couple on couch

Mortgage Loans

Mortgage Loans

A new home has never looked better!  At CSB we have mortgage loans to get you that home you always wanted.  So, whether you're looking for a starter home or a second home, our Mortgage specialist can help.  We can arrange a loan that works with your budget.  Stop by today and let Citizens State Bank turn your dream home into picture worthy reality.
What is needed after I have received a loan estimate, disclosures and indicated the intent to proceed with my mortgage application?
  • Two forms of identification one being a valid government issued photo identification with current address
  • Two most recent bank statements of al deposit accounts and current 401-K or investment account statements
  • Two most recent pay stubs and last year's W-2
  • If self-employed, last two years complete personal and business tax returns
  • If a purchase, a copy of the signed sales contract
  • If a refinance, a copy of your warranty deed.
My Real Estate agent recommended that I get a commitment letter.  what is a commitment letter, and why should I get one?
  • A prequalification letter is given by the lender stating the terms which it agrees to provide a mortgage to a homebuyer that meets all necessary financial and credit qualifications. Prequalification letters help you set realistic goals while you're house-hunting, provide the same negotiating ability as a cash buyer, and enable you to move quickly once the perfect home is found.

When mortgage lenders refer to "PITI" what exactly are they referring to?
  • PITI is Principal, Interest, Taxes, and Insurance- the components of a monthly mortgage payment.

Can I make my monthly payments with an automated debit from my checking account?
  • Automated monthly payments are available and encouraged.  Enrolling in this program means you'll never miss a payment because the money is withdrawn at the same time each month.
How much do I need for a down payment?
  • Typically a 20% down payment is required.
When my loan officer asks me if I want to waive my escrows, what exactly does that mean?
  • When you waive escrows, you take the responsibility of paying taxes and insurance, as opposed to having them included in your monthly payment. Waiving escrows may add a small fee to your closing costs. You can only waive escrows if your loan to value is 80% or less on your first lien.

Why did I receive a Loan Estimate?
  • Loan Estimates are sent to all borrowers after loan application has been made. The Truth In Lending Act is a federal law requiring lenders to reveal all of the terms of a mortgage. The APR that appears on your Loan Estimate will be higher than the interest rate on your Real Estate Lien Note.

What inspections does the lender require?
  • The lender requires only a clear termite report and an appraisal. If the appraisal recommends repairs, the lender may require that those repairs be done before closing. The appraiser will then perform a final inspection to assure that the repairs were done correctly. If the termite report recommends treatment, treatment is required. We will need a receipt showing the name and amount of chemical used. If there is structural damage to the home from termites, these repairs may be required and an inspection done to assure the proper completion.

How is my credit report used by mortgage lenders?
  • Your credit report is reviewed by your lender to analyze how you handled your credit in the past and what the risk is for handling your credit lines in the future.  The length of your credit history and any derogatories like late payments, judgements or liens will be taken into consideration before making a decision to lend.
    • There are 3 major credit reviewers who will give you a free copy of your credit report.
How can I improve my credit score?
  • Your payment history and the amount of credit in use versus the total amount of credit extended to you are the two most important components that make up your credit score.  It is extremely important to pay your bills on time.  A good principle to follow is to never "max out" credit cards, because the balance on open accounts is a big factor, lower balances are always better.  When balances exceed 30% of the available credit at the time of reporting, you may see a dip in your credit score.
How does the annual percentage rate differ from the interest rate?
  • The annual percentage rate (APR) is the effective rate of interest for a loan if the calculation is based on the original loan amount less the closing costs.  This is the rate that will appear on your Loan Estimate.  Please note that the APR is higher than the interest rate on your Mortgage Note and the note rate is your true interest rate.
What are annual percentage rates (APRs) on mortgages?  I've read that APRs should be compared when searching for a loan but do not affect your monthly payment?
  • In theory, the APR is a way to reflect the total cost of a loan once all of the points, fees and other costs are taken into account.
  • That cost is expressed as an annual percentage rate that will be higher than the interest rate on the loan and should allow borrowers to compare loans that have different interest rates and fees. The lower the APR, the better for the customer.
What is an Appraisal?
  • An appraisal is an unbiased professional evaluation of the value of a property.  If you need a mortgage to buy a new home or take cash out using a refinance, a professional appraisal will usually be required.
What is the Debt-to-Income Ratio?
  • A ratio used by lenders to determine whether a person is qualified for a mortgage.  Debt-to-Income is the total amount of monthly debt, including house payment, credit cards and other loans, divided by the total gross monthly income.
What is the Loan to Value (LTV)?
  • The loan to value is the loan amount divided by the lessor of the sales price or the appraised value. 
    • Example:  Loan amount is $80,000.  The sales price is $100,000.  The appraised value is $105,000.  The lessor of sales price or appraised value is $100,000.  $80,000/$100,000=80% LTV.
When will I find out what my final figure is for total cost to close?
  • The title company will prepare a Closing Disclosure detailing the closing figures. We will provide you with the Closing Disclosure no later than 3 business days before consummation. Remember to bring a cashier's check made payable to the company. Your Loan Estimate and down payment should be close to the final settlement costs.