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Mortgage
 


Loan Programs, Rates & Fees
How are interest rates determined?
What is an adjustable rate mortgage?
Is comparing APRs the best way to decide which lender has the lowest rates and fees?
How much money will I save by choosing a 15-year loan rather than a 30-year loan?
Are there any prepayment penalties charged for these loan programs?
What is your Rate Lock Policy?
Tell me more about closing fees and how they are determined.
What is title insurance and why do I need it?
What is mortgage insurance and when is it required?
Should I pay discount points in exchange for a lower interest rate?
What is the maximum percentage of my home's value that I can borrow?


How are interest rates determined?
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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.

What is an adjustable rate mortgage?
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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.

Against the advantage of the lower payment at the beginning of the loan, you should weigh the risk that an increase in interest rates would lead to higher monthly payments in the future. It's a trade-off. You get a lower rate with an ARM in exchange for assuming more risk.

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.

Here's some detailed information explaining how ARM's work.

Adjustment Period

With most ARMs, the interest rate and monthly payment are fixed for an initial time period such as five years, seven years or ten years. After the initial fixed period, the interest rate can change every year or five years. For example, one of our offered adjustable rate mortgages is a 5/5 ARM. The interest rate will not change for the first five years (the initial adjustment period) but can change every five years after the first five years.

Index

Our 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.

Margin

To 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 Caps

An 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.

Negative Amortization

"Negative Amortization" occurs when your monthly payment changes to an amount less than the amount required to pay interest due. If a loan has negative amortization, you might end up owing more than you originally borrowed. None of the ARMs we offer allow for negative amortization.

Prepayment Penalties

Some lenders may require you to pay special fees or penalties if you pay off the ARM early. We never charge a penalty for prepayment.

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 Lending Representative at 800-342-3086 extension 1300 or 931-454-1300 if you have questions about the features of our adjustable rate mortgages.

Is comparing APRs the best way to decide which lender has the lowest rates and fees?
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The Federal Truth in Lending law requires that all financial institutions disclose the APR when they advertise a rate. The APR is designed to present the actual cost of obtaining financing, by requiring that some, but not all, closing fees are included in the APR calculation. In addition to the interest rate, these fees determine the estimated cost of financing over the full term of the loan. Since most people do not keep the mortgage for the entire loan term, it may be misleading to spread the effect of some of these up- front costs over the entire loan term.

Also unfortunately, the APR doesn't include all the closing fees and lenders are allowed to interpret which fees they include. Fees for things like appraisals, title work, and document preparation are not included even though you'll probably have to pay them.

For adjustable rate mortgages, the APR can be even more confusing. Since no one knows exactly what market conditions will be in the future, assumptions must be made regarding future rate adjustments.

You can use the APR as a guideline to shop for loans but you should not depend solely on the APR in choosing the loan program that's best for you. Look at total fees, possible rate adjustments in the future if you're comparing adjustable rate mortgages, and consider the length of time that you plan on having the mortgage.

Don't forget that the APR is an effective interest rate--not the actual interest rate. In addition, your rate and APR will be based on your creditworthiness and could be higher than the rate shown. Your APR and monthly payments will be based on the actual interest rate, the amount you borrow, and the term of your loan.

How much money will I save by choosing a 15-year loan rather than a 30-year loan?
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Compare Them Yourself

Use the "How much can I save with a 15 year mortgage?" calculator in our Resource Center to help decide which loan term is best for you.

A 15-year fixed rate mortgage gives you the ability to own your home free and clear in 15 years. And, while the monthly payments are somewhat higher than a 30-year loan, the interest rate on the 15-year mortgage is usually a little lower, and more important - you'll pay less than half the total interest cost of the traditional 30-year mortgage.

Don't feel alone, if you can't afford the higher monthly payment of a 15-year mortgage. Many borrowers find the higher payment out of reach and choose a 30-year mortgage. It still makes sense to use a 30-year mortgage for most people.

Who Should Consider a 15-Year Mortgage?

The 15-year fixed rate mortgage is most popular among younger homebuyers with sufficient income to meet the higher monthly payments to pay off the house before their children start college. They own more of their home faster with this kind of mortgage, and can then begin to consider the cost of higher education for their children without having a mortgage payment to make as well. Other homebuyers, who are more established in their careers, have higher incomes and whose desire is to own their homes before they retire, may also prefer this mortgage.

Advantages and Disadvantages of a 15-Year Mortgage

The 15-year fixed rate mortgage offers two big advantages for most borrowers:

You own your home in half the time it would take with a traditional 30-year mortgage.

