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To determine the value of the property you are pulling home equity from, 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.

In addition to verifying that your home's value supports your loan request, we'll also verify that your home is as marketable as others in the area. We'll want to be confident that if you decide to sell your home, it will be as easy to market as other homes in the area.

We certainly don't expect that you'll default under the terms of your loan and that a forced sale will be necessary, but as the lender, we'll need to make sure that if a sale is necessary, it won't be difficult to find another buyer.

We'll review the features of your home and compare them to the features of other homes in the neighborhood. We'll also make sure that the value of your home is in the same range as other homes in the area. If the value of your home is substantially more than other homes in the neighborhood, it could affect the market acceptance of the home if you decide to sell. We'll also review the market statistics about your neighborhood. We'll look at the time on the market for homes that have sold recently and verify that values are steady or increasing.

As soon as we receive your appraisal, we'll update your loan with the estimated value of the home. We will promptly give you a copy of any appraisal, even if your loan does not close.

Since the value and marketability of condominium properties is dependent on items that don't apply to single-family homes, there are some additional steps that must be taken to determine if condominiums meet our guidelines.

One of the most important factors is determining if the project that the condominium is located in is complete. In many cases, it will be necessary for the project, or at least the phase that your unit is located in, to be complete before we can provide financing. The main reason for this is, until the project is complete, we can't be certain that the remaining units will be of the same quality as the existing units. This could affect the marketability of your home.

In addition, we'll consider the ratio of non-owner occupied units to owner-occupied units. This could also affect future marketability since many people would prefer to live in a project that is occupied by owners rather than renters.

We'll also carefully review the appraisal to insure that it includes comparable sales of properties within the project, as well as some from outside the project. Our experience has found that using comparable sales from both the same project as well as other projects gives us a better idea of the condominium project's marketability.

Depending on the percentage of the property's value you'd like to finance, other items may also need to be reviewed.

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.

Licensed appraisers who are familiar with home values in your area perform appraisals. We order the appraisal as soon as the application deposit is paid. 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. An interior inspection of the home is necessary, the appraiser will contact you to schedule an appointment. If you don't hear from the appraiser within seven days of the order date, please inform your loan professional.

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

• A manufactured home is any dwelling built on a permanent chassis and attached to a permanent foundation system.
  
  
• Be a one-family dwelling that is legally classified as real property.
  
  
• The towing hitch, wheels, and axles must have been removed and the home must be permanently attached to a foundation system that meets state and local codes as well as the manufacturer’s requirements.
  
  
• Foundation system must be appropriate for the soil conditions for the site and meet local and state codes.
  
  
• The land on which the manufactured home is situated must be owned by you. We do not provide financing for manufactured homes located on rented or leased land.
  
  
• 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.
  
  
• Must be at least double-width, 24 feet wide, and have a minimum 600 square feet of gross living area. Must be acceptable to typical purchasers in the market area.

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.

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

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 between the borrower and the lender which specifies the number of days for which a loan’s interest rate and discount 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?

In some cases, your online application will provide all the information needed and you will have the option to lock immediately at time of application. Otherwise, you will be invited back to lock after we have reviewed your documentation and credit package. With a pre-approval you will be given the option to lock once you have signed a purchase agreement for your new home. Your Mortgage Representative will notify you when you are able to lock.

Lock Period

The lock-in agreement shall become binding when signed by you and the Bank and is in effect for 60 days for existing properties, 90 days for construction financing or 270 days for new construction, with a closing upon completion.

Lock-In Options

Option A) Lock: The interest rate in effect the day you execute a lock in agreement, is the interest rate you will be charged, assuming your mortgage loan closes within the lock-in period. 

Option B) Float: The Bank is not locking in any interest rate.  The rate is established based on the prevailing rate in effect as of the date the Bank determines your loan is “clear to close”.  This could result in a delayed closing date of up to ten (10) business days.

“Prevailing rate” is the interest rate that the Bank charges for your type of loan on any particular day.  The rate takes into consideration market conditions at the time and is determined at the sole discretion of the Bank.

