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. The pre-qualification process helps assure that you are looking in the right price range to comfortably fit in your budget. Having been pre-qualified for a mortgage may also give more weight on any offer you make.
When you find the perfect home, simply call your FB&T Mortgage Specialist to complete your application. At this point, you may lock in your rates and we will complete processing your application.
Is there a fee charged or any other obligation if I complete the online application?
No, we do not charge any fees to complete and submit your application on line. Completing the application does not obligate you in any way. We welcome the opportunity to help you find the best rate and service available during the mortgage process.
How do you decide what you need from me to process my loan?
We take full advantage of an automated underwriting system that allows us to request as little information as possible to verify the data you provided during your loan application. The automated underwriting system compares your financial situation with statistical data from millions of other homeowners and uses that comparison to determine the level of verification needed. In many cases, a single W-2 or pay stub can be used to verify your income or a single bank statement can be used to verify the assets needed to close your loan.
Can I apply for a FB&T mortgage if I want to buy or refinance a manufactured home?
At this time we do not finance mobile homes or manufactured housing.
Will my overtime, commission, or bonus income be considered when evaluating my application?
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. Usually, your FB&T Mortgage Specialist will request 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 then average the amounts you have received over the past two years to calculate the amount that can be considered a regular part of your income.
If you have not received bonus, overtime, or commission income for at least one year, it probably will not be given full value when your loan is reviewed for approval.
Is my second job income considered when reviewing my application?
Typically, income from a second job is considered if a one-year history of secondary employment can be verified.
I am retired and my income is from a retirement program or Social Security. What do I need to provide when applying?
FB&T Mortgage Specialist asks 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 is 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 do not have an award letter, your mortgage specialist can contact the source of this income directly for verification.
If you are receiving tax-free income, such as Social Security earnings in some cases, we consider the fact that taxes are not deducted from this income when reviewing your request.
How is rental income verified?
If you own rental properties, your mortgage specialist generally asks for the most recent year's federal tax return to verify your rental income. We 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 is not counted against your rental income.
If you have not owned the rental property for a complete tax year, we ask for a copy of any leases you have executed and estimate the expenses of ownership.
I have income from dividends and/or interest. What documents do I need to provide?
Generally, two years of personal tax returns are required to verify the amount of your dividend and/or interest income so that an average amount can be calculated. In addition, we 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.
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.
If I have income that is 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. If the income is legally tax-free and is not required to be reported, we can consider it.
If I have student loans that are not in repayment yet, are they considered debts?
Any student loan that goes into repayment within the next six months will be considered when evaluating your loan. If you are not sure exactly what the monthly payment is, enter an estimated amount.
If other student loans are reflected on your final credit report, which are not scheduled to go into repayment in the next six months, we may need to ask you for verification that repayment is required during this time period.
If I have co-signed a loan for another person, does that affect my ability to get a mortgage?
Generally, a co-signed debt is considered when determining your qualifications for a mortgage. If the co-signed debt does not affect your ability to obtain a new mortgage we leave it at that. However, if it does make a difference, we can ignore the monthly payment of the co-signed debt if you can provide verification that the other person responsible for the debt has made the required payments, by obtaining copies of their cancelled checks for the last six months.
Will a past bankruptcy or foreclosure affect my ability to obtain a new mortgage?
If you have 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 generally require two to four years to pass after the bankruptcy or foreclosure. It is also important that you re-established an acceptable credit history with new loans or credit cards.
How do you verify my income if I am self-employed?
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. However, based on your entire financial situation, we may not need full copies of your tax returns.
We review and average the net income from self-employment that is reported on your tax returns to determine the income that can be used to qualify. We do not consider any income that has not been reported as such on your tax returns. Typically, we need at least a one- or two-year history of self-employment to verify that your self-employment income is stable.
If I have had a few employers in the last few years, does this affect my ability to get a new mortgage?
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 also look at your income advancements as you have changed employment.
If you are paid on a commission basis, a recent job change may be an issue since we may have a difficult time predicting your earnings without a history with your new employer.
If 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.
What should I enter on my application, if I am relocating because I have accepted a new job, but I have not started yet?
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 receiving at your new location.
