days of the order date, please inform your Mortgage Loan Originator. 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.
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Does Huron Community Bank provide financing for manufactured homes?
We define manufactured housing as housing units that are factory built with a steel undercarriage that remains as a structural component and limits the structure to a single story. These types of manufactured homes are sometimes known as mobile homes. We do not consider other factory-built housing (not built on a permanent chassis), such as modular, prefabricated, panelized, or sectional housing, to be manufactured housing. If your home is one of these types, please complete the application indicating that your home is a single family home.
In order to qualify for our loan programs a manufactured home must meet the following requirements:
- A manufactured home is any dwelling built on a permanent chassis and attached to a permanent foundation system.
- Be a one-family dwelling that is legally classified as real property.
- The towing hitch, wheels, and axles must have been removed and the home must be permanently attached to a foundation system that meets state and local codes as well as the manufacturer’s requirements.
- Foundation system must be appropriate for the soil conditions for the site and meet local and state codes.
- The land on which the manufactured home is situated must be owned by you. We do not provide financing for manufactured homes located on rented or leased land.
- Must have been built in compliance with the Federal Manufactured Home Construction and Safety Standards that were established June 15, 1976. Generally, compliance with these standards will be evidenced by the presence of a HUD Data Plate that is affixed near the main electrical panel of the home or in another readily accessible and visible location.
- Must be at least double-width, 24 feet wide, and have a minimum 600 square feet of gross living area. Must be acceptable to typical purchasers in the market area.
- A manufactured home is any dwelling built on a permanent chassis and attached to a permanent foundation system.
Loans, Rates & Fees
When it comes to home financing, there are many different options to choose from. How do you find the loan that's best for you? Here is some information to help you.-
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 rate of inflation 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 designed to keep inflation and interest rates relatively low and stable.
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What is an adjustable rate mortgage?
An adjustable rate mortgage, or an "ARM" as they are commonly called, is a loan type that may offer a lower initial interest rate than most fixed rate loans. The interest rate can change periodically, usually in relation to an index, and the monthly payment may go up or down accordingly.
You should weigh the risk that an increase in interest rates would lead to higher monthly payments in the future.
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 a short period of time.
Here's some detailed information explaining how ARM's work.
Adjustment PeriodWith most ARMs, the interest rate and monthly payment are fixed for an initial time period such as three years, five years, or seven years. After the initial fixed period, the interest rate can change every year. For example, one of our most popular adjustable rate mortgages is a five-year ARM. The interest rate will not change for the first five years (the initial adjustment period) but can change every year after the first five years.
IndexOur ARM interest rate changes are tied to changes in an index rate. Using an index to determine future rate adjustments provides you with assurance that rate adjustments will be based on actual market conditions at the time of the adjustment. The current value of most indices is published weekly in the Wall Street Journal. If the index rate moves up so does your mortgage interest rate, and you will probably have to make a higher monthly payment. On the other hand, if the index rate goes down your monthly payment may decrease.
MarginTo determine the interest rate on an ARM, we'll add a pre-disclosed amount to the index called the "margin." If you're still shopping, comparing one lender's margin to another's can be more important than comparing the initial interest rate, since it will be used to calculate the interest rate you will pay in the future.
Interest-Rate CapsAn interest-rate cap places a limit on the amount your interest rate can increase or decrease. There are two types of caps:
1. Periodic or adjustment caps, which limit the interest rate increase or decrease from one adjustment period to the next.2. Overall or lifetime caps, which limit the interest rate increase over the life of the loan.
As you can imagine, interest rate caps are very important since no one knows what can happen in the future. All of the ARMs we offer have both adjustment and lifetime caps. Please see each product description for full details.
Prepayment PenaltiesSome lenders may require you to pay special fees or penalties if you pay off the ARM early. We never charge a penalty for prepayment.
Contact a Mortgage Loan OriginatorSelecting 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.
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Is there a fee charged or any other obligation if I complete the online application?
No fee is charged and you are not under any obligation to us when completing our online application.
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What is your Rate Lock Policy?
General Statement
The interest rate market is subject to movements without advance notice.
Lock-In AgreementA lock is an agreement by the borrower and the lender and specifies the number of days for which a loan's interest rate are guaranteed. Should interest rates rise during that period, we are obligated to honor the committed rate. Should interest rates fall during that period, the borrower must honor the lock.
Fees
We do not charge a fee for locking in your interest rate.
Lock Period
We currently offer 30 and 45 day lock-in periods. This means your loan must close and disburse within this number of days from the day your lock is confirmed by us.
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What is title insurance and why do I need it?
If you've ever purchased a home before, you may already be familiar with the benefits and terms of title insurance. But if this is your first home loan or you are refinancing, you may be wondering why you need another insurance policy.