“Clear to close” is defined as the date that all contingencies that will be stated in the commitment letter are satisfied, with the exception of requirements related to title and documents required by the Bank’s closing attorney.

Option C) Rate Float Down: A lock-in fee of ½% of the loan amount is required to lock-in the terms of this option.  This fee will be charged at time of closing and will be shown on a Revised Loan Estimate or Closing Disclosure. 

The interest rate in effect the day you execute a Lock-In Agreement is the interest rate you will be charged, assuming your  mortgage closes within the original lock-in period.  This option may be used more than once.

This option is typically exercised when Option A was chosen and rates decrease prior to lock in expiration.

Note: THE LOCK-IN AGREEMENT DOES NOT GUARANTEE THAT THE LOAN WILL CLOSE BY THE EXPIRATION DATE. ELECTION OF THE PREVAILING RATE OPTION; OR ANY CONVERSION OF; OR EXPIRATION IN LOCK-IN OPTIONS MAY RESULT IN A DELAYED CLOSING DATE OF UP TO TEN (10) BUSINESS DAYS.

If Option A (Lock) was chosen, you are eligible to convert to Option C up to ten (10) business days prior to closing, allowing you to receive the current market (prevailing) rate.   Upon expiration, your rate will be the higher of the lock in rate or prevailing rate at expiration.  However, you may re-lock the rate under Option C for a 1/2% Lock-In Fee up to ten (10) business days prior to closing, allowing you to receive the current market rate. 

If Option B (Float) is chosen at time of application, you are eligible to convert to Option A up to ten (10) business days prior to loan closing. This could result in a delayed closing date of up to ten (10) business days.

If Option C (Rate Float Down) was chosen, you may not convert to Option A at any time.  Upon expiration, your rate will be the higher of the lock in rate or prevailing rate at expiration.   However, you may re-lock the rate under Option C for an additional 1/2% Lock-In Fee up to ten (10) business days prior to closing, allowing you to receive the current market (prevailing) rate. 

Conversion from Rate Lock Option A to Rate Lock Option C or a subsequent relock under Option C will not extend the expiration date of the original Lock In Agreement. 

Extensions to the Rate Lock period are available based on the below schedule:

Extension Period     Fee
30 day                    .125%
60 day                    .25%
90 day                    .375%
120 day                  .50%

CONVERSION FROM OPTION A or OPTION C, ONCE AGREED TO BY YOU AND THE BANK, IS NOT AN OPTION IF THE BANK, AS A CONDITION OF LOAN APPROVAL, IS SELLING THE LOAN AND TRANSFERRING THE SERVICING RIGHTS ON THE SECONDARY MARKET.

THE BANK’S DECISION TO SELL A LOAN IN THE SECONDARY MORTGAGE MARKET WILL BE MADE AT THE SOLE DISCRETION OF THE BANK.

CHANGING LOAN PROGRAMS:

The loan terms described in this Agreement apply only to the loan program you have locked-in.  Loan approval is subject to a satisfactory appraisal.  The actual interest rate and fees charged may be higher than the applied for rate and fees if the appraised value is less than the estimated value or if there is a material change in your financial condition or credit profile.  If the Bank makes a counteroffer to the terms originally requested or if you request a change in loan terms (with the exception of a decrease in loan amount), this Agreement becomes null and void and a revised Lock-In Agreement will be required.  The interest rate for the new Lock-In Agreement will be based on the interest rate and fees in effect at the time of the original Lock-In Agreement and the original expiration date will also remain in effect.  If you request a decrease in the amount of the loan on which this Lock-In Agreement is based, you acknowledge that all other terms and conditions of the Lock-In Agreement, except those affected by the decrease in principal, (e.g. amount of the monthly payment) remain the same.  Any change in loan program could result in a delayed closing date of up to ten (10) business days.

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!

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, but only recently have mortgage lenders begun to use credit scoring to assist with their 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.

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 home equity loan or auto loan credit inquiries that are made within the 30 days prior to the score being calculated. In addition, all home equity loan inquiries made in any 14-day period are always considered one inquiry. Don't limit your home equity loan 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.

