Questions about Home Mortgage Loans?
We have answers.
General Questions about Mortgage Loans
How long does the Home Mortgage Loan process take?
It generally takes 30–60 days from start to finish.
Can I apply for a Home Mortgage Loan before I find a new home or property to purchase?
Yes, applying for a mortgage pre-approval before you shop is something most any seller and real estate agent will require. If you apply for your mortgage now and qualify, Great Midwest Bank will issue a pre-approval letter, subject to a few standard conditions, including final verification of your employment and assets for a down payment. A pre-approval for a mortgage from Great Midwest Bank offers you an advantage over other simultaneous offers as real estate professionals know that we’ll be thorough in our review. We do that in order to avoid surprises down the road.
When you find your perfect home, simply call or email your loan officer to get the. You’ll have an opportunity to lock in your interest rate as long as your closing is within 45 days or less.
Do you recommend going through the pre-approval process before shopping for a new home?
Getting pre-approved for a mortgage shows sellers and realtors you’re serious about buying a home. Plus, you’ll know how much home you can afford.
What will I need in order to apply for a Home Mortgage Loan?
Salaried individuals typically only need to provide some W2 and paystub history for income verification. Self-employed borrowers require recent Federal Income Tax Returns and a recent profit/loss statement. An application eventually involves an authorization to inquire into your credit history and in some cases may involve a prior rental verification as well. Last, any down payment funds will be required to be “seasoned” in your account for 60 days in advance of closing.
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 approved.
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 generally excludes other recent mortgage credit inquiries.
It is, however, important to understand that we will require an explanation on all inquiries reflected on your credit report in the period just preceding your application. Additionally, just prior to closing, we are required to make a final inquiry to be sure you haven’t taken on any additional debt that would have to be considered part of your application. It’s important to avoid new credit while your loan application is pending. This final “soft” inquiry does not affect your scores.
How are mortgage interest rates determined?
Mortgage interest rates fluctuate based on a variety of factors, including inflation, the pace of economic growth, and Federal Reserve policy. Our nation’s central bank, the Federal Reserve, implements policies designed to keep inflation and interest rates relatively low and stable.
Additionally, some loan programs require adjustments to stated interest rates based on a loan characteristics such as a Borrower’s credit history or down payment or amount of equity in the home. The online mortgage application and rate quotes are designed to provide you with an accurate quote once we have an indicative score and down payment figure.
Is comparing APRs the best way to decide which lender has the lowest rates and fees?
Federal Regulation requires that all financial institutions disclose the Annual Percentage Rate (the “APR”) when advertising a mortgage rate. The APR is designed to present the actual cost of obtaining financing, by including certain closing fees that are included in the APR calculation.
While the APR is a guideline to shop for loans, other factors should be considered when making your decision on a mortgage lender. Great Midwest Bank offers local, experienced loan officers to keep the process stress-free, along with local loan servicing.
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 (or the “note rate”), the amount you borrow, and the term of your loan.
Mortgage Closing Costs
What makes up mortgage closing costs?
A bank incurs costs to provide your home loan, including the appraisal, title insurance, closing, recording and various other costs. These fees vary from lender to lender.
Great Midwest Bank is mutually owned, which means we have no shareholders to please. That allows us to pass along continued competitive rates and fees to you.
To assist you in evaluating our fees, we’ve grouped them as follows:
Third Party Fees
We consider third party fees including the appraisal fee, the credit report fee, the settlement or closing fee, title insurance fees, flood certification fees, and courier/mailing fees.
Third party fees are fees that we’ll collect and pass on to the person or business 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 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.
Discount points, document preparation fees, and loan processing fees are retained by the lender and are used to provide you with the lowest rates possible.
This is the category of fees that you should compare very closely from lender to lender before making a decision.
Taxes and Other Necessary Prepaid Items
These closing costs include local real estate taxes and recording fees. You also may be asked to prepay some items at closing that will actually be due in the future. These figures are sometimes referred to as “prepaid items.”
