QUESTIONS YOU NEED ANSWERED BEFORE YOU GET A MORTGAGE.
is the interest rate?
2. How long is the rate good for?
3. Do you offer both fixed and variable
(A fixed interest rate is one that does not
change for the life of the loan.
A variable interest rate will
go up or down. It will be based on a rate determined by the
A variable interest rate may
quarterly or semi annually or annually depending on the standard
chosen by the lender.)
you sell my loan? (Many institutions sell mortgage
to third parties. The lender received money for your
loan from a third party. That
way the lender will have more money to lend to other borrowers.
This may also be away your lender can get you a lower rate from a
lender out of the area.)
5. If you sell my loan
to whom will I make my payments?
(Some lenders will sell your loan, but retain
the 'servicing rights.' In this case, you will continue to make
to your lender
and you may never know some other
owns your loan. )
will make the decision on my application?
Your loan officer? Someone
else? Or some one from another lender in another town?
7. Will my credit
report be pulled locally or from an out of the state credit
I have a question, or problem, is there a real person I can talk to
regarding my credit report?
9. Will my lender provide me with
a copy of my credit report?
question has several answers.
First. If you have applied for a job and your prospective
employer pulls your credit report, they are required to give you a copy
of the report.
Second. The Fair credit Reporting Act says the credit bureaus can
not tell the lenders not to give you the information in your
report. Some states require the lenders to provide a copy of the
report, if the report is used for mortgage purposes. Illinois
does not require the reports be give out. If your lender has
pulled your mortgage report from us, they can provide you with a
"consumer copy" of your report at no cost to you or to them.
Third. If you are turned down for a loan or if your loan is
approved with terms less favorable then you requested and would
normally been given to others with good credit, the creditor will
give you the name, address and toll free number, to call the credit
bureau. You can then get a copy of the report from that credit
bureau. (This free credit report does not count against your free
annual credit report)
10. Will my lender provide me with
a copy of my credit score?
this question has several answers.
First. If the
loan request is for a mortgage on a single residence or a 1 to 4 unit
home, the lender must provide the credit score and a special score
Second. If the lender did not request the score, then they are
not required to provide you with the score. This law applies to
any loan using any type of mortgage as security.
the security for the loan is not a mortgage on residential
property, they are not required to provide you with the score.
there any application fees?
are the closing costs and how are they determined?
Closing costs vary
from Lender to Lender and from loan type to loan type. Typical loans
costs include the appraisal fee, credit report, flood determination,
title/legal work, document preparation, closing fee, state and county
recording fees, inspection fees such as termite, well, septic, and
radon, and loan origination (Points, origination
The lender will provide you with a good faith estimate and truth in
lending disclosure that you can use to compare closing costs as
disclosed by other lenders and/or loan types.
Earl Riley, Pekin
Community Bank, (e-mail: Earl.Riley@mortonbank.com)
my credit score affect my interest rate?
(also see question 18)
14. If so, can you tell
me how I can improve
15. What Are
Point(s) are part of the your closing costs paid to
the lender at closing. Each point equals 1% of the mortgage amount. The
interest rate you pay on your mortgage is reduced by the number of your
That is points in simplistic terms -- below are benefits if you want to
> The total amount of interest paid over the life of the loan will
be reduced by paying the upfront point expense at closing
> You can calculate the dollar benefit of the points by the
difference in the mortgage payments based upon the interest rates.
> Your "break-even" time frame is determined by the monthly payment
difference divided into the dollar amount of the points. For example
you save $20 a monthly in payments and your point expense was $750. It
would take you 37.5 months to recoup your point expense and then you
are $20 ahead every month going forward.
> Points are more beneficial for longer fixed rate terms than
shorter ones or adjustable rate mortgages.
If you need further information or I can be of other service, please
let me know.
Adam Angst, Better Banks,
What do I need to bring to the bank the
first time I come in?
Current paystubs covering 30 days earnings (handwritten pay stubs
are not acceptable).
Last 2 years W2's
Current 2 months' bank statements
Current stock/bond/ retirement statement
Divorce Decree, if applicable
Copy of sales contract (Signed purchase agreement for the home being
This information is sufficient to get the loan application
Marian Grebner, Herget National Bank
The following items may also be needed at your loan interview and will
faster processing and approval on your application.