You save more than half the amount of interest of a 30-year mortgage. Lenders usually offer this mortgage at a slightly lower interest rate than with 30-year loans - typically up to .5% lower. It is this lower interest rate added to the shorter loan life that creates real savings for 15-year fixed rate borrowers.

The possible disadvantages associated with a 15-year fixed rate mortgage are:

The monthly payments for this type of loan are roughly 10 to 15 percent higher per month than the payment for a 30-year.

Because you'll pay less total interest on the 15-year fixed rate mortgage, you won't have the maximum mortgage interest tax deduction possible.

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

What is your Rate Lock Policy?
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General Statement

The interest rate market is subject to movements without advance notice. Locking in a rate protects you from the time that your lock is confirmed to the day that your lock period expires.

Lock-In Agreement

A lock is an agreement by the borrower and the lender and specifies the number of days for which a loan's interest rate and discount points are guaranteed. Should interest rates rise during that period, we are obligated to honor the committed rate.

When Is My Rate Locked?

Your rate will be locked at the time a completed application is submitted.

Fees

We do not charge a fee for locking in your interest rate.

Lock Period

We currently offer a 60 day lock-in period. This means your loan must close and disburse within this number of days from the day your lock is confirmed by us. 

Lock Changes

We are not able to renegotiate lock commitments.

Tell me more about closing fees and how they are determined.
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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 also from lender to lender. Any lender or broker should be able to give you an estimate of their fees. We take quotes very seriously. We've completed the research necessary to make sure that our fee quotes are accurate for your local area.

To assist you in evaluating our fees, we've grouped them as follows:

Third Party Fees

Fees that we consider third party fees include the appraisal fee, the credit report fee, the settlement or closing fee, the survey fee, tax service fees, title insurance fees, flood certification fees, and courier/mailing fees.

Third party fees are fees that we'll collect and pass on to the person who actually performed the service. For example, an appraiser is paid the appraisal fee, a credit bureau is paid the credit report fee, and a title company or an attorney is paid the title insurance fees.

Typically, you'll see some minor variances in third party fees from lender to lender.

Taxes and Other Unavoidables

Fees that we consider to be taxes and other unavoidables include: State/Local Taxes and recording fees. These fees will most likely have to be paid regardless of the lender you choose.

Lender Fees

Fees such as discount points, document preparation fees, and loan processing fees are retained by the lender and are used to provide you with the lowest rates possible.

This is the category of fees that you should compare very closely from lender to lender before making a decision.

Required Advances

You may be asked to prepay some items at closing that will actually be due in the future. These fees are sometimes referred to as prepaid items.

One of the more common required advances is called "per diem interest" or "interest due at closing." For example, your payment due date is the 1st of the month and the loan is closed on June 15, we'll collect interest from June 15 through June 30 at closing. This also means that you won't make your first mortgage payment until August 1. This type of charge should not vary from lender to lender, and does not need to be considered when comparing lenders.

If an escrow or impound account will be established, you will make an initial deposit into the escrow account at closing so that sufficient funds are available to pay the bills when they become due.

If your loan requires mortgage insurance, an annual premium and up to two months of the mortgage insurance will be collected at closing. Whether or not you must purchase mortgage insurance depends on the size of the down payment you make.

If your loan is a purchase, you'll also need to pay for your first year's homeowner's insurance premium prior to closing. We consider this to be a required advance.

What is title insurance and why do I need it?
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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 the property is indeed yours: That no individual or government entity has any right, lien, claim, or 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.

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 can be cleared up prior to your purchase of the property. Once a title policy is issued, if any claim covered under your policy is ever filed against your property, the title company will pay the legal fees involved in the defense of your rights. They are also responsible to cover losses arising from a valid claim. This protection remains in effect as long as you or your heirs own the property.

The fact that title companies try to eliminate risks before they develop makes title insurance significantly different from other types of insurance. Most forms of insurance assume risks by providing financial protection through a pooling of risks for losses arising from an unforeseen future event, say a fire, accident or theft. On the other hand, the purpose of title insurance is to eliminate risks and prevent losses caused by defects in title that may have happened in the past.

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.

Buying a home is a big step emotionally and financially. With title insurance you are assured that any valid claim against your property will be borne by the title company, and that the odds of a claim being filed are slim indeed.

What is mortgage insurance and when is it required?
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Mortgage insurance should not be confused with mortgage life insurance, which is designed to pay off a mortgage in the event of a borrower's death. Mortgage insurance protects the lender against the additional risk associated with low down payment lending and may not be required on certain mortgage types.

