Maquoketa State Bank offers a wide variety of mortgage programs to meet your needs, including:

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    Kevin Burns
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  Marla Franzen
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  Brian Nabb
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  Matt Tranel
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Frequently Asked Questions:

Q: How do I know what mortgage payment I qualify for?

A: Typical qualification for all mortgage programs is broken down into two areas, your Front Ratio and Your Back Ratio. Front Ratio is the maximum housing expense, and Back Ratio which is the maximum allowable debt to income ratio.

Front Ratio, the maximum housing expense for mortgage qualification, is figured as percentage of your Gross Monthly payroll. If are making $30,000 per year your gross monthly payroll is $2500 per month (30,000/12). The percentage used to obtain the maximum housing expense generally is 28%. So you would take 28% of your gross monthly income, which would be a monthly payment of $700.00 (2500 x .28 = 700) for qualification purposes.

The Back Ratio is the one most heavily considered during the mortgage qualification process. It is the maximum allowable debt to income ratio. The percentage used to figure Back Ratio for qualification purposes is 43% of your gross monthly payroll minus your total monthly debt payments (such as credit cards, installment loans, etc. ). With an income of $30,000 per year your back ratio would be $1,075 (30,000 x .43 divided by 12).

So if you had a car payment of $300, and two credit cards totaling $100 per month with income of $30,000 per year, the maximum monthly mortgage payment you would qualify for is $675. The $675 monthly payment would contain the total of Principle and Interest, Insurance, property taxes, and monthly mortgage insurance.

Q: What loan term should I pick?

A: A tough question! Most will tell you longest term with smallest payment. If you follow this line of thinking or advice depending on your down-payment it could be many years before you have enough equity to sell your home, remodel or purchase a new home.

However if you are smart the answer is to plan your financial future. Do some investigating, questioning and comparisons. Then go with the shortest term and payment you are comfortable with. Balance your purchase price and payment and the rewards will be great. It may mean a little bit smaller home at the time you purchase or refinance today but it will have a huge effect when you decide in five or six years to remodel, buy up or go into new construction. This strategy combined with today's low rates allows you with even a small down payment to start building equity in your home leaving you many options in the future.

Q: What is a Home Inspection?

A: A home inspection is a physical examination of a home in a purchase transaction to prevent you from purchasing a home that may need extensive repairs or upgrades. The inspection will typically include an extensive visual inspection of the home's foundation, interior and exterior walls, roof, crawl spaces, basements, drainage, door, windows, with operating inspections of plumbing, heating, and electrical systems. Home inspections are usually done by Certified Home Inspectors but can be made by anyone with extensive knowledge of the residential building trades.  A home inspection is a great idea for the peace of mind and knowledge it will provide you about your new purchase.

Q: Automated Payments

A: Your mortgage payment can be debited automatically by the lender or you can set up an automatically reoccurring "Bill Pay" from your checking or savings account on the payment due date. The automatic payment is a very good way to assure your mortgage payments are made timely and consistently on the due date each month without fail.

Q: What is Flood Insurance and why do I have to have it.

A: During the mortgage process every mortgage secured by property must have a flood certificate pulled and documented in the file. The Flood Certificate will tell us if the property is located in a flood plain. The flood plain maps are set up and maintained by FEMA. Flood insurance if needed is then obtained through the NFIP (National Flood Insurance Program). On the certificate will be the zone your property is located in according to these FEMA flood maps. There are several mandatory and non-mandatory flood zones. The most common designation for Non-mandatory flood zones is the X which means you are located in a zone with minimal flood potential and will not be required to have flood insurance. The most common designation for Mandatory flood zones is AE. Properties in these zones are in high potential flooding areas and would be required to have flood insurance. One important note is if you are located in a non-mandatory flood zone flood insurance is still available to you if you should choose to enroll in it for protection and peace of mind.

Q: Is a Pest Inspection required?

