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. Federal law and national standards govern not only the format for the appraisal; they also specify the appraiser's qualifications and credentials. In addition, most states (including the state of Michigan) 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. You are entitle by law to receive your appraisal not less than three days prior to closing. You also have the authority to waive that right and receive a copy of the appraisal at closing. 

The appraiser will inspect both the interior and exterior of the home. The appraiser is required to view and take pictures of the rooms inside the home and include them in the appraisal.

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" (or "comps" for short) and play a significant role in the appraisal process. Using industry guidelines, the appraiser will try to weigh the major attributes of these properties (e.g. design, square footage, number of rooms, lot size, age, etc.) to the attributes 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. Appraisers need to rely on actual sales of comparable properties and not just advertised listing prices.

As an additional check on the value of the property, the appraiser may also estimate 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.

Federal law also requires the review of every appraisal by an independent third party. This person is frequently another appraiser, an appraisal management company, or another "disinterested" party. The review is required to prevent appraisal fraud and to ensure that the comparables  used to determine the value, as well as the adjustments made by the appraiser, are appropriate and reasonable.

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. For example, if your home is on a 20-acre lot, or has a large accessory building, we'll want to make sure that there are other homes in the area on similar size lots or with similar outbuildings. It is hard to place a value on such unique features if we can't see what other buyers are willing to pay for them. In some areas, additional acreage or outbuildings could actually be a detriment to a future sale. Finding comparable properties can be more challenging in rural areas where it is more difficult to find homes that have similar features.

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.

By law, you are entitled to receive a copy of the appraisal. After you formally apply for a loan, you will have the opportunity to decide between receiving your appraisal at least three days prior to closing, or waiting to receive a copy at closing. 

Please keep in mind that the sole purpose for obtaining an appraisal is to determine if the Bank has sufficient collateral for the loan you have requested. While the appraisal is yours to keep, it is not an indication of the absolute highest price your home could command in the open market, nor should it be used as the basis for tax appeals or estate planning purposes.

Since the value and marketability of condominium properties is dependent on items that don't apply to single-family homes, there are additional factors that must be taken into consideration when financing condos.

Here are some of the factors the Bank examines prior to financing:

Phasing - It is typically required that at least a few units be completed within the phase you’re purchasing. The main reason for this is, until the overall project is complete, we can't be certain that the remaining units will be of the same quality as the existing units.

Rental Ratio – We examine 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.

Association – We examine the overall financial health of the Association within the development.  This includes an in-depth analysis of the Association’s finances, budgets, insurance coverage, delinquent dues, common elements, etc.

Almost all of these items are covered in the HOA Certification / Condo Questionnaire.  Most associations will fill out the questionnaire free of charge, however when the association is controlled by a property management company, there is typically a fee involved.   If the seller hasn’t already provided a questionnaire, it is between the buyer and seller to determine who pays for the questionnaire

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.

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 7-10 days before the written report is sent to us. We follow up with the appraiser to ensure that it is completed as soon as possible. If you are refinancing, the appraiser should contact you to schedule a viewing appointment. If you don't hear from the appraiser within two business 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, or the seller to schedule an appointment to view the home.

We do not finance mobile homes or homes that have a steel undercarriage and an axle for transportation. 

If your home is being built in a factory and attached to a permanent foundation we may be able to provide financing.  Please contact a Loan Officer to discuss options we may have.

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 a lower initial interest rate than most 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. It's a trade-off: you get a lower rate with an ARM in exchange for assuming more interest rate risk.

For many people in a variety of situations, an ARM is the right mortgage choice, particularly if your income is likely to increase in the future or if you only plan on being in the home for three to five years.

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, or five years. Some lenders offer ARMs whereby, after the initial fixed period, the interest rate can change every year. These types of loans are known as "3/1" or "5/1" ARMs. For example, with a five-year ARM, the interest rate will not change for the first five years (the initial fixed period) but can change every year after the first five years.

Dearborn Federal Savings Bank's ARM loans are different: they provide a more predictable monthly payment for a longer period of time. Instead of converting to a one-year adjustment period after the initial fixed period, the interest rate on DFSB's three and five-year ARMs changes at the end of the initial adjustment period and then is fixed for another three or five years. Our ARM loans are known as "3/3" or "5/5" ARMs. This change in the interest rate on the anniversary date of the fixed period continues until the loan reaches final maturity. Because our three and five-year ARMs don't convert to one-year ARMs, your interest rate will not adjust annually and you will have more predictability in your monthly mortgage payment. DFSB's ARMs can also save you money because you won't have to refinance your mortgage loan into a new ARM, or a fixed rate loan, after the initial adjustment period expires.