• Proof of paid charge-offs, copy of Recorded Release
of Judgments, receipts for paid off collections.
(if any, from credit reports you pulled
on yourself in Step 1)
• Non-refundable commitment fee to be applied to the
• Realtor listing sheet on the home (or lot size, tax
ID, tax amount, legal description).
• Signed U.S. Tax Returns, including all schedules,
for the last two years if you earned commissions, are self-employed,
have significant interest or dividend income, or own rental
property. If self-employed, please bring business tax returns for
the last 2 years. Also bring business balance sheets for
the last two years and a year-to-date profit and loss statement if the
business is a partnership, corporation or S-corporation.
• Name, Address, and phone number, payment amounts
and balances for all mortgage loans, installment loans, credit cards
and other debts.
• Statements (originals) for the last three months
for all savings, checking certificates, mutual funds, brokerage
accounts, 401(k) plans, employee savings plans and other investments.
• Offer to purchase or listing agreement, if selling
• If receiving child support, maintenance or alimony,
and if using that income to qualify, bring copies of the last 12 months
pay record form the Circuit Clerk’s Office.
What is Flood Determination and Flood Insurance?
Flood Determination is the process of looking at a property on a flood
map to see if any part of the property is located in a flood zone.
Normally, there is a life of loan tracking charge included in the price
that is charged to the borrower.
Flood Insurance is insurance coverage that protects the homeowner from
any damages that may occur as a result of a flood. There are certain
zones that require flood insurance. Property located in zone A would be
required to have flood insurance.
Flood zones are geographic areas that the Federal Emergency Management
Agency (FEMA) has defined according to varying levels of flood risk.
These zones are depicted on a community's Flood Hazard Boundary Map or
a Flood Insurance Rate Map (FIRM). Each zone reflects the severity or
type of flooding in the area.
Below are brief definitions of the FEMA flood zones. For comprehensive
flood zone definitions, visit the NFIP Web site. If you'd like
additional information, contact your agent or find an agent serving
Moderate to Low Risk Areas In communities that participate in the NFIP,
flood insurance is available to all property owners and renters with
moderate to low risk.
Zones B, C, and X
Areas with less than a 1% chance of flooding each year; areas that have
less than a 1% chance of sheet flow flooding with an average depth of
less than 1 foot; areas that have less than a 1% chance of stream
flooding where the contributing drainage area is less than 1 square
mile; or areas protected from floods by levees. No base flood
elevations or depths are shown within these zones.
High Risk Areas
In communities that participate in the NFIP, mandatory flood insurance
purchase requirements apply to all A zones.
Areas with a 1% annual chance of flooding and a 26% chance of flooding
over the life of a 30-year mortgage. Because detailed analyses are not
performed for such areas; no depths or base flood elevations are shown
within these zones.
Zone AE and A1-A30
Areas with a 1% annual chance of flooding and a 26% chance of flooding
over the life of a 30-year mortgage. In most instances, base flood
elevations derived from detailed analyses are shown at selected
intervals within these zones.
Areas with a 1% annual chance of shallow flooding, usually in the form
of a pond, with an average depth ranging from 1 to 3 feet. These areas
have a 26% chance of flooding over the life of a 30-year mortgage. Base
flood elevations derived from detailed analyses are shown at selected
intervals within these zones.
River or stream flood hazard areas, and areas with a 1% or greater
chance of shallow flooding each year, usually in the form of sheet
flow, with an average depth ranging from 1 to 3 feet. These areas have
a 26% chance of flooding over the life of a 30-year mortgage. Average
flood depths derived from detailed analyses are shown within these
Areas with a temporarily increased flood risk due to the building or
restoration of a flood control system (such as a levee or a dam).
Mandatory flood insurance purchase requirements will apply, but rates
will not exceed the rates for unnumbered A zones if the structure is
built or restored in compliance with Zone AR flood plain management
Areas with a 1% annual chance of flooding that will be protected by a
Federal flood control system where construction has reached specified
legal requirements. No depths or base flood elevations are shown within
Cory Biers, First State
Bank in Mendota, firstname.lastname@example.org
Scores What are they?