A: For Conventional purchase loans no. For Government purchase loans such as FHA, VA and USDA RD loans Pest Inspections are required. Like home inspections a pest inspection is a great idea. When purchasing your home knowledge is power. It could save you from purchasing a home with a Termite or Carpenter Ant infestation capable of causing possibly devastating structural damage. Pest inspections are done by state licensed pest inspectors checking the interior and exterior of the home and buildings for potential damaging insect infestations and dry rot. Some of the most common are Termites, Carpenter Ants, and Powder Post Beetles. If infestations are found in the home the Pest Inspector would be able to give you a bid to treat the infestation and eliminate the pests.

Q: What is PMI and why do I have to have it on my loan?

A: PMI is an acronym for Private Mortgage Insurance also referred to as MI or Mortgage Insurance. PMI or MI is used by lenders and the secondary market as a risk offset and may be required when doing a mortgage on your property when you do not have a minimum of 20% down or at least 20% equity in your home when doing a purchase or refinance. PMI limits the risk of loss to the lender which protects the lender in the case of default or foreclosure by the borrower. The insurance covers only a percentage of the mortgage. So as an example if you were to put a 5% down-payment on your home in a purchase transaction it would protect 30% of the mortgage amount which would be reimbursed to the lender in the case of default or foreclosure to help offset losses incurred by the lender.

Q: Should I lock or float my loan?

A: Locking your rate is a personal choice and depends on your level of comfort. Mortgage rates from the Secondary Market generally change daily and come out around 8 to 10 AM every morning. However during times of economic and or market instability these rates can change several times during the day. During times of economic and market stability we may go for days where there is very little to no change at all. Examples of events that can move rates up or down are the stock market doing well, stock market doing poorly, upcoming elections, almost anything which will affect national or world markets and bonds. We recommend you lock your loan at least 10 days prior to closing your loan.

Q: What is an appraisal and why do I have to have one?

A: Simply put an appraisal is a snap shot of the market value of your home at a given time and moment. Mortgages for purchases, refinances or new construction loans for the secondary market require an independent appraisal be done to determine the market value of your home and property. Typically appraisals are valid for 90 days from the date they were done with the exception of new construction which is 120 days.

Appraisals can only be done by a State Licensed appraiser. Some appraisals such as VA, FHA, and USDA RD loans must be done by appraisers who have also passed certain tests and standards and been approved and certified by the VA or FHA. Appraisals for secondary market loans can only be ordered by the lender. To maintain their independent and unbiased nature appraisers are not to be in direct communication with the Originator, Seller, Builder, Purchaser or Realtor in the transaction.

Market value is determined by many variables the biggest being comparables or comps. Comps are homes that are very close in property size, age, physical size, appearance, and location to the home being appraised. These comps are used to validate and help determine the market value given to your home. These homes are generally to be within one mile, and have sold on the open market within the last six months.

Given the above main characteristics of an appraisal that is why sometimes it is very difficult to determine the market value of a home. Variables like new construction custom homes built by Developers or Builders and sold directly to the consumer cannot be used as they were not sold on the open market. Rural or small town areas can be sometimes very difficult as consumers in these markets do not typically sell their homes very often and the comparables are located much further apart than in metro areas. High end homes can also be very difficult to determine market value because of their physical size, location, and lower numbers of sales in reasonably close market area.

There are many factors used in determining the market value of your appraisal. From this very short description you can get a feel for the difficulty and why appraisals are a very large part of your purchase or refinance mortgage.

Q: What information should I bring with me to my appointment?

  • Previous two years Federal income tax returns & W-2 forms
  • Current pay stubs
  • Bank statements for the past two months
  • Retirement account statements for the past two months
  • Social Security Annual Benefits statement, if applicable

If you currently own Real Estate:

  • Mortgage account information
  • Home Insurance policy information
  • Home equity account information (if applicable)

Glossary There might be unfamiliar terms that you will hear during the mortgage process, but don't worry, we've put together this glossary to help give you a better understanding and make things more clear.

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