To determine the value of the property you are purchasing or refinancing, an appraisal will be required. An appraisal report is a written description and estimate of the value of the property. National standards govern not only the format for the appraisal; they also specify the appraiser's qualifications and credentials. In addition, most states now have licensing requirements for appraisers evaluating properties located within their states.The appraiser will create a written report for us and you will be provided a copy at least three days before closing.  If a full appraisal is ordered, the appraiser will inspect both the interior and exterior of the home. After the appraiser inspects the property, they will compare the qualities of your home with other homes that have sold recently in the same neighborhood. These homes are called "comparables" and play a significant role in the appraisal process. Using industry guidelines, the appraiser will try to weigh the major components of these properties (i.e., design, square footage, number of rooms, lot size, age, etc.) to the components of your home to come up with an estimated value of your home. The appraiser adjusts the price of each comparable sale (up or down) depending on how it compares (better or worse) with your property.As an additional check on the value of the property, the appraiser also estimates the replacement cost for the property. Replacement cost is determined by valuing an empty lot and estimating the cost to build a house of similar size and construction.  Finally, the appraiser reduces this cost by an age factor to compensate for depreciation and deterioration.Using these different methods, an appraiser will frequently come up with slightly different values for the property. The appraiser uses judgment and experience to reconcile these differences and then assigns a final appraised value. The comparable sales approach is the most important valuation method in the appraisal because a property is worth only what a buyer is willing to pay and a seller is willing to accept. It is not uncommon for the appraised value of a property to be exactly the same as the amount stated on your sales contract. This is not a coincidence, nor does it question the competence of the appraiser. Your purchase contract is the most valid sales transaction there is. It represents what a buyer is willing to offer for the property and what the seller is willing to accept. Only when the comparable sales differ greatly from your sales contract will the appraised value be very different.

As soon as we receive your appraisal, we will have it reviewed and then have any corrections made.  We will then promptly give you a copy at least three days before closing.

Federal Law requires all lenders to investigate whether or not each home they finance is in a special flood hazard area as defined by FEMA, the Federal Emergency Management Agency.  Floods happen anytime, anywhere.  The Flood Disaster Protection Act of 1973 and the National Flood Insurance Reform Act of 1994 help to ensure that you will be protected from financial losses caused by flooding.

We use a third party company who specializes in the reviewing of flood maps prepared by FEMA to determine if your home is located in a flood area. If it is, then flood insurance coverage will be required, since standard homeowner's insurance doesn't protect you against damages from flooding.

Licensed appraisers who are familiar with home values in your area perform appraisals. When you are your loan officer agree, we will order the appraisal. Generally, it takes 10-14 days before the written report is sent to us. We follow up with the appraiser to insure that it is completed as soon as possible. If you are refinancing, and an interior inspection of the home is necessary, the appraiser should contact you to schedule a viewing appointment. If you don't hear from the appraiser within seven days of the order date, please inform your Loan Officer. If you are purchasing a new home, the appraiser will contact the real estate agent, if you are using one, or the seller to schedule an appointment to view the home. We will promptly give you a copy of the appraisal at least three days before closing.

Interest rates fluctuate based on a variety of factors, including inflation, the pace of economic growth, and Federal Reserve policy. Over time, inflation has the largest influence on the level of interest rates. A modest rate of inflation will almost always lead to low interest rates, while concerns about rising inflation normally cause interest rates to increase. Our nation's central bank, the Federal Reserve, implements policies designed to keep inflation and interest rates relatively low and stable.

An adjustable rate mortgage, or an "ARM" as they are commonly called, is a loan type that offers an alternative to a fixed rate loan. The interest rate can change periodically, usually in relation to an index, and the monthly payment will go up or down accordingly.

Although an ARM might be a good option for you, you should weigh the risk that an increase in interest rates would lead to higher monthly payments in the future.

For many people in a variety of situations, an ARM is the right mortgage choice, particularly if you do not qualify for a fixed rate mortgage or if you only plan on being in the home for three to five years.

