CalculatorsThere are many financial decisions involved in purchasing or refinancing a home. The calculators we provide here can help you decide some of those decisions.
Your PropertyWhen you buy or refinance a home, the property is used as collateral for the loan. Here's what the lender is looking for and why.
What is an appraisal and who completes it?
To determine the value of the property you are purchasing or refinancing, an appraisal will be required. An appraisal report is a written description and estimate of the value of the property. National standards govern not only the format for the appraisal; they also specify the appraiser's qualifications and credentials. In addition, most states now have licensing requirements for appraisers evaluating properties located within their states.
The appraiser will create a written report for us and you'll be given a copy no later than your loan closing. If you'd like to review it earlier, your Mortgage Loan Originator would be happy to provide it to you.
The appraiser will inspect both the interior and exterior of the home. After the appraiser inspects the property, they will compare the qualities of your home with other homes that have sold recently in the same or similar neighborhoods. These homes are called "comparables" and play a significant role in the appraisal process. Using industry guidelines, the appraiser will 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 may also estimate 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 may also consider the rental income that will be generated by the property to help determine the value.
Using these methods, an appraiser will come up with estimated values for the property. The appraiser uses judgment and experience to reconcile differences and 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.
Will I get a copy of the appraisal?
As soon as we receive your appraisal, we'll update your loan with the estimated value of the home. As a standard practice we will provide a copy of your appraisal at closing, unless you elect to receive at the time it is completed.
I'm purchasing a home, do I need a home inspection AND an appraisal?
While we do not require you to have a home inspection, both 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. 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?
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. Floods can happen anytime, anywhere. 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?
Licensed appraisers who are familiar with home values in your area perform appraisals. We order the appraisal as soon as the application deposit is paid. Generally, it takes 10-14 days after the appraiser has completed their site visit before the written report is sent to us. We follow up with the appraiser to ensure that it is completed as soon as possible. If you are refinancing, the appraiser should contact you to schedule the site visit. If you don't hear from the appraiser within seven days of the order date, please inform your Mortgage Loan Originator. If you are purchasing a new home, the appraiser will contact the real estate agent, if you are using one, or the seller to schedule an appointment to view the home.
Does Collinsville Building & Loan provide financing for manufactured homes?
We define manufactured housing as housing units that are factory built with a steel undercarriage that remains as a structural component and limits the structure to a single story. These types of manufactured homes are sometimes known as mobile homes. We do not consider other factory-built housing (not built on a permanent chassis), such as modular, prefabricated, panelized, or sectional housing, to be manufactured housing. If your home is one of these types, please complete the application indicating that your home is a single family home.
In order to qualify for our loan programs a manufactured home must meet the following requirements:
- Be affixed to a permanent foundation and be legally classified as real property (a one-family dwelling).
- Title or Manufacturer Certificate of Origin (MCO) must be surrendered to the State of Illinois.
- The towing hitch, wheels, and axles must have been removed.
- 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 land.
- Must have been built in compliance with the Federal Manufactured Home Construction and Safety Standards that were established June 15, 1976. Generally, compliance with these standards will be evidenced by the presence of a HUD Data Plate that is affixed near the main electrical panel of the home or in another readily accessible and visible location.
- Must be at least double-width, 24 feet wide, and have a minimum 600 square feet of gross living area.
- Must be acceptable to typical purchasers in the market area.
Loans, Rates & FeesWhen it comes to home financing, there are many different options to choose from. How do you find the loan that's best for you? Here is some information to help you.
How are interest rates determined?
Interest rates fluctuate based on a variety of factors, including inflation, the pace of economic growth, and Federal Reserve policy. Collinsville Building and Loan sets its own rates based upon local economic conditions and market demand. Our rates may or may not reflect Federal Reserve policy and/or national rates.
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 Annual Percentage Rate (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 doesn't include all the closing fees. Fees for things like appraisals, title work, and a credit report are not included in the APR.
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. Your 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?
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 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.
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.
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.
Is there a fee charged or any other obligation if I complete the online application?
Once you have completed the application, we will request a deposit of $500. This deposit covers things like the appraisal, your credit report and flood certification that we need in order to underwrite the loan. This amount will be credited towards your total closing costs, all other costs associated with the transaction will be collected from you at closing.
When can I lock in my interest rate?
While we do not have a formal rate lock policy, we consider your interest rate locked the day your application is submitted. That means, once we receive your application your interest rate is not subject to increase or decrease.
Are there any prepayment penalties charged for these loan programs?
None of the loan programs we offer have penalties for prepayment. You can pay off your mortgage any time with no penalties for doing so.
What is your Rate Lock Policy?
The interest rate market is subject to movements without advance notice. Your interest rate is locked-in at the time you apply. This means that you are not subject to any increases (or decreases) after you have submitted your completed application to our institution.
Tell me more about 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.
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, title insurance fees and flood certification 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 since a lender may have negotiated a special charge from a provider they use often or chooses a provider that offers nationwide coverage at a flat rate.
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. If some lenders don't quote you fees that include taxes and other unavoidable fees, don't assume that you won't have to pay it.