The answer is simple: The purchase of a home is most likely one of the most expensive and important purchases you will ever make. You, and especially your mortgage lender, want to make sure there is no encumbrance on your property.
The function of a title insurance company is to make sure your rights and interests to the property are clear, that transfer of title takes place efficiently and correctly, and that your interests as a homebuyer are fully protected.
Title insurance companies provide services to buyers, sellers, real estate developers, builders, mortgage lenders, and others who have an interest in real estate transfer. Title companies typically issue two types of title policies:
1) Owner's Policy. This policy covers you, the homebuyer.2) Lender's Policy. This policy covers the lending institution over the life of the loan.
Both types of policies are issued at the time of closing for a one-time premium, if the loan is a purchase. If you are refinancing your home, you probably already have an owner's policy that was issued when you purchased the property, so we'll only require that a lender's policy be issued.
Before issuing a policy, the title company performs an in-depth search of the public records to determine if anyone other than you has an interest in the property. The search may be performed by title company personnel using either public records or, more likely, the information contained in the company's own title plant. After a thorough examination of the records, any title problems are usually found and most times cleared up prior to your purchase of the property.
The fact that title companies try to eliminate risks before they develop makes title insurance significantly different from other types of insurance. This risk elimination has benefits to both the homebuyer and the title company. It minimizes the chances that adverse claims might be raised, thereby reducing the number of claims that have to be defended or satisfied. This keeps costs down for the title company and the premiums low for the homebuyer. -
What is mortgage insurance and when is it required?
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. Low down payment mortgages are becoming more and more popular, and by purchasing mortgage insurance, lenders are comfortable with down payments as low as 3 - 5% of the home's value. It also provides you with the ability to buy a more expensive home than might be possible if a 20% down payment were required.
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 to two months 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 75% to 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 cancelled, please contact your Mortgage Loan Originator. -
What is the maximum percentage of my home's value that I can borrow?
The maximum percentage of your home's value depends on the purpose of your loan, how you use the property, and the loan type you choose, so the best way to determine what loan amount we can offer is to complete our online application!
Your Application
Applying for a mortgage can be very intimidating. You're asked specific details about your income, assets, and debts. Here we will give you information that will let you know how that information is used when applying for a mortgage.-
Will I be charged any fees if I authorize my credit information to be accessed?
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.
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Can I really borrow funds to use towards my down payment?
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.
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I'm self-employed. How will you verify my income?
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. -
Will my overtime, commission, or bonus income be considered when evaluating my application?
In order for bonus, overtime, or commission income to be considered, in most cases, you must have a history of receiving it for the past two years and it must be likely to continue. We'll usually need to obtain copies of W-2 statements for the previous two years and a recent pay stub to verify this type of income. If a major part of your income is commission earnings, we may need to obtain copies of recent tax returns to verify the amount of business-related expenses, if any. We'll average the amounts you have received over the past two years to calculate the amount that can be considered as a regular part of your income.
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I am retired and my income is from pension or social security. What will I need to provide?
Different types of documentation are required for certain types of retirement income. We will typically ask for award letters, check stubs or bank statements to confirm receipt and balance statements. Sometimes it will also be necessary to verify that this income will continue for at least three years since some pension or retirement plans do not provide income for life. This can usually be verified with a copy of your award letter. If you don't have an award letter, we can contact the source of this income directly for verification. Your Mortgage Loan Originator will give you direction on what documents will need to be supplied.
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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 a pre-qualification subject to you finding the perfect home. We'll issue a pre-qualification letter. You can use the pre-qualification letter to assure real estate brokers 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. -
If I have income that's not reported on my tax return, can it be considered?
Generally, only income that is reported on your tax return can be considered when applying for a mortgage. Unless, of course, the income is legally tax-free and isn't required to be reported.
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How will rental income be verified?
If you own rental properties, we'll generally ask for the most recent year's federal tax return to verify your rental income. We'll review the Schedule E of the tax return to verify your rental income.
If you haven't owned the rental property for a complete tax year, we'll ask for a copy of any leases you've executed and we'll estimate the expenses of ownership. -
I have income from dividends and/or interest. What documents will I need to provide?
Generally, two years personal tax returns are required to verify the amount of your dividend and/or interest income so that an average of the amounts you receive can be calculated. In addition, we will need to verify your ownership of the assets that generate the income using copies of statements from your financial institution, brokerage statements, stock certificates or Promissory Notes.
Typically, income from dividends and/or interest must be expected to continue for at least three years to be considered for repayment.
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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.
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Will my second job income be considered?
Income from a second job may be considered as long as it meets program requirements for length of time on the job.
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What can you expect when you apply for a mortgage?
