FDIC Mortgages Protection

Q :        How do I know how much house I can afford?
A :        Generally speaking, you can purchase a home with a value of two or three times your annual household income. However, the amount that you can borrow will also depend upon your employment history, credit history, current savings and debts, and the amount of down payment you are willing to make. You may also be able to take advantage of special loan programs for first time buyers to purchase a home with a higher value. Give us a call, and we can help you determine exactly how much you can afford.

Q :        What is the difference between a fixed-rate loan and an adjustable-rate loan?
A :        With a fixed-rate mortgage, the interest rate stays the same during the life of the loan. With an adjustable-rate mortgage (ARM), the interest changes periodically, typically in relation to an index. While the monthly payments that you make with a fixed-rate mortgage are relatively stable, payments on an ARM loan will likely change. There are advantages and disadvantages to each type of mortgage, and the best way to select a loan product is by talking with us.

Q :        How do I know which type of mortgage is best for me?
A :        There is no simple formula to determine the type of mortgage that is best for you. This choice depends on a number of factors, including your current financial picture and how long you intend to keep your house. Citizens First Bank can help you evaluate your choices and help you make the most appropriate decision.

Q :        What does my mortgage payment include?
A :        For most homeowners, the monthly mortgage payments include three separate parts:
Principal: Repayment on the amount borrowed
Interest: Payment to the lender for the amount borrowed
Taxes & Insurance: Monthly payments are normally made into a special escrow account for items like hazard (homeowners) insurance and city or county property taxes. This feature is sometimes optional, in which case the fees will be paid by you directly to the County Tax Assessor and property insurance company.
The payment for your mortgage loan will be due on the 1st day of each month.

Q :        How much cash will I need to purchase a home?
A :        The amount of cash that is necessary depends on a number of items. Generally speaking, though, you will need to supply:
Earnest Money: The deposit also known as earnest money that is supplied when you make an offer on the house
Down Payment: A percentage of the cost of the home that is due at settlement (closing), generally a minimum of 3%, 20% if you do not want to pay private mortgage insurance on a conventional loan
Closing Costs: Costs associated with processing paperwork to purchase or refinance a house

Q :        What is an abstract of title?
A :        A condensed history, taken from public records or documents, of the ownership of a piece of land. An abstract of title, or title abstract, briefly summarizes the various activities affecting ownership of a parcel of land. When a person or business agrees to purchase real estate, that person or business arranges for an examination of the history of the property’s title. This examination is known as a title search. A title search is conducted to determine that the seller of the property in fact owns the property and has a free-and-clear title. A free-and-clear title has no clouds on it, which means that no person or business other than the seller has an interest in, or claim to, the property. If you own property in Iowa, you will need to know the location of your abstract.

Q :        What is Private Mortgage Insurance (PMI)?
A :        Private Mortgage Insurance is an insurance policy paid for monthly by the borrower which compensates lenders for losses due to the default of a conventional mortgage loan. Mortgage insurance is required for any long term fixed rate conventional mortgage with less than a 20% down payment when purchasing a home, or if the equity in a home loan refinance transaction is less than 20%. The monthly cost of mortgage insurance will in part be based on a combination of the borrower’s credit scores and the amount of down payment made. A greater down payment will reduce the cost of the monthly mortgage insurance on a conventional loan. A down payment of 20% (or equity in a home) will avoid the requirement for mortgage insurance. Mortgage insurance in most cases is dropped when the loan balance reaches 78% of the loan to value (LTV) of the original purchase price or appraised value, whichever is less. Ask your loan officer for more details specific to your transaction.

Q :        What is your lending area?
A :        Citizens First Bank lending territory covers the following Iowa and Illinois counties: Clinton County, Iowa; Jackson County, Iowa; Whiteside County, Illinois; and Carroll County, Illinois. Call to inquire about other surrounding counties in Iowa or Illinois.