Here's some detailed information explaining how ARM's work.

Adjustment PeriodWith most ARMs, the interest rate and monthly payment are fixed for an initial time period such as three years, six years, or ten years. After the initial fixed period, the interest rate can change every year. For example, one of our most popular adjustable rate mortgages is a six-year ARM. The interest rate will not change for the first six years (the initial adjustment period) but can change every year after the first six years.

IndexOur ARM interest rate changes are tied to changes in an index rate. Using an index to determine future rate adjustments provides you with assurance that rate adjustments will be based on actual market conditions at the time of the adjustment. The current value of most indices is published weekly in the Wall Street Journal. If the index rate moves up so does your mortgage interest rate, and you will probably have to make a higher monthly payment. On the other hand, if the index rate goes down your monthly payment may decrease.

MarginTo determine the interest rate on an ARM, we will add a pre-disclosed amount to the index called the "margin." If you're still shopping, comparing one lender's margin to another's can be more important than comparing the initial interest rate, since it will be used to calculate the interest rate you will pay in the future.

Interest-Rate CapsAn interest-rate cap places a limit on the amount your interest rate can increase or decrease. There are two types of caps:

1. Periodic or adjustment caps, which limit the interest rate increase or decrease from one adjustment period to the next.2. Overall or lifetime caps, which limit the interest rate increase over the life of the loan.

As you can imagine, interest rate caps are very important since no one knows what can happen in the future. All of the ARMs we offer have both adjustment and lifetime caps. Please see each product description for full details.

Negative Amortization"Negative Amortization" occurs when your monthly payment changes to an amount less than the amount required to pay interest due. If a loan has negative amortization, you might end up owing more than you originally borrowed. None of the ARMs we offer allow for negative amortization.

Prepayment PenaltiesSome lenders may require you to pay special fees or penalties if you pay off the ARM early. We very seldom charge a penalty for prepayment on residential real estate loans.

Contact a Loan Officer

Selecting a mortgage may be the most important financial decision you will make and you are entitled to all the information you need to make the right decision. Don't hesitate to contact a Loan Officer if you have questions about the features of our adjustable rate mortgages.

Points are considered a form of interest. Each point is equal to one percent of the loan amount. You pay them, up front, at your loan closing in exchange for a lower interest rate over the life of your loan. This means more money will be required at closing, however, you will have lower monthly payments over the term of your loan.

To determine whether it makes sense for you to pay points, you should compare the cost of the points to the monthly payments savings created by the lower interest rate. Divide the total cost of the points by the savings in each monthly payment. This calculation provides the number of payments you'll make before you actually begin to save money by paying points. If the number of months it will take to recoup the points is longer than you plan on having this mortgage, you should consider the loan program option that doesn't require points to be paid.

The Federal Truth in Lending law requires that all financial institutions disclose the APR when they advertise a rate. The APR is designed to present the actual cost of obtaining financing, by requiring that some, but not all, closing fees are included in the APR calculation. These fees in addition to the interest rate determine the estimated cost of financing over the full term of the loan. Since most people do not keep the mortgage for the entire loan term, it may be misleading to spread the effect of some of these up front costs over the entire loan term. Also, unfortunately, the APR does not include all the closing fees and lenders are allowed to interpret which fees they include. Fees for things like appraisals, title work, and document preparation are not included even though you'll probably have to pay them.For adjustable rate mortgages, the APR can be even more confusing. Since no one knows exactly what market conditions will be in the future, assumptions must be made regarding future rate adjustments.You can use the APR as a guideline to shop for loans but you should not depend solely on the APR in choosing the loan program that's best for you. Look at total fees, possible rate adjustments in the future if you're comparing adjustable rate mortgages, and consider the length of time that you plan on having the mortgage.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, the amount you borrow, and the term of your loan.

