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'll be given a copy at your loan closing.  If you would like to review it earlier, your Loan Officer would be happy to provide it to you.

Usually the appraiser will inspect both the interior and exterior of the home.   However, in some cases, only an exterior inspection will be necessary.   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.  If your home is for investment purposes, or is a multi-unit home, the appraiser will also consider the rental income that will be generated by the property to help determine the value.  Using these three 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'll update your loan with the estimated value of the home. As a standard practice we will provide a copy of your appraisal at closing.

Both a home inspection and an appraisal are designed to protect you against potential issues with your new home.  Although they have totally different purposes, it makes the most sense to rely on each to help confirm that you've found the perfect home.

The appraiser will make note of obvious construction problems such as termite damage, dry rot or leaking roofs or basements.  Other obvious interior or exterior damage that could affect the salability of the property will also be reported.   However, appraisers are not construction experts and won't find or report items that are not obvious.  They won't turn on every light switch, run every faucet or inspect the attic or mechanicals.   That's where the home inspector comes in.   They generally perform a detailed inspection and can educate you about possible concerns or defects with the home.  Accompany the inspector during the home inspection.  This is your opportunity to gain knowledge of major systems, appliances and fixtures, learn maintenance schedules and tips, and to ask questions about the condition of the home.

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.   The law can't stop floods.   Floods happen anytime, anywhere.   But 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.

We define manufactured housing as housing units that are factory built with a steel undercarriage that remains as a structural component and limits the structure to a single story. These types of manufactured homes are sometimes known as mobile homes. We do not consider other factory-built housing (not built on a permanent chassis), such as modular, prefabricated, panelized, or sectional housing, to be manufactured housing. If your home is one of these types, please complete the application indicating that your home is a single family home.

In order for a manufactured home to qualify for our loan programs the home must meet the following requirements:

• A manufactured home is any dwelling built on a permanent chassis.
• Be a one-family dwelling that is legally classified as real property.
• To qualify for the loans offered in the mortgage area of our web site, the land on which the manufactured home is situated must be owned by you.  We do offer financing for manufactured homes located on rented or leased land, but you will need to apply for a different loan type through our consumer loan application online or by calling our consumer loan department at 800-462-9515.
• Must have been built in compliance with the Federal Manufactured Home Construction and Safety Standards that were established June 15, 1976. Generally, compliance with these standards will be evidenced by the presence of a HUD Data Plate that is affixed near the main electrical panel of the home or in another readily accessible and visible location.
  
  

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

Against the advantage of the lower payment at the beginning of the loan, 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.

Here's some detailed information explaining how ARMs work.

Adjustment Period 

With most ARMs, the interest rate and monthly payment are fixed for an initial time period such as one year, three years, five years, or ten years.   After the initial fixed period, the interest rate can change every year, three years, or five years depending on the product.   For example, one of our most popular adjustable rate mortgages is a five-year ARM.   The interest rate will not change for the first five years (the initial adjustment period) and can change every five years until maturity of the loan.

Index 

Our 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.

Margin 

To determine the interest rate on an ARM, we'll 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 Caps 

An 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 limit the interest rate increase or decrease from one adjustment period to the next. 

2. Overall or lifetime caps 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.

Prepayment Penalties 

Some lenders may require you to pay special fees or penalties if you pay off an ARM early.  We do not charge a penalty for prepayment.

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.

A 15-year fixed rate mortgage gives you the ability to own your home free and clear in 15 years.  And, while the monthly payments are somewhat higher than a 30-year loan, the interest rate on the 15-year mortgage is usually a little lower, and more important - you'll pay less than half the total interest cost of a traditional 30-year mortgage.

However, if you can't afford the higher monthly payment of a 15-year mortgage, don't feel alone.  Many borrowers find the higher payment out of reach and choose a 30-year mortgage.  It still makes sense to use a 30-year mortgage for most people.

Advantages and Disadvantages of a 15-year fixed rate mortgage

The 15-year fixed rate mortgage offers two big advantages for most borrowers:

• You own your home in half the time it would take with a traditional 30-year mortgage.
• You save more than half the amount of interest of a 30-year mortgage.  Lenders usually offer this mortgage at a slightly lower interest rate than with 30-year mortgages - typically up to .5% lower.  It is this lower interest rate added to the shorter loan life that creates real savings for 15-year fixed rate borrowers.