Index

Our ARM interest rate changes are tied to changes in an index rate. For example, Dearborn Federal Savings Bank uses the one-year, three-year, and five-year United States Treasury Securities as its indices. 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 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, 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 Penalties

Some lenders may require you to pay special fees or penalties if you pay off the ARM early. Dearborn Federal Savings Bank never charges 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.

Discount 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 discount points, you should compare the cost of the discount points to the monthly payments savings created by the lower interest rate. Divide the total cost of the discount 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 discount points. If the number of months it will take to recoup the discount points is longer than you plan on having this mortgage, you should consider the loan program option that doesn't require discount points to be paid.

If you'd prefer not to make this calculation the "old-fashioned way," we have a discount points calculator!

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 doesn't 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.

Completing our online application is free of charge. 

However, once your application is completed and submitted, in order for us to begin processing your loan request we do require that you submit the supporting documentation and application fee to us.  The application fee is applied directly to cover the cost of the appraisal and is required to move forward with your application.

At Dearborn Federal Savings Bank, you lock in your interest rate on the date you formally complete your loan application and apply for your loan. If, on the day your loan closes, the interest rate we offer is lower, you automatically receive the lower rate in effect on the day of closing - at no additional cost to you! In other words, you lock your rate on the day you apply and can only do better (not worse) if the rate is lower on the day you close.

Once you complete your application and signify your intent to proceed with your loan application, a $450.00 application fee is required. The application fee is not just another fee, it's actually the appraisal cost estimate and will be credited to the actual cost of the appraisal at your closing. If you complete your application today, and your request is conditionally approved online, you can include a check for the application fee along with the documents we need from you to underwrite and fully approve your application.

If we need to review your information before providing you with a conditional loan approval, a Loan Officer will contact you and you'll have the opportunity to lock your rate and fees then.

None of the loan programs we offer have penalties for prepayment!  You can pay off your mortgage at any time, or reduce your principal balance with a lump sum payment, with no prepayment penalties.

General Statement

While interest rates are subject to change at any time without notice, our rate lock policy offers you the security of getting what you signed up for or better. Not only is it great, but it's free!

A lock is an agreement between the borrower and the lender that specifies the number of days for which a loan's interest rate is guaranteed. Dearborn Federal Savings Bank's rate lock policy for owner-occupied mortgages is simple: locked or lower. On the day of closing, if our current rate is lower than your locked rate, you automatically get the lesser of the two rates. And did we mention that it's free of charge?

When Can I Lock?

Your interest rate will automatically be locked at the time of application. There's no "playing the field" here and no teaser rates to get you in the door. Our advertised rate is the rate you get!

Fees

Dearborn Federal Savings Bank does not charge a fee for locking in your interest rate.

Lock Period

Your rate will be locked at the time of application. Our rate lock policy guarantees your rate from the day of application to the day that your commitment expires. Your loan must close within 45 days from the date your commitment was issued. If your loan doesn't close within that timeframe due to unforeseen circumstances, don't worry! In many cases, we can extend our commitment and that's free too.

Lock Changes

Our rate policy protects you from rising interest rates. Your rate is locked at the time of application – it doesn't "float" during the period when your loan application is being processed. While the rate can't be re-locked after application, if rates are lower on the day you close, you automatically get the lower rate.

Lock Confirmation

As part of your application package that you receive from us, a copy of our rate lock policy will be included and requires your signature. We know this is something most banks can't offer, so you'll get it in writing from us.

A home loan often involves many fees, such as the appraisal fee, title insurance charges, closing fees, and state or local taxes. These fees vary from state to state and also from lender to lender. All mortgage lenders, including mortgage brokers, must be able to give you an accurate "Loan Estimate" which includes all of their fees and closing costs - this is required by federal law. However, 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, appraisal review 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 or company 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.

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 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.

Prepaid Items

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", "odd-days 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 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 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, Dearborn Federal Savings Bank will not collect a fee for mortgage insurance, or the monthly mortgage insurance premium in advance. Whether or not you must purchase mortgage insurance depends on the size 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 prepaid item.

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.

If the loan is for a home purchase, both types of policies are issued at the time of closing for a one-time premium. 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. Keep in mind that title insurance is tied to a specific property and a specific loan. For both a purchase loan and a refinance loan, whenever a new mortgage is placed on a property a new lender's title insurance policy is required.