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.

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 Lending Representative.

Should I pay discount points in exchange for a lower interest rate?
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Discount points are considered a form of interest. Each point is equal to one percent of the loan amount. You pay them, up front, at your loan closing in exchange for a lower interest rate over the life of your loan. This means more money will be required at closing however, you will have lower monthly payments over the term of your loan.

To determine whether it makes sense for you to pay discount points, you should compare the cost of the discount points to the monthly payments savings created by the lower interest rate. Divide the total cost of the discount points by the savings in each monthly payment. This calculation provides the number of payments you'll make before you actually begin to save money by paying discount points. If the number of months it will take to recoup the discount points is longer than you plan on having this mortgage, you should consider the loan program option that doesn't require discount points to be paid.

If you'd prefer not to make this calculation the "old-fashioned way," we have a discount points calculator!

What is the maximum percentage of my home's value that I can borrow?
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The maximum percentage of your home's value that you can borrow 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 on-line application. You may also contact one of our Mortgage Lending Representatives at 1-931-454-1300 or 1-800-342-3086, extension 1300 for personal assistance.



Your Application
What is a credit score and how will my credit score affect my application?
Will the inquiry about my credit affect my credit score?
Will I be charged any fees if I authorize my credit information to be accessed?
Are we right for you?
Can I really borrow funds to use towards my down payment?
I'm self-employed. How will you verify my income?
Will my overtime, commission, or bonus income be considered when evaluating my application?
I am retired and my income is from pension or social security. What will I need to provide?
Can I apply for a loan before I find a property to purchase?
If I have income that's not reported on my tax return, can it be considered?
How will rental income be verified?
I have income from dividends and/or interest. What documents will I need to provide?
Do I have to provide information about my child support, alimony or separate maintenance income?
Will my second job income be considered?
I've had a few employers in the last few years. Will that affect my ability to get a new mortgage?
I was in school before obtaining my current job. How do I complete the application?
I'm getting a gift from someone else. Is this an acceptable source of my down payment?
I am selling my current home to purchase this home. What type of documentation will be required?
I am relocating because I have accepted a new job that I haven't started yet. How should I complete the application?
I have student loans that aren't in repayment yet. Should I show them as installment debts?
How will a past bankruptcy or foreclosure affect my ability to obtain a new mortgage?
What, exactly, is an installment debt?


What is a credit score and how will my credit score affect my application?
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A credit score is one of the pieces of information that we'll use to evaluate your application. Financial institutions have been using credit scores to evaluate credit card and auto applications for many years, but only recently have mortgage lenders begun to use credit scoring to assist with their loan decisions.

Credit scores are based on information collected by credit bureaus and information reported each month by your creditors about the balances you owe and the timing of your payments. A credit score is a compilation of all this information converted into a number that helps a lender to determine the likelihood that you will repay the loan on schedule. The credit score is calculated by the credit bureau, not by the lender. Credit scores are calculated by comparing your credit history with millions of other consumers. They have proven to be a very effective way of determining credit worthiness.

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.

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.

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 member.

Will the inquiry about my credit affect my credit score?
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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.

Will I be charged any fees if I authorize my credit information to be accessed?
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With your permission we'll access your credit file to evaluate your on-line application. There is a charge of $14.00 per applicant to obtain this credit information.

Are we right for you?
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Whether you're purchasing or refinancing, we're certain you'll find our service amazing!

If you'll be purchasing but haven't found the perfect home yet, complete our application and we'll determine if you are pre-qualified for a mortgage loan. A Mortgage Lending Representative will contact you.

Can I really borrow funds to use towards my down payment?
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Yes, on certain loan types, you can borrow secured funds to use as your down payment. If you are planning on obtaining a loan, make sure to include the details of this loan in the expenses section of the application.

I'm self-employed. How will you verify my income?
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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 a full two-year history of self-employment to verify that your self-employment income is stable.

Will my overtime, commission, or bonus income be considered when evaluating my application?
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In order for bonus, overtime, or commission income to be considered, you must have a history of receiving it 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.

If you haven't been receiving bonus, overtime, or commission income for at least one year, it probably can't be given full value when your loan is reviewed for approval.

I am retired and my income is from pension or social security. What will I need to provide?
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We will ask for copies of your recent pension check stubs, or bank statement if your pension or retirement income is deposited directly in your bank account. 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.

 

Can I apply for a loan before I find a property to purchase?
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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 can issue a pre-qualification letter subject to you finding the perfect home.  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 Lending Representative 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.

If I have income that's not reported on my tax return, can it be considered?
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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.