One of the more common required advances is called “per diem interest” or “interest due at closing.” You can be charged from the date of closing or disbursement through the end of the month, at closing.
For example, if the home loan is closed on June 15, we’ll collect interest from June 15 through June 30 at closing. This type of charge should not vary from lender to lender, and does not need to be considered when comparing lenders. All lenders will charge you interest beginning on the day the home loan funds are disbursed. It is simply a matter of when it will be collected.
If an escrow or impound account for property taxes and/or insurance will be established, you will make an initial deposit into the escrow account at closing so that sufficient funds are available to pay the bills when they become due. Most other lenders will cushion your escrow account with 2-3 months extra funds, which you will not see until you pay off the loan. At Great Midwest Bank, we generally avoid a “cushion” in escrow.
If your home loan requires mortgage insurance, your closing figure may include one months’ premium. Whether or not your home loan requires mortgage insurance depends on the size of the down payment you make.
If your loan is for a purchase, you’ll also need to pay for your first year’s homeowner’s insurance premium prior to closing. We consider this to be a required advance.
For a purchase loan, can I get a credit towards costs?
Yes, but the credit is limited to the actual closing costs plus prepaid items and may not be used towards down payment. Prepaid items include interest, taxes, insurance and the inspection cost. Additionally, the overall credit is limited based on the price of the property and the amount of your down payment.
Does Great Midwest Bank provide home loan down payment assistance?
Under certain circumstances, homebuyers may be eligible to receive home loan down payment assistance via one or more outside sources. The assistance can take the form of a grant that is forgiven over a period of time (say, for example, five years) or as a loan where repayment is deferred until you decide to sell your home.
Eligibility is most often based on household income, and will vary depending on the number of people that will be occupying the home. The maximum annual income limits are published by HUD and vary by county. For more details, contact one of our Loan Officers.
What is the minimum down payment for a home mortgage loan transaction?
Down payment requirements vary by program. Great Midwest Bank specializes in low down payment options for primary residence purchases, some of which can be gifted by others under certain circumstances. Ask your Loan Officer for more details.
Private Mortgage Insurance
What is mortgage insurance and when is it required?
Mortgage insurance makes it possible for you to buy a home with a low down payment by protecting the lender against the additional risk associated with low down payment lending.
Low down payment mortgages are popular, and by including mortgage insurance, Great Midwest is able to provide mortgages to those customers with a low down payment but with a good credit history and sufficient income to cover the new payment.
The mortgage insurance premium is based on your down payment amount, type of loan, your credit score, debt-to-income ratio and amount of coverage required. Usually, the premium is included in your monthly payment; however options do exist to pay it in a single amount at closing. Ask your Loan Officer for more details.
It may be possible to cancel private mortgage insurance at some point. If you have any questions about when your mortgage insurance could be cancelled, please call 888-485-4400 or email us.
What are my mortgage payment options?
You can make your mortgage pay a few ways:
- By mail
- Pay online (include link for online mortgage payments)
- Visit branch location
How will my home loan payments get applied to my mortgage?
When you make a mortgage payment, you’re paying towards the principal and interest. If your down payment is less than 20%, you’re likely to pay private mortgage insurance, which increases your monthly payment.
Can I make additional payments towards the principal of my mortgage?
For all owner-occupied transactions, yes. Paying extra towards your principal means over the life of the loan, you can reduce the total amount of interest you’ll pay.
Are there penalties for paying off my mortgage early?
For Owner-Occupied mortgages, no.
What happens if I am unable to make a mortgage payment?
Contact us right away to find out if there are any programs available to help you. You may qualify for a temporary payment reduction, or other options. Failing to make a full payment within the grace period can lead to a late fee being assessed.
What is a Mortgage Satisfaction?
When you pay off your mortgage, a Mortgage Satisfaction is filed with the County in which the property is located. It’s a legal document advising that your mortgage has been paid in full, all terms of the loan have been satisfied and there will no longer be a lien on the property.