The possible disadvantages associated with a 15-year fixed rate mortgage are:

• The monthly payments for this type of loan are roughly 10 percent to 15 percent higher per month than the payment for a 30-year fixed rate mortgage.
• Because you'll pay less total interest on the 15-year fixed rate mortgage, you won't have the maximum mortgage interest tax deduction possible.

Compare Them Yourself

Use the "How much can I save with a 15 year mortgage?" calculator in our Resource Center to help decide which loan term is best for you.

There's no cost at all for completing our application.   After your loan is approved, you can decide whether you wish to pay the application deposit to cover the cost of the appraisal and final credit report so that you can lock in an interest rate and we can begin to process your request.

None of the loan programs we offer have penalties for prepayment.  You can pay off your mortgage any time with no additional charges.

After submitting your application, you will be contacted by The Honesdale National Bank to discuss the rates and terms for which you have applied and to also discuss all of your possible options to be sure you get the mortgage loan that is perfect for you.

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 more difficult to tell which lenders have done their homework and are providing a complete and accurate estimate. We take quotes very seriously. We've 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 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.

Third party fees are 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, a credit bureau is paid the credit report fee, and a title company or an attorney is 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.  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 unavoidables 

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 it.  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 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 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 1st 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, at closing.  For example, if the loan is closed on June 15th, we'll collect interest from June 15th through June 30th at closing.  This also means that you won't make your first mortgage payment until August 1st.  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 or not you must purchase mortgage insurance depends on the amount of the down payment you make.  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.

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 either public records or, more likely, the information contained in the company's own title plant.  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 involved in the defense of your rights.  They are also responsible to cover losses 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, such as 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.

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.   Recent Federal legislation requires automatic termination of mortgage insurance for many borrowers when their loan balance has been amortized down to 78% of the original property value.  If you have any questions about when your mortgage insurance could be cancelled, please contact your Loan Officer.

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.  The best way to determine what loan amount we can offer is to complete our online application!

A credit score is one of the pieces of information that we'll use to evaluate your application.   Financial institutions have been using credit scores to evaluate credit card and auto applications for many years.

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.   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.  However, 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. 

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.

Yes, discussing a mortgage loan before you find a home may be the best thing you could do!   If you enter some basic information now, we may be able to issue a Pre-qualification letter online instantly. You can use the Pre-qualification letter to assure real estate brokers and sellers that you are a qualified buyer.  Having a Pre-qualification for a mortgage may give more weight to any offer to purchase that you make.

Then, when you find the perfect home, simply call your Loan Officer to complete your application.  You will have an opportunity to choose from our great mortgage options and we'll complete the processing of your request.

First, you'll complete our online application! 

The application will ask you questions about the home and your finances and takes less than 20 minutes to complete.  As soon as you've finished the application we'll review your request.  

After completing your application, a Loan Officer will contact you to introduce themselves and to answer any questions you may have.  We are mortgage experts and will provide help and guidance along the way.  If your request wasn't approved online, he or she will ask you for any information required to make a decision about your loan.

If you are purchasing a new home, the Loan Officer will also contact the real estate broker or the seller so that they'll know whom to contact with questions.  

We'll send you an application kit and prepare your loan for closing.

The application kit will be sent to you and 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 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 the appraiser will need to view the home.  Sometimes they are able to do their evaluation from the street and won't have to make an appointment with you to view the inside of your home.

Title insurance may be necessary.  If you're purchasing a home, we'll work with the real estate broker or seller to ensure the title work is ordered as soon as possible.  If you are refinancing we'll take care of ordering the title work for you.  We'll use the title insurance to confirm the legal status of your property and to prepare the closing documents.

 We'll contact you to coordinate your closing date.

After we received the application kit back from you and the appraisal and title work, we'll contact you to schedule your loan closing.  If you are purchasing a home, we'll also schedule the closing with the real estate broker and the seller.

If you were in school before your current job, enter the name of the school you attended and the length of time you were in school in the "length of employment" fields.   You can enter a position of "student" and income of "0."

First, you'll complete our online application. 

The application will ask you questions about the home and your finances and takes less than 20 minutes to complete.

After you complete the online application, a Loan Officer will contact you to introduce themselves 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 send 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 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 they 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.

 We will contact you to coordinate your closing date. 

After we receive the application package back from you and the appraisal and title work, we'll contact you to schedule your loan closing.

A home equity line is a form of revolving credit in which your home serves as collateral.

With a home equity line, you will be approved for a specific amount of credit meaning the maximum amount you can borrow at any one time while you have the plan.

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