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, 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, sometimes referred to as "credit 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 the loan-to-value ratio, the type of loan, the borrowers' credit scores and the amount of coverage required by the lender. Usually, the premium is included in your monthly payment, however some lenders "pay" for the policy upfront and make up the decrease in their return through other fees. Some lenders (not Dearborn Federal Savings Bank)may require one to two months of the premium 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 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, 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 mortgage loan applications for many years to assist with their loan decisions.

Credit scores are based on information collected by the three major credit bureaus (Experian, Equifax, and Transunion) and information reported each month by your creditors about the balances you owe, the amounts you pay, 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. Credit scores are calculated by the credit bureaus, 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 creditworthiness.

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 typically 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.

One of the benefits of obtaining a mortgage loan with Dearborn Federal Savings Bank is that the Bank does not vary the interest rate offered to a customer based on their credit score. This practice is known as "risk-based pricing". Dearborn Federal Savings Bank looks for a minimum median credit score (the "middle" score reported by the three credit bureaus) of 660 for each borrower. The same great interest rate is afforded to all applicants with a minimum median credit score of 660.

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 conditionally approved online.

Whether you're purchasing or refinancing, we're certain you'll find our personal service amazing!

Dearborn Federal Savings Bank does not sell its loans or the servicing of its loans - we are a "portfolio lender". This means that when you have a question or a concern about your mortgage, you'll continue to work directly with Dearborn Federal Savings Bank rather than a third party.

If you'll be purchasing but haven't found the perfect home yet, complete our online application and we'll issue a pre-qualification letter for a mortgage loan with no obligation. This lets real estate agents and sellers know that you're a qualified buyer.

Yes, you can borrow funds to use as your down payment! However, any loans that you take out must be secured by an asset that you own. If you own something of value that you could borrow funds against such as a car or another home, it's a perfectly acceptable source of funds. If you are planning on obtaining a loan, make sure to include the details of this loan in the Expenses section of the application.

Dearborn Federal Savings Bank's lending policies comply with federal regulations that require all lenders to analyze and document every borrower's ability to repay their mortgage loan. This involves verification of a borrower's income (generally through paystubs, W2's, and/or fully scheduled tax returns) as well as the assets used for a down payment or to demonstrate financial reserves (typically bank or brokerage account statements).

Other documents, such as a survey or documents pertaining to title, may be required based on the unique situation of each applicant. A list of the documents can be found in the Resources section of our website. A list of all documents you will be required to send us in order to process and underwrite your loan will automatically be generated once you complet our online application  

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.

No, but at any time you can inquire to find out how much purchasing power you have.  Depending on whether or not we review your finances and credit, we'll issue either a pre-approval subject to you finding the perfect home or a pre-qualification subject to review of your finances and credit.  

You can use these letters to assure real estate brokers and sellers that you are a qualified buyer. Having a pre-approval for a mortgage typically gives more weight to any offer you submit.

Once you have a fully executed purchase agreement in hand, simply contact your Loan Officer to schedule an appointment or apply for your mortgage directly through our website.

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

Some lenders may offer a stated income program, which means that you can be qualified for a loan based on the income you state rather than that which can be verified. Usually these programs require larger down payments and offer interest rates that are substantially higher than regular mortgage rates. We do not offer stated income programs at this time.

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.

Typically, income from a second job will be considered if a one-year history of secondary employment can be verified.

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 for instant approval. If your application is approved online, we'll ask you for a deposit to cover the cost of the appraisal on your home so that we can begin to process your request immediately. This deposit will be credited towards your closing fees at closing.

After completing your application, a Loan Officer will contact you to introduce himself or 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. 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 package and prepare your loan for closing.

The application package 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.

Title insurance will 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 package 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.

The closing will take place at the office of a title company or attorney in your area who will act as our agent. A few days before closing, your Loan Officer will contact you to walk through the final information so that there won't be any surprises at closing.

That's all there is to it! You're on your way to the most convenient home loan ever!

Having changed employers frequently is typically not a hindrance to obtaining a new mortgage loan. This is particularly true if you made employment changes without having periods of time in between without employment. We'll also look at your income advancements as you have changed employment.

If you're paid on a commission basis, a recent job change may be an issue since we'll have a difficult time of predicting your earnings without a history with your new employer.

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."