If your employment is with a new employer, complete the application as if your new employer is your current employer and indicate that you have been there for one month. The information about the employment you are leaving should be entered as a previous employer. Your mortgage specialist sorts out the details after you submit your loan for approval.
What is a credit score and how does it affect my application?
A credit score is one of the pieces of information that your mortgage specialist uses to evaluate your application. 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 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 will not be paid as agreed. Using credit scores to evaluate your credit history allows your mortgage specialist to quickly and objectively evaluate your credit history when reviewing your loan application. However, there are many other factors when making a loan decision and we never evaluate an application without looking at the total financial picture of a customer.
Does the inquiry about my credit affect my credit score?
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 does not 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. So, don't limit your mortgage shopping for fear of the effect on your credit score.
Can I borrow funds to use towards my down payment?
Yes, you can borrow funds to use as your down payment. However, any loan you take out for a down payment 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 is 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.
Can I use a gift from someone else for my down payment?
Gifts are an acceptable source of down payment, if the gift giver is related to you or your co-borrower. We ask you for the name, address and phone number of the gift giver, as well as the donor's relationship to you. If your loan request is for more than 80% of the purchase price, we need to verify that you have at least 5% of the property's value in your own assets. Prior to closing, we verify that the gift funds have been transferred to you by obtaining a copy of your bank receipt or deposit slip to verify that you have deposited the gift funds into your account.
If the appraised value of my property is more than the purchase price, can I use the difference towards my down payment?
Unfortunately, if you are purchasing a home, we have to use the lower of the appraised value or the sales price to determine your down payment requirement.
It is still a great benefit for your financial situation if you are able to purchase a home for less than the appraised value, but our investors don't allow us to use this instant equity when making our loan decision.
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.
Should I pay points/origination in exchange for a lower interest rate?
Points/origination is 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 points/origination, you should compare the cost of the points/origination to the monthly payments savings created by the lower interest rate. Divide the total cost of the points/origination by the savings in each monthly payment. This calculation provides the number of payments you must make before you actually begin to save money by paying points/origination. If the number of months it takes to recoup the points/origination is longer than you plan to have the mortgage, you should consider the loan program option that does not require points/origination to be paid.
Is comparing APRs the best way to decide which lender has the lowest rates and fees?
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. These fees, in addition to the interest rate, 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 does not include all the closing fees, and lenders are allowed to determine which fees to include. Fees for things like appraisals, title work and document preparation are not included even though you generally have to pay them.
Don't forget that the APR is an effective interest ratenot the actual interest rate. Your monthly payments will be based on the actual interest rate, the amount you borrow, and the term of your loan
How do I know if it's best to lock in my interest rate or to let it float?
Mortgage interest rate movements are as hard to predict as the stock market and no one can really know for certain whether they will go up or down. If you have a hunch that rates are on an upward trend then you may want to consider locking the rate as soon as you are able. Before you decide to lock, make sure that your loan can close within the lock in period. It will not do any good to lock your rate if you can not close during the rate lock period.
If you are purchasing a home, review your contract for the estimated closing date to help you choose the right rate lock period. If you are refinancing, in most cases, your loan could close within 30 days. If you think rates might drop while your loan is being processed, take a risk and let your rate "float" instead of locking.
When can I lock in my interest rate and points/origination?
Once we have reviewed your documentation and credit package, we notify you when you are able to request the rate lock. Please see our rate lock policy for further details.
What is your Rate Lock Policy?
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.
A lock is an agreement between the borrower and the lender that specifies the number of days for which a loan's interest rate and points/origination are guaranteed. Should interest rates rise during that period, FB&T Mortgage is obligated to honor the committed rate. Should interest rates fall during this period, the borrower must honor the lock.
When Can I Lock?
Once we have reviewed your documentation and credit package, we notify you when you are able to request the lock.
We currently present a 60 day-lock in price in our online application. Additional lock periods can be discussed with your mortgage professional after completing the application.
When you submit your online application, the loan rate agreement will show that you are floating. When you lock your loan with your mortgage professional, a loan rate agreement will be provided.
What is a fixed rate mortgage?