Mortgage interest rate movements are as hard to predict as the stock market and no one can really know for certain whether they will go up or down. If you have a hunch that rates are on an upward trend then you will want to consider locking the rate as soon as you are able. LNB Community Bank offers rate locks on secondary market loans.  Before you decide to lock, make sure that your loan can close within the lock-in period. It will not do any good to lock your rate if you cannot close during the rate lock period.  If you're purchasing a home, review your contract for the estimated closing date to help you choose the right rate lock period. If you are refinancing, in most cases, your loan could close within 30-45 days. However, if you have any secondary financing on the home that will not be paid off, allow some extra time since we will need to contact that lender to get their permission.You always have the option in taking a risk and letting your rate "float" instead of locking.

We do require you sign a form to lock in your rate.

Many of our conventional home loan programs we offer do not have penalties for prepayment. With these programs, you can pay off your mortgage any time with no additional charges.

General StatementThe 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.  LNB Community Bank allows the option to lock your rate in on loans sold to the secondary market.Lock-In AgreementA lock is an agreement must be signed by the borrower and the lender.  This agreement specifies the number of days for which a loan’s interest rate and points are guaranteed.  Should interest rates rise during that period, we are obligated to honor the committed rate. Should interest rates fall during that period, the borrower must honor the lock.When Can I Lock?Once your loan application has been approved, your Loan Officer will contact you to discuss locking your rate. FeesWe do not charge a fee for locking in your interest rate.Lock PeriodWe currently offer 14, 28, 30 and 45 day lock-in periods depending on the secondary market lender. This means your loan must close and disburse within this number of days from the day your lock is confirmed by us.Lock ChangesOnce we accept your lock, your loan is committed into a secondary market transaction. Therefore, we are not able to renegotiate lock commitments without charging a pair-off penalty.

A home loan often involves many fees, such as the appraisal fee, title charges, closing fees, recording 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 more difficult to tell which lenders have done their homework and are providing a complete and accurate estimate. We take quotes very seriously. We have completed the research necessary to make sure that our fee quotes are accurate to the city level - and that is no easy task!

To assist you in evaluating our fees, we've grouped them as follows:

Third Party FeesFees that we consider third party fees include the appraisal fee, appraisal review fee, the credit report fee, title insurance fees, flood certification fees, and courier/mailing fees.

Third party fees are fees that we will collect and pass on to the person 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 or an attorney is paid the title insurance fees.

Typically, you will 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. You may also see that some lenders absorb minor third party fees such as the flood certification fee or courier/mailing fees.

Taxes and other unavoidablesFees 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 do not quote you fees that include taxes and other unavoidable fees, do not assume that you will not have to pay it. It probably means that the lender who does not tell you about the fee has not done the research necessary to provide accurate closing costs.

Lender FeesFees such as points, document preparation fees, escrow 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 AdvancesYou 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." Some of our loan products have payment due dates of the 1st of the month. On these loan types, if your loan is closed on any day other than the first of the month, you will pay interest from the date of closing through the end of the month, at closing. For example, if the loan is closed on June 15, we will collect interest from June 15 through June 30 at closing. This also means that you will not 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 your loan requires mortgage insurance, up to three months of the mortgage insurance will be collected at closing. Whether or not you must purchase mortgage insurance depends on the size of the down payment you make.

If your loan is a purchase and you are escrowing your taxes and insurance, you will also need to pay for your first year's homeowner's insurance premium prior to closing. We consider this to be a required advance.  If you are not escrowing, we require you pay for at least the first month of insurance prior to closing.

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 property taxes, homeowners insurance and mortgage insurance if applicable, when they become due.

If you've ever purchased a home before, you may already be familiar with the benefits and terms of title insurance. But if this is your first home loan or you are refinancing, you may be wondering why you need another insurance policy.

The answer is simple: The purchase of a home is most likely one of the most expensive and important purchases you will ever make. You, and especially your mortgage lender, want to make sure the property is indeed yours: That no individual or government entity has any right, lien, claim, or encumbrance on your property.