Credit scores are a mathematical representation of
how you have paid your bills and they are used to predict how you will
pay your bills in the future.
Your Credit Score could affect you in many ways. Interest rates,
down payments, loan points, deposits (on purchases or for apartment
rents), insurance premiums may all be determined by your credit score.
There are several different models of credit scores. Each credit
has their own models.
TransUnion uses one called “Your Personal Score Model.”
It's scores range from 450 to 950. Experian uses one called
“Scorex.” It’s scores range from 300 to 900. Experian also
The newest model is VantageScore. It was developed by the three
main national credit bureaus, TransUnion, Experian and Equifax.
It’s scores range from a low of 501 to a high of 990.
The following information applies
only to Fair Isaac.
Fair Isaac scores can
not be compared to any other model from any other company.
The most widely used model is called: Fair Isaac or
The Experian / Fair Isaac Corporation Risk Score produces a score which
summarizes the information on the credit bureau file. It is a
three-digit number ranging from 350–840, which ranks consumers
according to future credit
Lenders use credit scores because they are: A. consistent-
the same data equals the same decision. B. Objective. There
is no underwriter bias. C.
Fast. The results are returned
with the credit report. D.
Accurate. The look at all
Credit scores look only at: 1.
Tradelines (loan and credit
information provided by creditors.) 2. Credit related
inquiries (inquiries for employment and inquiries by you to the
national credit bureaus or to the free site set up by the Fair Credit
Reporting Act do not count against your score.) 3.
Collections. And 4. Public
Records (Bankruptcies, Tax liens,
Multiple inquiries for mortgage purposes in the last 30 days only count
as one inquiry. After 30 days multiple inquiries for mortgage
purposes in a 14 day period count as one inquiry. So, if you are
looking at several lenders, and if they check your credit within 14
each other, your score will not be affected. (Auto loan inquiries
are treated the same way.)
The Fair Isaac Model has five major parts to their formula.
Length of credit history: 15%
Types of credit in use: 10%
The older the paid accounts or inquiries, the less weight they have
on your score.
For example, (the points deducted in this example may not be
exactly correct): Let’s say you have an unpaid collection that
years old. It will take off at least 24 points from your
score. Any unpaid collection will deduct from your score.
When you pay the collection, your score will not be reduced
immediately. ( unless it was a large amount.) However each month
after it is was paid, it will have less impact and less deductions on
your score. A collection paid off 25 months ago has no impact on
My score determines
whether or not I get credit.
• Lenders use a number of facts to
make credit decisions, including your FICO Score. Lenders look at
information such as the amount of debt you can reasonably handle, given
your income, your employment history, and your credit history.
Based on their perception of this information, as well as their
specific underwriting policies, lenders may extend credit to you
although your score is low, or decline your request although your score
is high. (myfico.com)
A poor score will
haunt me forever.
• Just the opposite is true.
A score is a “snapshot” of your risk at a particular point in
time. It changes as new information is added to your
credit bureau files. Scores change gradually as you change the
way you handle credit. (myfico.com)
• My score will drop
if I apply for new credit.
• If it does it probably won't
drop much. If you apply for several credit cards within a short
period of time, multiple requests for your credit report information
(called inquiries) will appear on your reports. Looking for new
credit can equate with higher risk, but most credit scores are not
affected by multiple inquiries from auto or mortgage lenders within a
short period of time. (myfico.com)
• Average Credit
• According to Experian, (May
2006) the average credit score in Illinois for a person with a
mortgage is 713.
The average credit score without a mortgage in
Illinois is 658.
And, according to Fair Isaac, 58% of the population
has a 700 to 840 score. 27% have a 600 to 699 score and 15%
have a 350 to 599 score.
19. What are Credit Report Triggers?
Report Triggers are notices sent to lenders when you apply for a
Unless you have "opted out" with the credit bureaus, when you apply for
a mortgage loan, your lender's credit bureau inquiry will be sent to
other lenders who have
paid the credit bureaus for information on consumers applying for
mortgage loans. (Click
here to see an article in the Peoria Journal Star regarding Triggers.)
If you have any questions that we
have not answered, e-mail us.
We will either post it here or e-mail a response to you.