A conventional fixed rate mortgage is a loan product featuring a fixed interest rate for the entire term of the loan. Monthly mortgage payments remain the same for the life of your loan. A fixed rate mortgage may be right for you, if you:
Prefer easy budgeting and long-term planning
If want to lock in a favorable rate for the long term
Prefer predictable financing for an investment property
Don't plan to relocate, refinance or move in the next few years
Don't expect a significant increase in income in the next few years
How much money will I save by choosing a 15-year rather than a 30-year fixed rate loan?
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 importantly, you pay less than half the total interest cost of the traditional 30-year mortgage.
However, if you can't afford the higher monthly payment of a 15-year mortgage, don't feel alone. 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 fixed rate mortgage?
The 15 year-fixed rate mortgage is 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.
What is an adjustable rate mortgage ARM?
An adjustable rate mortgage (ARM) 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 will lead to higher monthly payments in the future. In short, 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 to be in your home for three to five years.
Periodic or Adjustment Cap: Limits the interest rate increase or decrease from one adjustment period to the next.
Some lenders may require you to pay special fees or penalties if you pay off the ARM early. FB&T Mortgage never charges a penalty for prepayment.
What is an interest-only loan?
An interest-only mortgage is a loan product that allows you to pay only the interest on your mortgage for a fixed term. After the end of that term, generally five to seven years, you start paying off the principal. The principal payments will be considerably higher than the interest payments. You may also refinance, or pay the balance in a lump sum at the end of the fixed term. Interest only loans are not for everyone.
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.
What is an appraisal and who completes it?
To determine the value of the property you are purchasing or refinancing, an appraisal is 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 for us. You receive a copy of the report at your loan closing. Ask your mortgage specialist for a copy if you would like to review it earlier.
Usually the appraiser will inspect both the interior and exterior of the home. However, in some cases, only an exterior inspection will be necessary based on your financial strength and the location of the home. Exterior-only inspections usually save time and money, but if you are purchasing a new home, your mortgage professional will contact you to determine if you would be more comfortable with a full inspection.
After the appraiser inspects the property, s/he 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 is the appraised value very different.
What types of things does an underwriter look for when they review the appraisal?
In addition to verifying that your home's value supports your requested loan amount, we also verify that your home is as marketable as others in the area. We want to be confident that if you decide to sell your home, it is as easy to market as other homes in the area. We certainly don't expect you to default under the terms of your loan, forcing a sale, but as the lender, we also need to make sure that if a sale is necessary, it won't be difficult to find another buyer.
We 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 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 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 also review the market statistics about your neighborhood. We look at the time on the market for homes that have sold recently and verify that values are steady or increasing.
Do I get a copy of the appraisal?
As soon as we receive your appraisal, we update your loan with the estimated value of the home. As a standard practice, we provide a copy of your appraisal at closing. Ask your mortgage specialist if you would like to review a copy prior to closing.
Do I need a home inspection AND an appraisal if I am purchasing a home?
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 have 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.
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 the credit report fee deposit is paid. 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 to ten days of the order date, please inform your mortgage specialist. 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.
What is title insurance and why do I need it?
If you have 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 wonder 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
Owner's Policy: Covers you, the homebuyer
Lender's Policy: Covers the lending institution for 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 FB&T Mortgage only requires a lender's policy.
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.
Title insurance premiums are generally very affordable and protect you against the slim chance that a claim may be filed against you.
What is mortgage insurance and when is it required?
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 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 to 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 amountbelow 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 specialist.
Does FB&T Mortgage require flood insurance?
Federal law requires all lenders to investigate whether or not each home they finance is in a special flood hazard area as defined by the Federal Emergency Management Agency (FEMA). 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.
FB&T Mortgage uses 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.
What types of insurance should homeowners consider?
Homeowners' Insurance: Required for all mortgage loans, protects the home from damage and theft
Owner's Title Insurance: Optional policy ensuring the title will not be subject to a claim of ownership, lien or other encumbrance
Private Mortgage Insurance (PMI): Required by most lenders when the down payment is less than 20%
Federal Housing Authority (FHA) Mortgage Insurance Premium: Required on all FHA loans
Mortgage Life Insurance: Optional policy that protects family and estate by paying off the loan in case of death
Disability Insurance: Optional policy that guarantees loan payments will be made in case of disability
Closing and Escrow
What happens at the loan closing?