The function of a title insurance company is to make sure your rights and interests to the property are clear, that transfer of title takes place efficiently and correctly, and that your interests as a homebuyer are fully protected.

Title insurance companies provide services to buyers, sellers, real estate developers, builders, mortgage lenders, and others who have an interest in real estate transfer. Title companies typically issue two types of title policies:

1) Owner's Policy. This policy covers you, the homebuyer.2) Lender's Policy. This policy covers the lending institution over the life of the loan.

Both types of policies are issued at the time of closing for a one-time premium, if the loan is a purchase. If you are refinancing your home, you probably already have an owner's policy that was issued when you purchased the property, so we'll only require that a lender's policy be issued.

Before issuing a policy, the title company performs an in-depth search of the public records to determine if anyone other than you has an interest in the property. The search may be performed by title company personnel using public records.

After a thorough examination of the records, any title problems are usually found and can be cleared up prior to your purchase of the property. Once a title policy is issued, if any claim covered under your policy is ever filed against your property, the title company will pay the legal fees, up to a certain amount, involved in the defense of your rights. They are also responsible to cover losses, up to a certain amount, arising from a valid claim. This protection remains in effect as long as you or your heirs own the property.

The fact that title companies try to eliminate risks before they develop makes title insurance significantly different from other types of insurance. Most forms of insurance assume risks by providing financial protection through a pooling of risks for losses arising from an unforeseen future event, say a fire, accident or theft. On the other hand, the purpose of title insurance is to eliminate risks and prevent losses caused by defects in title that may have happened in the past.

This risk elimination has benefits to both the homebuyer and the title company. It minimizes the chances that adverse claims might be raised, thereby reducing the number of claims that have to be defended or satisfied. This keeps costs down for the title company and the premiums low for the homebuyer.

Buying a home is a big step emotionally and financially. With title insurance you are assured that any valid claim against your property will be borne by the title company, and that the odds of a claim being filed are slim indeed.

First of all, let's make sure that we mean the same thing when we discuss "mortgage insurance." Mortgage insurance should not be confused with mortgage life insurance, which is designed to pay off a mortgage in the event of a borrower's death. Mortgage insurance makes it possible for you to buy a home with less than a 20% down payment by protecting the lender against the additional risk associated with low down payment lending. Low down payment mortgages are becoming more and more popular, and by purchasing mortgage insurance, lenders are comfortable with down payments as low as 3 - 5% of the home's value. It also provides you with the ability to buy a more expensive home than might be possible if a 20% down payment were required.

The mortgage insurance premium is based on loan to value ratio, type of loan, and amount of coverage required by the lender. Usually, the premium is included in your monthly payment and one to two months of the premium is collected as a required advance at closing.

It may be possible to cancel private mortgage insurance at some point, such as when your loan balance is reduced to a certain amount - below 75% to 80% of the property value. Federal Legislation requires automatic termination of mortgage insurance for many borrowers, if you meet certain criteria, such as when their loan balance has been amortized down to 78% of the original property value. They are other requirements for cancellation of private mortgage insurance.  If you have any questions about when your mortgage insurance could be cancelled, please contact your Loan Officer.

Yes, applying for a mortgage loan before you find a home may be the best thing you could do!  Although, LNB Community Bank does not have a pre-approval program, if you apply for your mortgage now, we can pre-qualify you based on information you submit through an application subject to finding the perfect home.  Although we do not offer these online, any of our mortgage professionals can see you in person to get this process started.  If pre-qualified, we can offer you a pre-qualification letter and you can use this letter to assure real estate brokers and sellers that you are a qualified buyer*. Having this for a mortgage may give more weight to any offer to purchase that you make. 

When you find the perfect home, you'll simply call your Loan Officer to complete your application. We will then gather the necessary documentation and complete the processing of your request. * Subject to program terms, program conditions and underwriting approval once a home is found.

A credit score is one of the pieces of information that we'll use to evaluate your application.  Most financial institutions use credit scoring to assist in loan decisions.