First, you'll complete our online application!
The application will ask you questions about the home and your finances.
A Mortgage Loan Originator will contact you to introduce himself or herself and to answer any questions you may have. Your Mortgage Loan Originator is a mortgage expert and will provide help and guidance along the way. He or she will ask you for any information required to make a decision about your loan.
If you are purchasing a new home, the Mortgage Loan Originator will also contact the Real Estate Broker or the seller so that they'll know whom to contact with questions.
We'll send you an application package and prepare your loan for closing.
The application package will be sent to you and will contain papers for you to sign and a list of items we'll need to verify the information you provided about your finances during the online application.
We'll order the appraisal from a licensed appraiser who is familiar with home values in your area.
Title insurance will be necessary. If you're purchasing a home, we'll work with the real estate broker or seller to ensure the title work is ordered as soon as possible. If you are refinancing we'll take care of ordering the title work for you. We'll use the title insurance to confirm the legal status of your property and to prepare the closing documents.
We'll contact you to coordinate your closing date.
Once the loan has been approved, we'll contact you to schedule your loan closing. If you are purchasing a home, we'll also schedule the closing with the real estate broker and the seller.
The closing will take place at the office of a title company or attorney, who will work as our agent, or one of our bank branches in your area. A few days before closing, your Mortgage Loan Originator will contact you to walk through the final information so that there won't be any surprises at closing.
That's all there is to it! You're on your way to the most convenient home loan ever!
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I was in school before obtaining my current job. How do I complete the application?
If you were in school before your current job, enter the name of the school you attended and the length of time you were in school in the "length of employment" fields. You can enter a position of "student" and income of "0."
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If my property's appraised value is more than the purchase price can I use the difference towards my down payment?
When you are purchasing a home, we will use the lower of the appraised value or the sales price to determine your down payment requirement.
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I am selling my current home to purchase this home. What type of documentation will be required?
If you're selling your current home to purchase your new home, we'll ask you to provide a copy of the Closing Disclosure you'll receive at the closing to verify that your current mortgage has been paid in full and that you'll have sufficient funds for our closing. Often the closing of your current home is scheduled for the same day as the closing of your new home. If that's the case, we'll just ask you to bring your settlement statement with you to your new mortgage closing.
Closing & Beyond
Hurray! Your loan has been approved and your loan closing date has been set! This section will give you some idea of what to expect at closing and what happens after closing.-
What happens at the loan closing?
In most cases the closing will take place at the office of a title company or one of our branch offices in your area. If you are purchasing a new home, the seller may also be at the closing to transfer ownership to you, but in some cases, these two events actually happen separately.
During the closing you will be reviewing and signing several loan papers. The closing agent 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.
Huron Community Bank will provide you with your preliminary Closing Disclosure 3 business days prior to your closing for your review. It contains important information about your loan including the term, interest rate, closing costs, loan amount, and payment information.
The most important documents you will be signing at the closing include:Closing Disclosure
This document provides an itemized listing of the final fees charged in connection with your loan. If your loan is a purchase, the Closing Disclosure will also include a listing of any fees related to the transaction between you and the seller. If this loan will be a refinance, the Closing Disclosure will show the pay off amounts of any mortgages that will be paid in full with your new loan.
Promissory NoteThis is the document you sign to agree to repay your mortgage. The note will provide you with all of the details of your loan including the interest rate and length of time to repay the loan. It also explains the penalties that you may incur if you fall behind in making your payments.
Mortgage / Deed of TrustThis document pledges a property to the lender as security for repayment of a debt. Essentially this means that you will give your property up to the lender in the event that you cannot make the mortgage payments. The Mortgage restates the basic information contained in the note, as well as details the responsibilities of the borrower. In some states this is called a Deed of Trust.
If your loan is a refinance, Federal Law requires that you have three days to decide positively that you want a new mortgage after you sign the closing documents. This means that the loan funds won't be disbursed until three business days have passed. The closing agent will provide more details at the closing. -
I won't be able to attend the closing. What other options are there?
If you won't be able to attend the loan closing, contact your Mortgage Loan Originator to discuss other options. If someone you trust is able to attend on your behalf, you can execute a Power of Attorney so that this person can sign documents on your behalf. In some cases, we're able to mail you the documents in advance so that you can sign them and forward them to the closing agent. We're sure to have a solution that will work in your circumstances.
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If I apply, where will the closing take place?
We use a network of closing agents and 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 and your loan funds to the closing agent or attorney prior to closing so that they'll have plenty of time to prepare for your closing. -
Can I make my monthly payments with an automated debit from my checking account?
Automated monthly payments are available. At the loan closing an automated payment application will be provided by request. Simply return it at your earliest convenience to enroll in the automated payment program.
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