Generally, the income of self-employed borrowers is verified by obtaining copies of personal (and business, if applicable) federal tax returns for the most recent two-year period. However, based on your entire financial situation, we may not need full copies of your tax returns.

We'll review and average the net income from self-employment that's reported on your tax returns to determine the income that can be used to qualify. We won't be able to consider any income that hasn't been reported as such on your tax returns. Typically, we'll need at least one, and sometimes a full two-year history of self-employment to verify that your self-employment income is stable.

In order for bonus, overtime, or commission income to be considered, you must have a history of receiving it and it must be likely to continue. We'll usually need to obtain copies of W-2 statements for the previous two years and a recent pay stub to verify this type of income. If a major part of your income is commission earnings, we may need to obtain copies of recent tax returns to verify the amount of business-related expenses, if any. We'll average the amounts you have received over the past two years to calculate the amount that can be considered as a regular part of your income.

If you haven't been receiving bonus, overtime, or commission income for at least one year, it probably can't be given full value when your loan is reviewed for approval.

We will ask for copies of your recent pension check stubs, or bank statement if your pension or retirement income is deposited directly in your bank account. Sometimes it will also be necessary to verify that this income will continue for at least three years since some pension or retirement plans do not provide income for life. This can usually be verified with a copy of your award letter. If you don't have an award letter, we can contact the source of this income directly for verification.

If you're receiving tax-free income, such as social security earnings in some cases, we'll consider the fact that taxes will not be deducted from this income when reviewing your request.

Generally, only income that is reported on your tax return can be considered when applying for a home equity loan. Unless, of course, the income is legally tax-free and isn't required to be reported.

If you own rental properties, we'll generally ask for the most recent year's federal tax return to verify your rental income. We'll review the Schedule E of the tax return to verify your rental income, after all expenses except depreciation. Since depreciation is only a paper loss, it won't be counted against your rental income.

If you haven't owned the rental property for a complete tax year, we'll ask for a copy of any leases you've executed and we'll estimate the expenses of ownership.

Generally, two years personal tax returns are required to verify the amount of your dividend and/or interest income so that an average of the amounts you receive can be calculated. In addition, we will need to verify your ownership of the assets that generate the income using copies of statements from your financial institution, brokerage statements, stock certificates or Promissory Notes.

Typically, income from dividends and/or interest must be expected to continue for at least three years to be considered for repayment.

Information about child support, alimony, or separate maintenance income does not need to be provided unless you wish to have it considered for repaying this mortgage loan.

Generally, a co-signed debt is considered when determining your qualifications for a mortgage. If the co-signed debt doesn't affect your ability to obtain a new mortgage we'll leave it at that. However, if it does make a difference, we can ignore the monthly payment of the co-signed debt if you can provide verification that the other person responsible for the debt has made the required payments, by obtaining copies of their cancelled checks for the last twelve months.

Any student loan that will go into repayment within the next six 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.

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

If you've had a bankruptcy or foreclosure in the past, it may affect your ability to get a new mortgage. Unless the bankruptcy or foreclosure was caused by situations beyond your control, we will generally require that four years have passed since the bankruptcy or foreclosure. It is also important that you've re-established an acceptable credit history with new loans or credit cards.

The closing will take place at a Saratoga National Bank and Trust Company office in your area with an attorney who will act as our agent. 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 closing attorney conducting the closing should be able to answer any questions you have or you can feel free to contact your Mortgage Professional if you prefer.

Just to make sure there are no surprises at closing, the Bank attorney will contact you before closing to review your final fees, loan amount, first payment date, etc.

The most important documents you will be signing at the closing include:

Closing Disclosure Statement

This document provides a full disclosure of the terms and conditions of the mortgage, including the annual percentage rate (APR) and 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 settlement statement will show the payoff amounts of any mortgages that will be paid in full with your new loan. Federal law requires that all lenders provide you with this document at closing.

Note

This 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

This 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 of your primary residence, 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 from the time you consummate the transaction. This takes place when you sign the commitment letter or at the closing when you sign the final documents, depending upon the circumstances. The closing attorney will provide more details based upon your individual situation.