FRSB > Personal Banking > Loans > Home Buyer Guide

Home Buyer Guide

Information to bring with you to meet with a loan officer:

• Last 2 year’s W-2’s
• Most recent paystub
• 2 Months of Statements for non-FRSB deposit accounts
• If self-employed, last 2 years tax returns with all supporting schedules
• Retirement account statement, if applicable

Buying A Home Process

1. Pre-Qualify – Meet with a loan officer to determine what type and amount of loan you might qualify for
2. Make an Offer – Meet with realtor/seller to make an offer to purchase the property
3. Bring Accepted Offer In – After your offer is accepted, bring in a copy of your signed Purchase Agreement to the Bank
4. Appraisal – An appraisal is ordered by the Bank for an independent assessment of the market value of the property
5. Titlework/Deed Preparation – A search of public records is done to determine what liens (if any) need released to convey clear title to the property to the buyer. A warranty deed is prepared transferring ownership of the property from the seller to the buyer.
6. Homeowner’s Insurance – A binder of insurance coverage will need to be provided to the Bank prior to closing showing that coverage is effective the day of closing.
7. Closing - This is the day you meet with the Bank, Realtor(s), and sellers to sign your loan documents, pay your remaining down payment, and actually take ownership of the property. Depending on your Purchase Agreement, you may or may not take possession on this date.

Typical Closing Costs

          Closing costs are the fees that are charged in conjunction with a real estate loan. Typically, fees when you are buying real estate are split between the buyer and seller. The buyer is generally responsible for the following fees: Origination Fee, Flood Certification, Credit Report, Appraisal, Recording of Deed, Recording of Mortgage, Title Opinion and Final Abstracting (Or Loan Policy if Title Insurance). The seller is generally responsible for the following fees: Realtor commission, Deed Preparation, Deed Stamps, Preliminary titlework, Pest Inspection, and Proration of Real Estate Taxes.

Ways to Take Title to Real Estate:

Tenants By The Entirety

          This has been available in Illinois since 1990. This option is available to a husband and wife under certain circumstances. These conditions must be met to qualify for Tenants By The Entirety:

• Property must be primary residence
• Deed must specify “as husband and wife, not as joint tenants or tenants in common but as tenants by the entirety”
• Grantees are married

          One of the benefits of tenants by the entirety is the ability to protect the property for enforcement of future judgments and liens against a single owner. This holds true for the following:

• Judgment or Lien entered after October 1, 1990
• Judgment or Lien was not present prior to being transferred as tenants by the entirety
• Property was not transferred specifically to avoid attachment of judgment or lien

          In the event of the passing of one spouse, title automatically transfers to the surviving spouse.

Joint Tenancy

          This ownership option transfers an undivided interest in the real estate by two or more parties with each party having an equal and undivided interest. All interests must be created with the same conveyance and timing. In the event of the passing of an owner, ownership passes to the remaining owner’s rather than heirs of the deceased. This is a commonly used conveyance of title.

Tenants in Common

          Each owner has a separate and distinct undivided interest in the property. The undivided interests can be conveyed at different times and with unequal shares. In the event of the passing of an owner, ownership of their undivided interest passes to their heirs or as specified in their will. An owner may encumber their undivided interest in the real estate without affecting the other owners. Judgments and liens against an owner attach only to the undivided interest of the judgment debtor, not the other owner’s share.

Definition of Annual Percentage Rate (APR):

          This is a different rate from your note interest rate. It’s use is to compare competing banks loan programs. The APR is required to be disclosed to you pursuant to the Federal Truth-in-Lending Regulation whenever a rate is advertised. The APR does not affect your monthly loan payment. This is defined by your note interest rate and term of loan. It is designed to measure the “true cost of the loan” and designed to prevent lenders from advertising a low rate and hiding fees from the borrower.

          APR’s are calculated differently by different lenders. The lowest APR is not necessarily the best deal. You should compare not only APR (found on your Truth-in-Lending Disclosure), but also the Good Faith Estimate of Closing Costs that estimates the fees you will incur in conjunction with your real estate loan. Make sure the documents you are comparing are for the same type of loan program (i.e. 30 year fixed rate, interest rate).

          Fees typically included in the APR calculation include: Points (if applicable), Pre-paid interest (also referred to as Odd-Days Interest), Processing Fees, Underwriting Fees, Document Preparation Fees, Origination Fees, Flood Certifications.

          An APR does not tell you how long your interest rate is locked in for. A 10-Day lock would typically have a lower APR than a 60-Day lock. Computing APR on adjustable rate loans is very difficult because future adjustments to your interest rate are unknown.

          Do not compare loans with different terms using APR. A 15-year loan may have a lower interest rate, but higher APR because fees are amortized over a shorter period of time.