Home Mortgage FAQ
What are the home mortgage products and terms you have to offer?
We offer a variety of options to fit your needs and lifestyle:
- Conforming Loans - Single-family residence, duplex or townhomes with limited outbuildings.
- Non-conforming Loans - 40+ tillable acres or zoned agricultural with substantial outbuildings. Financing available for unique properties such as log homes, manufactured homes and earth homes.
- Construction/Renovation Loans - Option to pay interest only on loan funds or lock in a long-term, fixed-rate right away. Finance construction of unique properties such as log homes, manufactured homes and earth homes.
- Home Site/Lot Loans - Land purchases for future home construction or refinance land already owned. Low down payments and fixed rate amortization with ARM/balloon options available.
- Recreational Land Loans - Fixed-rate loans to purchase or refinance recreational and hunting land.
- Home Equity Loans - Fixed-rate options.
Do you finance hobby farms?
Yes, we finance unique properties that qualify as hobby farms. These properties can range significantly in size and level of development, but each has the potential to produce some income from livestock, crops and other related activities. As specialists in rural home financing, we can offer many of our clients long-term, fixed-rate loans for homes that also include the following:
- Income-producing acres
- Substantial outbuildings, livestock or other agricultural assets
- Bare land with intent of building later
Why is the rate on the Truth-in-Lending statement different than the rate I discussed with my specialist?
The rate on your Truth-in-Lending statement is the Annual Percentage Rate (APR), which reflects the cost of your mortgage loan as a yearly rate. The APR will usually be greater than the rate of interest on the note because it considers all costs of credit incurred in placing the loan. The APR includes:
- Prepaid interest - collected at closing for the period from the new loan disbursement date through the end of the month
- Origination fees
- Discount points
- Other fees you may pay in conjunction with the loan
The rate of interest on your borrowed funds will be the rate disclosed on the note you sign at closing and is factored into the calculation of the APR. When making comparisons between loan products, always compare APR to APR.
What are my closing costs?
A home loan often involves many fees, including the appraisal fee, title charges, closing fees and state or local taxes. These fees vary from state to state and from lender to lender. To assist you in evaluating our fees, we've grouped them as follows:
- Third-Party Fees - include the appraisal fee, credit report fee, settlement or closing fee, survey fee, tax service fees, title insurance fees, flood certification fees and courier/mailing fees. We will collect third-party fees and pass them on to the person who actually performed the service.
- Taxes and other unavoidable fees - include state/local taxes and recording fees. These fees most likely have to be paid regardless of the lender you choose.
- Lender Fees - include origination fees retained by the lender 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.
- Required Advances - 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 first 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. If your loan requires mortgage insurance, one to two months will be collected at closing. Mortgage insurance depends on the size of the down payment you make.
Where will I close my home loan?
You can choose the title and closing company you prefer to work with. At Compeer Financial, you can complete your entire loan transaction under one roof with our closing team. They can prepare comprehensive and accurate transactional documents, plus the following services:
- Title examination
- Public record search
- Document preparation and seller services
- Construction loan monitoring and disbursement
We have several offices located throughout Illinois, Minnesota and Wisconsin. Our closing team can assist with the closing of your loan at one of our offices that is the most convenient for you.
Why can’t my home loan be placed on the secondary market?
Secondary market lending follows a very strict set of guidelines for property types and borrower requirements. Many times a borrower has outstanding credit history, but the financed property has agricultural or business influence, unique features that other homes in the area may not have or be for bare land, requiring it to be financed through a lender’s portfolio program. Even with outstanding credit, there may be challenges with a borrower’s profile that may not allow secondary market lending to be an option. Most commonly, self-employed borrowers with business debts or a down payment gift are common challenges that make a loan ineligible for secondary market financing. Our portfolio lending is designed to finance properties that do not fit secondary market guidelines, and our flexible guidelines help borrowers with earnings from a self-owned business.
Why do you request so many financials (e.g., tax returns, balance sheets, pay stubs, bank statements, etc.)?
In 2010 Congress created a new federal agency called the Consumer Finance Protection Bureau (CFPB), which enacted a number of new laws to regulate the home mortgage industry. One of the regulations, Ability-to-Repay (ATR) rule, protects consumers from taking on mortgages that exceed their financial means. Our underwriters review your application to consider these eight factors in the loan approval process in order to comply with the ATR regulations:
- Current or reasonably expected income or assets.
- Current employment status.
- Monthly payment on covered transaction.
- Monthly payment on any simultaneous loan.
- Monthly payment for mortgage-related obligations.
- Current debt obligations, alimony and child support.
- Monthly debt-to-income ratio or residual income.
- Credit history.
The underwriting review will often result in requiring additional information in order to properly document the approval of your application.
How long does it take to get a home mortgage loan?
Recognizing a need to allow consumers adequate time to consider the implications of taking out a mortgage loan, government regulations were enacted to allow time to make sure you are doing what is best for your finances and future.
- Mortgage Disclosure Improvement Act - Allows time to review disclosures provided by the lender, not less than 7 days, before closing takes place.
- Appraiser Independence Requirements - Allows time to review the appraisal report, which must be delivered to the client no less than 3 days prior to closing.
- Right of Rescission - 3-day period from date of closing where you may cancel the transaction. Applies to refinance and second mortgage closings and not required on purchases.
Why might I have to escrow?
There are a number of regulations and requirements that stipulate escrow requirements. Typically, any loan borrowing over 80% of the value or purchase price is required to escrow. Depending on the loan terms and guidelines based on the individual circumstances, other regulatory requirements may place escrow requirements on a transaction as well.
Why is my escrow so much?
Escrow is simply a holding deposit for upcoming tax and property insurance payments. On a monthly basis, 1/12th of the annual tax and annual insurance premium is collected with each loan payment. The initial deposits are determined solely based on what month the taxes or insurance payment will be due, ensuring that there is no less than the 12-month balance available before the due date. If your loan is closing near a tax or insurance due date, the initial deposits will be significantly higher than payments that are due further out. We do not collect above the 1/12th level and provide annual reviews and adjustments as payments change.