Credit scores are based on information collected by credit bureaus and information reported each month by your creditors about the balances you owe and the timing of your payments. A credit score is a compilation of all this information converted into a number that helps a lender to determine the likelihood that you will repay the loan on schedule. The credit score is calculated by the credit bureau, not by the lender. Credit scores are calculated by comparing your credit history with millions of other consumers. They have proven to be a very effective way of determining credit worthiness.

Some of the things that affect your credit score include your payment history, your outstanding obligations, the length of time you have had outstanding credit, the types of credit you use, and the number of inquiries that have been made about your credit history in the recent past.

Credit scores used for mortgage loan decisions range from approximately 300 to 900. Generally, the higher your credit score, the lower the risk that your payments won't be paid as agreed.

Using credit scores to evaluate your credit history allows us to quickly and objectively evaluate your credit history when reviewing your loan application. However, there are many other factors when making a loan decision and we never evaluate an application without looking at the total financial picture of a customer.

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 doesn't include any mortgage or auto loan credit inquiries that are made within the 30 days prior to the score being calculated. In addition, all mortgage inquiries made in any 14-day period are always considered one inquiry. Don't limit your mortgage shopping for fear of the effect on your credit score.

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 and your loan goes to closing.

Any student loan that will go into repayment within the next twelve months should be included in the application. If you are not sure exactly what the monthly payment will be at this time, enter an estimated amount.  We will need verification of what the payment will be when it comes out of deferment before loan approval.

If other student loans are reflected on your final credit report, which will not go into repayment in the next twelve months, we may need to ask you for verification that repayment will not be required during this time period.

An installment debt is a loan that you make payments on, such as an auto loan, a student loan or a debt consolidation loan. Do not include payments on other living expenses, such as insurance costs or medical bill payments. We'll include any installment debts that have more than 10 months remaining when determining your qualifications for this mortgage.

The closing will take place at the LNB Community Bank branch of your choice (Lynnville, Chandler, Newburgh, or Boonville). If you are purchasing a new home, the seller will also be at the closing to transfer ownership to you.During the closing you will be reviewing and signing several loan papers. The Loan Officer conducting the closing should be able to answer any questions you have.Just to make sure there are no surprises at closing, the loan department will provide you with your Closing Disclosure at least 3 days before closing. The most important documents you will be signing at the closing include:Closing DisclosureThis document provides an itemized listing of the final fees charged in connection with your loan. If your loan is a purchase, the Closing Disclosure will also include a listing of any fees related to the transaction between you and the seller. If this loan will be a refinance, the Closing Disclosure will show the payoff amounts of any mortgages that will be paid in full with your new loan. Most items on the disclosure are numbered according to a standardized system used by all lenders. These numbers will correspond to the numbers listed on the Loan Estimate that will be provided in your application package. This document provides full written disclosure of the terms and conditions of a mortgage, including the annual percentage rate (APR).  Federal law requires that all lenders provide you with this document at closing.This document is also commonly known as the closing statement and both the buyer and seller must sign this document.  NoteThis is the document you sign to agree to repay your mortgage. The note will provide you with all of the details of your loan including the interest rate and length of time to repay the loan. It also explains the penalties that you may incur if you fall behind in making your payments.Mortgage / Deed of TrustThis document pledges a property to the lender as security for repayment of a debt. Essentially this means that you will give your property up to the lender in the event that you cannot make the mortgage payments. The Mortgage restates the basic information contained in the note, as well as details the responsibilities of the borrower. In some states, the document is called a Deed of Trust instead of a Mortgage.If your loan is a refinance, Federal Law requires that you have three days to decide positively that you want a new mortgage after you sign the documents. This means that the loan funds won't be disbursed until three business days have passed.

Your Closing Disclosure will be provided to you at least three days before closing for you to review your new loan terms.

Automated monthly payments are available. At the loan closing an automated payment application will be provided. Simply return it at your earliest convenience to enroll in the automated payment program.