Mortgage Process

Whether you're shopping for your first home loan, exploring refinancing options, seeking to leverage the equity you've built up in your current home, or looking to finance construction of a new home, the home loan process can be complicated and detailed. We are here to help you, start to finish. From choosing the right type of mortgage loan to closing on your new home, here are the steps to getting a mortgage.

Prequalify for a mortgage

Not sure how much home you qualify for? Prequalifications are evaluations of your credit that let you know approximately how much you can afford. Before you take any other steps in the mortgage process, First Commercial Bank's financial craftsmen can help you determine how much money you will be eligible to borrow.

Choosing a home loan

The second step in the mortgage loan process is finding the right home loan. Your home loan will either be a fixed-rate mortgage or an adjustable-rate mortgage (ARM), and your loan officer will craft a loan estimate based on your needs. The loan estimate will provide a detailed overview of what your costs may look like based on the loan program you’re looking to secure.

WE WILL HELP YOU DETERMINE WHICH HOME LOAN MIGHT WORK FOR YOU BASED ON THREE FACTORS:

• How long you plan to keep your home
• How much you need to borrow
  
• How much financial risk you're willing to accept
  

HOME MORTGAGE LOAN PRODUCTS OFFERED BY First Commercial Bank:

• Fixed-rate loan terms
• Adjustable-rate loan terms (up to $484,350)
  
• Jumbo adjustable-rate loan terms ($484,351 and over)
• First-time homebuyer home loan programs

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Determining your down payment

Determining your down payment depends on the amount of cash immediately available to you. Most mortgage programs have minimum down payment requirements based on the amount you need to borrow compared to the actual value of the home. This is commonly known as the loan-to-value ratio, or LTV.

• For a refinance transaction, you can calculate the LTV by dividing the loan amount by the appraised value. 
• For the purchase of a new home, this calculation is slightly different. LTV is calculated by dividing the loan amount by the lesser of the appraised value or purchase price.

The bigger your down payment, the lower your LTV. A low LTV not only gives you a better chance of a home loan approval, it also can affect the interest rate of your home loan, which can lower your monthly mortgage payment. Use our online home loan calculator to explore the impact of various down payment amounts on your mortgage loan payment.

Applying for a home loan

Applying for a mortgage with First Commercial Bank is an easy part of the home loan process. You can start the application process online, over the phone, by mail, or if feasible, in person. The application will ask for personal, property, employment, income, asset, and debt information.

Locking in mortgage rates

Mortgage rates are tied to movements in the financial markets, which are subject to change on a daily basis (even throughout the day). This means we cannot guarantee what mortgage rates will be at any given time. When you apply for a mortgage, you will need to choose to either float or lock in an interest rate.

Home inspection

Once your offer on your new home is accepted, it is always a good idea to get the home inspected by a professional. The home inspection is not an appraisal. It's an evaluation of the general quality of the home that details the structural condition of the house and the life expectancy of the major systems, such as plumbing, heating, electrical, etc. The inspection should tell you whether your new home is free from obvious or hidden problems that can cause significant emotional and financial stress both now and in the future. By making a home inspection a contingency in the purchase contract, you'll have a set amount of time to inspect the home once your offer is accepted. You also can use the inspection checklist as a basis for negotiating the final price.

Conditional approval of your mortgage loan

The underwriting of your loan may begin before or after you find the property you wish to purchase. A conditional approval will be issued identifying specific requirements that must be met before a final approval is issued and your loan is cleared to close.

Private mortgage loan insurance

A form of insurance you may be required to obtain on your mortgage is private mortgage insurance (PMI), also known as a mortgage insurance premium (MIP). Depending on the size of your down payment, especially when the LTV of your mortgage is more than 80 percent, you may need to insure the mortgage loan with a policy that protects the lender against default.

Final approval

At this point in the mortgage approval process, all the necessary documents have been submitted and we will send your loan file to our underwriters to request approval to close your loan. After an underwriter reviews and accepts all documents and information, you are ready to close on your mortgage loan.

Title insurance

To get a home loan, a title insurance company will need to research the deed to the property you are purchasing to confirm that there are no liens against it and the seller is able to deed the property into your name. This is a one-time expense to guarantee that the seller legally owns the property and that there are no outstanding legal or financial claims against it.

Homeowner's insurance

Insuring your home against disaster and liability is not optional. You are required to be insured against unexpected hazards (such as fire) and personal liability claims (injury to others while on your property). Prepayment of the first year's homeowner's insurance will be part of your closing costs, while your ongoing insurance premiums will become part of your monthly mortgage loan payment. The lender's interest, like yours, is to protect their investment.

Mortgage loan closing costs

Closing costs typically total between two and five percent of the purchase price of the home. These mostly one-time fees include the following:

• Appraisal
• Title insurance
• Closing transaction fee
• Loan origination fee
• Discount points
• Recording fee
• Underwriting fee
  
• Processing fee

Prepayment of expenses

Another important part of the mortgage loan closing is the prepayment of expenses—often called prepaids—involved in owning a home. These expenses include property taxes, homeowner's insurance premiums, association dues (if applicable), and prorated interest. The lender collects these funds to ensure your taxes and insurance are paid on time.

Mortgage loan closing

This is the final step in the mortgage loan process. A date and time convenient to you will be coordinated with the settlement agent (title company or attorney) and the sellers, if applicable, to close on your home mortgage loan. The closing will take place at the title company, attorney's office, or escrow office. You will need to bring a valid ID, certified funds totaling the down payment, closing costs, and prepaid items. At the closing, you will sign all the applicable documents.

The total amount of funds that you will need will be provided to you at least 3 days prior to closing in the form of a settlement statement, commonly known as a Closing Disclosure. The settlement statement is a key part of the closing and details the different fees and charges associated with the mortgage loan. The Closing Disclosure statement will be included in the final closing documents. Once these documents are signed, you will receive a copy of each one.

Want more information on the home loan process? Speak with one of First Commercial Bank’s mortgage experts today.

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