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How do FHA and VA loans differ from conventional loans?

FHA and VA loans are insured and administered by the federal government. Both loan types generally require lower down payments and have more lenient lending requirements than conventional loans. (Only qualified veterans can obtain VA loans.) Additionally, FHA and VA loans have established maximum loan amounts. Not every lender can offer ‘government’ loans, but First Internet Bank does. It’s always a good idea to talk to one of our mortgage loan experts, who can help you compare all eligible loan programs to determine which is best for your situation.

What is a home equity line of credit?

A home equity line of credit is a form of revolving credit in which your home serves as collateral. Because your home is likely your largest asset, you should consider a home equity line of credit for the purchase of major items such as education, home improvements, or medical bills and not for day-to-day expenses.

With a home equity line, you will be approved for a specific amount of credit — your credit limit — meaning the maximum amount you can borrow at any one time. Since you can get approved for an amount of credit now and not access the funds until you need them, a home equity line of credit is a good choice if you simply want the ability to access cash as you need it.

With our home equity line, you’ll have the ability to access funds, up to the amount of your credit limit, by simply writing a check. A small supply of checks will be sent to you after closing. The monthly payment for a home equity loan is typically based on your daily balance and the daily interest rate.

If you are thinking about a home equity line of credit, you also might want to consider a more traditional second mortgage loan. This type of loan provides you with a fixed amount of money repayable over a fixed period. Usually, the payment schedule calls for equal payments that will pay off the entire loan within that time. You might consider a traditional second mortgage loan instead of a home equity line if, for example, you need a set amount for a specific purpose, such as an addition to your home.

What happens if I have a second mortgage that I don’t want to pay off with my first mortgage?

In this situation, you’ll have a little extra work to do. We’ll need to get the permission of your second mortgage lender to pay off your existing first mortgage and replace it with your new first mortgage. Generally, their major concern will be the relationship of your new loan amount to the value of the home.

Your second mortgage lender will probably ask us to provide some documentation such as a copy of the mortgage note you’ll be signing and the appraisal before they provide their approval. We won’t be able to schedule your loan closing until we receive their approval. You may want to consider a lock period of more than 30 days to ensure we don’t run out of time.

Am I obligated to continue after I submit my loan application?

There’s absolutely no obligation to close the loan with us — even after you submit your loan for approval.

How are mortgage closing fees 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. Any lender or broker should be able to give you an estimate of their fees, but it is difficult to tell which lenders have done their homework and are providing a complete and accurate estimate.

At First Internet Bank, we take quotes very seriously! We’ve completed the research necessary to make sure that our fee quotes are accurate — down to the city level. Below is some more detailed information to help you understand our fees.

Third Party Fees: 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 and a title company or an attorney is paid the title insurance fees.) Fees that we consider third party fees include the appraisal fee, the credit report fee, the settlement or closing fee, the survey fee, tax service fees, title insurance fees, flood certification fees, and courier/mailing 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 one that offers nationwide coverage at a flat rate. You may also see that some lenders absorb minor third party fees such as the flood certification fee, the tax service fee, or courier/mailing fees.

Taxes and Other Fees: 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 them. It probably means that the lender who doesn’t tell you about the fee hasn’t done the research necessary to provide accurate closing costs.

Lender Fees: Fees such as 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.

Required Advances: You may be asked to pre-pay some items at closing that will actually be due in the future. These fees are sometimes referred to as pre-paid 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 day 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. 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 loan funds are disbursed. It is simply a matter of when it will be collected. If an escrow or impound account 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. If your loan requires mortgage insurance, up to two months of the mortgage insurance will be collected at closing. Whether you must purchase mortgage insurance depends on the size of your down payment. If your loan is 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.

What is your rate lock policy?

General Statement: The interest rate market is subject to movements without advance notice. Locking in a rate protects you from the time that your lock is confirmed to the day that your lock period expires.

Lock-In Agreement: A lock is an agreement by the borrower and the lender and specifies the number of days for which a loan’s interest rate and discount points are guaranteed. Should interest rates rise during that period, the lender is obligated to honor the committed rate. Should interest rates fall during that period, the borrower must honor the lock.

Timing: You may lock your rate by contacting one of our Loan Officers at 1-866-742-5158.

Fees: We do not charge a fee for locking in your interest rate.

Lock Period: We offer various lock-in periods and you should discuss your options with your loan officer. Your loan must close and disburse within the lock period from the day your lock is confirmed by us.

Lock Changes: Once we accept your lock, your loan is committed into a secondary market transaction. Therefore, we are not able to renegotiate lock commitments.

What is the maximum percentage of my home’s value that I can borrow?

The maximum percentage of your home’s value depends on the purpose of your loan, how you use the property, and the loan type you choose. So the best way to determine what loan amount we can offer is to complete our online application!

What can I expect when I apply for a home equity loan?

First, you’ll complete our online application. The application will ask you questions about the home and your finances, and it takes less than 20 minutes to complete.

After you complete the online application, a Loan Officer will contact you to introduce himself/herself and to answer any questions you may have. Your Loan Officer is a mortgage expert and will provide help and guidance along the way. We’ll email you an application package and prepare your loan for closing.

The application package will contain papers for you to sign and a list of items we’ll need to verify the information you provided about your finances during the online application. We’ll provide instructions for submitting your information electronically and a toll-free fax number to make it as easy as possible for you to return the papers and we’ll order a final credit report and determine if an appraisal is required. If necessary, we will contact you to make arrangements to pay for the appraisal.

We’ll order the appraisal from a licensed appraiser who is familiar with home values in your area. Depending on your finances and the loan amount requested, different types of appraisals are used. Sometimes appraisers can do their evaluation from the street and won’t have to make an appointment with you to view the inside of your home.

A title report or title insurance will be necessary and we’ll take care of ordering that for you. We’ll use the title work to confirm the legal status of your property and to prepare the closing documents. Then we’ll contact you to coordinate your closing date.

After we receive and validate the information we requested from you, and the appraisal and title work, we’ll contact you to schedule your loan closing. That’s all there is to it!

I’m not sure of the amount of my real estate taxes. What should I do?

If you’re not exactly sure of the annual real estate taxes for the property you are purchasing or refinancing, an estimate will do. The appraiser and title company will provide us with the exact amount later. If you do need to estimate the amount, shoot for the high side just to be safe.

I am refinancing my home. Why do you need to know when I originally purchased my home?

The year you purchased your home and the price you paid for it are provided to the appraiser to assist them in finding data about your home through local public records. In addition, if you purchased your home in the last year, some of the loan programs we offer require us to compare the original purchase price to the current appraised value so that any large increases in value can be justified.

If you don’t remember the exact year and purchase price of the property, an estimate will work just fine.