The closing takes place at the office of a title company or attorney who acts as our agent. If you are purchasing a new home, the seller may also be at the closing to transfer ownership to you, but in some states, these two events actually happen separately.
During the closing, you review and sign several loan papers. The closing agent or attorney conducting the closing should be able to answer any questions you have. If you prefer, you can also contact your mortgage specialist. Just to make sure there are no surprises at closing, your mortgage specialist will contact you a few days before closing to review your final fees, loan amount, first payment date, etc.
The most important documents you will be signing at the closing include:
HUD-1 Settlement Statement
The Hud-1 Settlement Statement is also commonly known as the closing statement and both the buyer and seller must sign it. 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 includes a listing of any fees related to the transaction between you and the seller. If the loan is a refinance, the settlement statement shows the pay-off amounts of any mortgages that 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 correspond to the numbers listed on the Good Faith Estimate that is provided in your application kit.
The Truth-in-Lending Statement (TIL) 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.
The note is the document you sign to agree to repay your mortgage. The note provides 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
The mortgage/deed of trust document pledges a property to the lender as security for repayment of a debt. Essentially this means that you 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, 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 provides more details at the closing.
If I am selling my current home to purchase a new home, what documentation is required before I close?
If you are selling your current home to purchase a new home, you need to provide a copy of the settlement or closing statement you receive at the closing on your current home to verify that your current mortgage has been paid in full and that you have sufficient funds for the closing on your new home. Often the closing of your current home is scheduled for the same day as the closing of your new home. If that is the case, just bring your settlement statement with you to your new mortgage closing.
What are closing fees and how they are determined?
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, but it is more difficult to tell which lenders have done their homework and are providing a complete and accurate estimate. FB&T Mortgage takes quotes very seriously. We have completed the research necessary to make sure that our fee quotes are accurate to the city level.
To assist you in evaluating our fees, we've grouped them as follows:
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 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 see some minor variances in third-party fees from lender to lender since a lender may have negotiated a special charge from a provider they use often, or choose a provider that offers nationwide coverage at a flat rate. You may also see that some lenders absorb minor third-party fees such as the flood certification fee, the tax service fee, or courier/mailing fees.
Taxes and Other Unavoidable Fees
Fees that we consider to be taxes or unavoidable include state and local taxes and recording fees. Some lenders don't quote fees that include taxes and other unavoidable fees; don't assume that you won't have to pay them. It probably means that the lender who doesn't tell you about the fee hasn't done the research necessary to provide accurate closing costs.
Fees such as points/origination, 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.
You may be asked to prepay some items at closing that are actually 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.
If an escrow or account is to be established, you 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, up to two months of the mortgage insurance is 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 also need to pay for your first year's homeowner's insurance premium prior to closing. We consider this to be a required advance.
Will I need to have an attorney represent me at closing?
In some areas of the country it is very customary, and sometimes required by law, to have an attorney represent you at the closing. In other areas, attorneys are not as common at a real estate closing. Please contact the closing agent if you have questions about attorney representation. By all means, we recommend that you have an attorney at the closing if it would make you more comfortable. If your attorney has any questions about your new mortgage, please refer him/her to your mortgage specialist.
Can I get advanced copies of the closing documents?
The most important documents you 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 professional.
Who will be at the closing?
The closing agent acts as our agent and will represent FB&T Mortgage at the closing. However, your personal mortgage specialist will contact you prior to closing to talk about your final documents and to provide a final breakdown of your closing fees. If you have any questions that the closing agent can't answer during the closing, ask them to contact your mortgage specialist by phone and we will get you the answers you need before the closing is over.
What options are there if I can't attend the closing?
If you won't be able to attend the loan closing, contact your mortgage specialist 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.
Where does the closing take place?
We use a network of closing agents and attorneys to conduct our loan closings. We schedule your closing to take place near your home for your convenience. We deliver our loan documents and wire transfer your loan funds to the closing agent or attorney prior to closing so that s/he has plenty of time to prepare for your closing.
What is an escrow account?
An escrow account requires borrowers to make monthly payments toward real estate taxes and/or home-related insurance as part of the regular monthly mortgage payment. Bills for the taxes and/or insurance are sent directly to the lender who makes the required payments.