Fees such as document preparation fees, loan processing fees and origination fees are retained by the lender. This is the category of fees that you should compare very closely before making a decision.
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." All of our mortgages have payment due dates of the 1st of the month. If your loan is closed on any day other than the first of the month, you'll pay interest, from the date of closing through the end of the month. For example, if 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.
What is title insurance and why do I need it?
If you've ever purchased a home before, you may already be familiar with the benefits and terms of title insurance. But if this is your first home loan or you are refinancing, you may be wondering why you need another insurance policy.
The answer is simple: The purchase of a home is most likely one of the most expensive and important purchases you will ever make. You, and especially your mortgage lender, want to make sure 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, if the loan is a purchase. If you are refinancing your home, you probably already have an owner's policy that was issued when you purchased the property, so we'll only require that a lender's policy be issued.
Before issuing a policy, the title company performs an in-depth search of the public records to determine if anyone other than you has an interest in the property.
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 own the property.
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.
What is the maximum percentage of my home's value that I can borrow?
The maximum percentage you may borrower against your home's value depends on the purpose of your loan, how you use the property, and the loan type you choose. The best way to determine what loan amount we can offer is to contact one of our Mortgage Loan Originators.
What's the difference between a home equity loan and a refinance?
A home equity loan is generally a second mortgage against your home, meaning it is a loan that you take out using your home as collateral without paying off your first mortgage. A refinance typically means that you'll be paying off your existing first mortgage and replacing it with a new first mortgage.
Determining whether it's best to refinance or to obtain a home equity loan is very complicated and depends on many factors including:
·The interest rate on your first mortgage
·The remaining term on your first mortgage
·The term on the second mortgage you are considering
·The rate on a new first mortgage
Comparing monthly payments of your existing first mortgage and a new home equity loan as opposed to a new first mortgage should help. Use our comparison calculators on our website or contact one of our Mortgage Loan Originators to help determine which option is best for you.
How do I lock my rate?
While Collinsville Building and Loan does not have a formal rate lock policy, your interest rate is set as soon as your application is submitted to us. Once submitted you are not subject to rate increases or decreases.
Your ApplicationApplying for a mortgage can be very intimidating. You're asked specific details about your income, assets, and debts. Here we will give you information that will let you know how that information is used when applying for a mortgage.
What is a credit score and how will my credit score affect my application?
A credit score is one of the pieces of information that we'll use 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 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.
There are many factors that are considered when making a loan decision. Therefore, we make sure to look at the total financial picture when evaluating an application.
Will 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 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?
There is no charge to you for the credit information we'll access with your permission to evaluate your application online. You will only be charged for a credit report if you decide to complete the application process after your loan is submitted. Once you indicate your intent to proceed, we will request a deposit of $500. This deposit is credited toward your total closing costs. All other costs associated with the transaction will be collected from you at closing.
Can I really borrow funds to use towards my down payment?
Yes, you can borrow funds to use as your down payment! However, any loans that you take out must be secured by an asset that you own. If you 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?
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 as well as year-to-date financial statements.
We'll review and calculate the 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?
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 need to obtain a Verification of Employment from your employer and recent pay stubs to verify the consistency and type of income. If you haven’t been receiving bonus, overtime or commission income for at least one year, we will need to review the documentation to determine if this income can be used for application purposes.
I am retired and my income is from pension or social security. What will I need to provide?
We will ask for copies of your recent pension check stubs, and 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.
If you're receiving tax-free income, such as social security earnings in some cases, we'll consider the fact that taxes will not be deducted from this income when reviewing your request.
If I have income that's not reported on my tax return, can it be considered?
Generally, only income that is reported on your tax return can be considered when applying for a mortgage. Unless, of course, the income is legally tax-free and isn't required to be reported. If this is the case, we will ask for documentation for proof of this type of income.
How will rental income be verified?
If you own rental properties, we'll ask for the two most recent year's federal tax returns to verify your rental income. If you haven't owned the rental property for two complete tax years, we'll ask for a copy of any leases you've executed.
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.
Will my second job income be considered?
Typically, income from a second job will be considered if we can obtain a verification of employment confirming the employment is likely to continue.
What can I expect when I apply for a mortgage?
First, you'll complete our online application.
The application will ask you questions about your current or potential home and your finances. After you've submitted your application, you will receive a confirmation email notifying you of receipt. One of our Mortgage Loan Originators will contact you within three business days to introduce him or herself and to answer any initial questions you may have. They will also supply you with documents that we will need you to sign and a list of items we’ll need to verify the information you provided about your finances.
We’ll order an appraisal from a licensed appraiser who is familiar with home values in your area. The appraiser will contact you directly (or your agent if you are purchasing a home) to set up an appointment to view the property.
Title insurance will be necessary. If you are purchasing a home, we'll work with the real estate broker or seller to insure the title commitment is ordered as soon as possible. If you are refinancing, we'll work directly with you to order a title commitment from a title provider of your choice. We'll use the title commitment to confirm the legal status of your property and to prepare the closing documents.
Once we receive and verify all information, including the appraisal and title commitment, your application will be submitted for decisioning. We will then notify you accordingly.