Unfortunately, if you are purchasing a home, we'll have to use the lower of the appraised value or the sales price to determine your down payment requirement.

It's still a great benefit for your financial situation if you are able to purchase a home for less than the appraised value, but our investors don't allow us to use this "instant equity" when making our loan decision.

Gifts are an acceptable source of down payment, if the gift giver is related to you or your co-borrower. We'll ask you for the name, address, and phone number of the gift giver, as well as the donor's relationship to you.

If your loan request is for more than 80% of the purchase price, we'll need to verify that you have at least 5% of the property's value in your own assets.

Prior to closing, we'll verify that the gift funds have been transferred to you by obtaining a copy of your bank receipt or deposit slip to verify that you have deposited the gift funds into your account.

If you're selling your current home to purchase your new home, we'll ask you to provide a copy of the settlement or closing statement you'll receive at the closing to verify that your current mortgage has been paid in full and that you'll have sufficient funds for our closing. Often the closing of your current home is scheduled for the same day as the closing of your new home. If that's the case, we'll just ask you to bring your settlement statement with you to your new mortgage closing.

Congratulations on your new job! If you will be working for the same employer, complete the application as such but enter the income you anticipate you'll be receiving at your new location.

If your employment is with a new employer, complete the application as if this were your current employer and indicate that you have been there for one month. The information about the employment you'll be leaving should be entered as a previous employer. We'll sort out the details after you submit your loan for approval.

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 six months.

Any student loan that appears on your credit history 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. 

For qualifying and underwriting purposes any student loans regardless of status (deferred or forbearance), we will use 1% of the total balance as the estimated monthly payment.  If you have a payment plan established that outlines the exact monthly payment, please provide that to you Loan Officer. 

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 two to 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.

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 office of a title company or attorney in your area who will act as our agent. If you are purchasing a new home, the seller may also be at the closing to transfer ownership to you, but in some states, these two events actually happen separately.

During the closing you will be reviewing and signing several loan papers. The closing agent or attorney conducting the closing should be able to answer any questions you have or you can feel free to contact your Loan Officer if you prefer.

Just to make sure there are no surprises at closing, your Loan Officer will contact you a few days 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:

HUD-1 Settlement Statement

This document provides an itemized listing of the final fees charged in connection with your loan. If your loan is a purchase, the settlement statement 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 pay off amounts of any mortgages that will be paid in full with your new loan. Most items on the statement are numbered according to a standardized system used by all lenders. These numbers will correspond to the numbers listed on the Good Faith Estimate that will be provided in your application package. This document is also commonly known as the closing statement and both the buyer and seller must sign this document.

Truth-in-Lending Statement (TIL)

This document provides full written disclosure of the terms and conditions of a mortgage, including the annual percentage rate (APR) and other fees. It is exactly the same as the TIL that you received immediately after your initial application, except it has been updated to reflect the final rate and fee information. 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 / Deed of Trust

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, 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. The closing agent will provide more details at the closing.

In some areas of the country it is very customary, and sometimes required by law, to have an attorney represent you at the closing. In other areas, attorneys are not as common at a real estate closing. Please contact the closing agent if you have questions about attorney representation. By all means, we recommend that you have an attorney at the closing if it would make you more comfortable. If your attorney has any questions about your new mortgage, please refer them to your Loan Officer. We'd be happy to provide any information necessary.

The most important documents you will sign at closing are the note and mortgage, sometimes called the deed of trust. Unless there are special circumstances, these documents are usually prepared one to two days before your closing. Other documents are prepared by the closing agent the day before or the day of your closing. If you would like copies of the completed documents to be sent to you after they are prepared, please contact your Loan Officer.

The closing agent acts as our agent and will represent us at the closing. However, your personal Loan Officer will contact you prior to closing to talk about your final documents and to provide a final breakdown of your closing fees. If you have any questions that the closing agent can't answer during the closing, ask them to contact your Loan Officer by phone and we'll get you the answers you need - before the closing is over!

If you won't be able to attend the loan closing, contact your Loan Officer to discuss other options. If someone you trust is able to attend on your behalf, you can execute a Power of Attorney so that this person can sign documents on your behalf. In other cases, we're able to mail you the documents in advance so that you can sign them and forward them to the closing agent. We're sure to have a solution that will work in your circumstances.

All refinance closings, and the majority of purchase closings, take place at our headquarters located in Dearborn, MI. 

If you're purchasing a home, we'll coordinate the closing with your real estate agent and the title company.

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.