 

How will rental income be verified?
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If you own rental properties, we'll generally ask for copies of your lease agreements and the most recent two 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 after all expenses except depreciation. Since depreciation is only a paper loss, it won't be counted against your rental income.

 

I have income from dividends and/or interest. What documents will I need to provide?
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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.

 

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

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

I've had a few employers in the last few years. Will that affect my ability to get a new mortgage?
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Having changed employers frequently is typically not a hindrance to obtaining a new mortgage loan. This is particularly true if you made employment changes without having periods of time in between without employment. We'll also look at your income advancements as you have changed employment.

If you're paid on a commission basis, a recent job change may be an issue since we'll have a difficult time of predicting your earnings without a history with your new employer.

I was in school before obtaining my current job. How do I complete the application?
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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."

I'm getting a gift from someone else. Is this an acceptable source of my down payment?
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Depending on the product you choose, 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.

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.

I am selling my current home to purchase this home. What type of documentation will be required?
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If you're selling your current home to purchase your new home, we'll ask you to provide a copy of the settlement or closing statement 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.

I am relocating because I have accepted a new job that I haven't started yet. How should I complete the application?
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Congratulations on your new job! If you will be working for the same employer, complete the application as such but enter the income you anticipate you'll be receiving at your new location.

If your employment is with a new employer, complete the application as if this were your current employer and indicate that you have been there for one month. The information about the employment you'll be leaving should be entered as a previous employer. We'll sort out the details after you submit your loan for approval.

I have student loans that aren't in repayment yet. Should I show them as installment debts?
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Yes, we will need to estimate the payments based on your loan balances when reviewing the application.

How will a past bankruptcy or foreclosure affect my ability to obtain a new mortgage?
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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 that two to four years have passed since the foreclosure or bankruptcy has been discharged. It is also important that you've re-established an acceptable credit history with new loans or credit cards and provide us with a satisfactory explanation.

What, exactly, is an installment debt?
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An installment debt is a loan that you make payments on, such as an auto loan, a student loan or a debt consolidation loan. Do not include payments on other living expenses, such as insurance costs or medical bill payments. We'll include any installment debts that have more than 10 months remaining when determining your qualifications for this mortgage.



Your Property
What is an appraisal and who completes it?
What types of things will an underwriter look for when they review the appraisal?
Will I get a copy of the appraisal?
Are there any special requirements for condominiums?
I'm purchasing a home, do I need a home inspection AND an appraisal?
I've heard that some lenders require flood insurance on properties. Will you?
How long does it take for the property appraisal to be completed?
Does Ascend Federal Credit Union provide financing for manufactured homes?


What is an appraisal and who completes it?
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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.

The appraiser will create a written report which will be sent to you.

Usually the appraiser will inspect both the interior and exterior of the home. However, in some cases, only an exterior inspection will be necessary.

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. The appraiser adjusts the price of each comparable sale (up or down) depending on how it compares (better or worse) with your property.

As an additional check on the value of the property, the appraiser also estimates the replacement cost for the property. Replacement cost is determined by valuing an empty lot and estimating the cost to build a house of similar size and construction. Finally, the appraiser reduces this cost by an age factor to compensate for depreciation and deterioration.

If your home is for investment purposes, or is a multi-unit home, the appraiser will also consider the rental income that will be generated by the property to help determine the value.

Using these three different methods, an appraiser will frequently come up with slightly different values for the property. The appraiser uses judgment and experience to reconcile these differences and then assigns a final appraised value. The comparable sales approach is the most important valuation method in the appraisal because a property is worth only what a buyer is willing to pay and a seller is willing to accept.

It is not uncommon for the appraised value of a property to be exactly the same as the amount stated on your sales contract. This is not a coincidence, nor does it question the competence of the appraiser. Your purchase contract is the most valid sales transaction there is. It represents what a buyer is willing to offer for the property and what the seller is willing to accept. Only when the comparable sales differ greatly from your sales contract will the appraised value be very different.

What types of things will an underwriter look for when they review the appraisal?
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In addition to verifying that your home's value supports your loan request, we'll also verify that your home is as marketable as others in the area. We'll want to be confident that if you decide to sell your home, it will be as easy to market as other homes in the area.

We certainly don't expect that you'll default under the terms of your loan and that a forced sale will be necessary, but as the lender, we'll need to make sure that if a sale is necessary, it won't be difficult to find another buyer.