If the decision is made to proceed, we will contact you to set a closing date. Closing will take place in one of our local branches. If you are purchasing a home, disbursements will be handled at a title company in your area.
About a week before closing, your Mortgage Loan Originator will contact you to walk through the final information and work with you to set a time to provide you with your Closing Disclosure. This disclosure must be provided three business days prior to closing and provides you with the amount required (or being received) in order to complete the transaction.
I've had a few employers in the last few years. Will that 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'll also look at your field of employment and income advancements over the course of these changes.
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."
If my property's appraised value is more than the purchase price can I use the difference towards my down payment?
Unfortunately, if you are purchasing a home, we'll have to use the lower of the appraised value or the sales price to determine your down payment requirement.
It's still a great benefit for your financial situation if you are able to purchase a home for less than the appraised value, but we don't use this "instant equity" when making our loan decision.
I'm getting a gift from someone else. Is this an acceptable source of my down payment?
Gifts are an acceptable source of down payment, if the giver can provide a gift letter. The letter should outline the amount of the gift and that no repayment is required.
I am selling my current home to purchase this home. What type of documentation will be required?
If you’re selling your current home to purchase your new home, we’ll ask you to provide a copy of the sales contract as well as the Closing Disclosure so that we can verify any proceeds deposited into your account. This will also show us that you have sufficient funds for the closing of your new home. Often times, 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 still request a copy of the sales contract and will confirm closing with the title company.
I am relocating because I have accepted a new job that I haven't started yet. How should I complete the application?
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 application.
I've co-signed a loan for another person. Should I include that debt here?
Yes, a co-signed debt will be considered when determining your qualifications for a mortgage.
I have student loans that aren't in repayment yet. Should I show them as installment debts?
Any student loan that will go into repayment within the next year should be included in the application. If you are not sure exactly what the monthly payment will be at this time, enter an estimated amount.
If other student loans are reflected on your final credit report, which will not go into repayment in the next year, we may need to ask you for verification that repayment will not be required during this time period.
How will a past bankruptcy or foreclosure affect my ability to obtain a new mortgage?
If you've had a bankruptcy or foreclosure in the past, it may affect your ability to get a new mortgage. We will require a letter of explanation to provide details of what caused the bankruptcy or foreclosure and how the situation has changed since that point. It is also important that you've re-established an acceptable credit history with new loans or credit cards.
What, exactly, is an installment debt?
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.
Closing & BeyondHurray! Your loan has been approved and your loan closing date has been set! This section will give you some idea of what to expect at closing and what happens after closing.
What happens at the loan closing?
For refinances, closing will take place at either our Collinsville or Troy office. For purchases, you will sign all loan documentation at our Collinsville office and all deed and title required documents at the title company. In order to avoid any surprises, you will be provided with a Closing Disclosure at least three days prior to your closing. This document provides an itemized listing of the final fees charged in connection with your loan.
Two important documents that you will be signing at closing include:
This is the document you sign to agree to repay your loan. The note contains details of your loan including the interest rate, loan amount, payment due date and maturity date. It also explains the penalties that you may incur if you fall behind in making your payments.
This document pledges your property to the lender as security for the note. The Mortgage restates the basic information contained in the note, as well as the responsibilities of the borrower.
If your loan is a refinance, Federal Law requires that you have three days to decide whether to complete the new loan after you sign the documents. This means that the loan funds won't be disbursed until three business days have passed. Your Mortgage Loan Originator will provide more details at closing.
Can I get advanced copies of the documents I will be signing at closing?
The most important documents you will sign at closing are the note and mortgage. Unless there are special circumstances, these documents are usually prepared one to two days before your closing. If you would like copies of the completed documents to be sent to you after they are prepared, please contact your Mortgage Loan Originator.
Who will be at the closing?
For refinances, closing will take place at either our Collinsville or Troy office with one of our Mortgage Loan Originators.
For purchases, you will sign all loan documentation with a Mortgage Loan Originator at our Collinsville office and all deed and title required documents with an agent at the tile company. Your privacy is important to us so the loan closing is generally only attended by you (the borrower) and your Mortgage Loan Originator. If you are purchasing a property and are using a real estate agent, they will generally attend the closing at the title company. Your Mortgage Loan Originator will walk you through this process prior to closing so you know exactly what to expect.
I won't be able to attend the closing. What other options are there?
If you won't be able to attend the loan closing, contact your Mortgage Loan Originator to discuss other options. If someone you trust is able to attend on your behalf, you may be able to execute a Specific Power of Attorney so that this person can sign documents on your behalf. You'll want to seek legal counsel for more details on this option.
If I apply, where will the closing take place?
If you are refinancing, closing will take place at either our Collinsville or Troy office. For purchases, you will sign all loan documentation at our Collinsville office and all deed and title required documents will be signed at the title company.
Can I make my monthly payments with an automated debit from my checking account?
If you have a deposit account with us, with your authorization, we can set up automatic payments out of that account. You can also transfer funds from that account to make your payment each month yourself through online banking. If you are wanting to utilize a deposit account outside of Collinsville Building and Loan to make your payment, you will want to check with that financial institution to set up payments. If they utilize bill pay, they will mail us a payment on the day you designate for the account to be debited.