We'll review the features of your home and compare them to the features of other homes in the neighborhood. For example, if your home is on a 20-acre lot, or has a large accessory building, we'll want to make sure that there are other homes in the area on similar size lots or with similar outbuildings. It is hard to place a value on such unique features if we can't see what other buyers are willing to pay for them. In some areas, additional acreage or outbuildings could actually be a detriment to a future sale. Finding comparable properties can be more challenging in rural areas where it is more difficult to find homes that have similar features.

We'll also make sure that the value of your home is in the same range as other homes in the area. If the value of your home is substantially more than other homes in the neighborhood, it could affect the market acceptance of the home if you decide to sell.

We'll also review the market statistics about your neighborhood. We'll look at the time on the market for homes that have sold recently and verify that values are steady or increasing.

Will I get a copy of the appraisal?
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As soon as we receive your appraisal and it is reviewed, we will send you a copy.

Are there any special requirements for condominiums?
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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?
Top

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.

I've heard that some lenders require flood insurance on properties. Will you?
Top

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.

How long does it take for the property appraisal to be completed?
Top

Licensed appraisers who are familiar with home values in your area perform appraisals. We order the appraisal as soon as the application fee is paid. Generally, it takes 5-7 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 Lending Representative. 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.

Does Ascend Federal Credit Union provide financing for manufactured homes?
Top

In order to qualify for our loan programs a manufactured home must meet the following requirements:

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.

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.

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.

 



Closing & Beyond
What happens at the loan closing?
Can I get advanced copies of the documents I will be signing at closing?
Who will be at the closing of the purchase of my new home?
I won't be able to attend the closing. What other options are there?
If I apply, where will the closing take place?
How can I make my payments?


What happens at the loan closing?
Top

We will use a closing agent or attorney of your choice.

During the closing you will review and sign several loan papers. The closing agent or attorney conducting the closing should be able to answer any questions you have or if you prefer, you can contact your Mortgage Lending Representative.

The most important documents you will be signing at the closing include:

HUD-1 Settlement Statement

This document provides an itemized listing of the final fees charged in connection with your loan. If your loan is a purchase, the settlement statement 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 settlement statement will show the pay-off amounts of any mortgages that will be paid in full with your new loan. Most items on the statement are numbered according to a standardized system used by all lenders. These numbers will correspond to the numbers listed on the Good Faith Estimate that will be provided in your application package. This document is also commonly known as the closing statement and both the buyer and seller must sign this document.

Truth-in-Lending Statement (TIL)

This document provides full written disclosure of the terms and conditions of a mortgage, including the annual percentage rate (APR) and other fees. It is exactly the same as the TIL that you received immediately after your initial application, except it has been updated to reflect the final rate and fee information. Federal law requires that all lenders provide you with this document at closing.

Note

This 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 Trust

This 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 detailing the responsibilities of the borrower. In some states, the document is called a Deed of Trust instead of a Mortgage.

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 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.

Can I get advanced copies of the documents I will be signing at closing?
Top

The most important documents you will sign at closing are the note and mortgage, sometimes called the deed of trust. Unless there are special circumstances, these documents are usually prepared one to two days before your closing. Other documents are prepared by the closing agent the day before or the day of your closing. If you would like copies of the completed documents to be sent to you after they are prepared, please contact your Mortgage Lending Representative.

Who will be at the closing of the purchase of my new home?
Top

The closing agent acts as our agent and will represent us at the closing. If you have any questions that the closing agent can't answer during the closing, ask them to contact your Mortgage Lending Representative by phone and we'll get you the answers you need - before the closing is over!

I won't be able to attend the closing. What other options are there?
Top

If you won't be able to attend the loan closing, contact your Mortgage Lending Representative 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 other 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.

If I apply, where will the closing take place?
Top

We can close your loan at one of the designated branches or the closing agent's office of your choice.

How can I make my payments?
Top

You can make your mortgage payments in one of the following ways:

  • Automatic Transfer from an existing account
  • Payroll Deduction
  • E-Branch
  • In Person
  • By Mail


Calculators

What Will My Payment Be?
Find out how much your payments would be.

How Much Can I Afford?
Find out what type of home is in your budget by entering a few numbers into our calculator.

Should I Refinance?
Analyze the total cost and savings of your refinance transaction.

Should I Buy or Rent?
Analyze the total cost to rent versus the total cost to own.


Glossary

Economic Terminology
Use this primer to better understand economic terminology.

Mortgage Terminology
All the mortgage-related terms you need to know from A to Z.

Contact Us

1-800-342-3086
Email Us

Home Equity Loans

 

P.O. Box 1210
520 Airpark Dr.
Tullahoma, TN 37388
800.342.3086
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