FAQs

Your Application

What is a credit score and how will my credit score affect my 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.

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 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.

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Will the inquiry about my credit affect my credit score?

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.

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Will I be charged any fees if I authorize my credit information to be accessed?

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.

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Are we right for you?

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

If you'll be purchasing but haven't found the perfect home yet, complete our application and we'll issue an approval for a mortgage loan now with no obligation!

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Can I really borrow funds to use towards my down payment?

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.

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I'm self-employed. How will you verify my income?

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.

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Will my overtime, commission, or bonus income be considered when evaluating my application?

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.

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I am retired and my income is from pension or social security. What will I need to provide?

We will ask for copies of your recent pension check stubs, or bank statement if your pension or retirement income is deposited directly into 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.

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Can I apply for a loan before I find a property to purchase?

Yes, applying for a mortgage loan before you find a home may be the best thing you could do! If you apply for your mortgage now, we'll issue an approval subject to you finding the perfect home. We'll issue a pre-qualification letter online instantly. You can use the pre-qualification letter to assure real estate brokers and sellers that you are a qualified buyer. Having a pre-qualification for a mortgage may give more weight to any offer to purchase that you make.

When you find the perfect home, you'll simply call your Loan Officer to complete your application. You'll have an opportunity to lock in our great rates and fees then and we'll complete the processing of your request.

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If I have income that's not reported on my tax return, can it be considered?

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.

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How will rental income be verified?

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.

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I have income from dividends and/or interest. What documents will I need to provide?

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.

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Do I have to provide information about my child support, alimony, or separate maintenance income?

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.

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Will my second job income be considered?

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

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What can you expect when you apply for a mortgage?

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!

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Your Property

What is an appraisal and who completes it?

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. 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.

The appraiser will create a written report for us and you'll be given a copy at your loan closing. If you'd like to review it earlier, your Loan Officer would be happy to provide it to you.

Usually the appraiser will inspect both the interior and exterior of the home. However, in some cases, only an exterior inspection will be necessary based on your financial strength and the location of the home. Exterior-only inspections usually save time and money, but if you're purchasing a new home, your Loan Officer will contact you to determine if you'd be more comfortable with a full inspection.

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" and play a significant role in the appraisal process. Using industry guidelines, the appraiser will try to weigh the major components of these properties (i.e., design, square footage, number of rooms, lot size, age, etc.) to the components 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.

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

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What types of things will an underwriter look for when they review the appraisal?

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 similarly sized 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.

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Will I get a copy of the appraisal?

As soon as we receive your appraisal, we'll update your loan with the estimated value of the home. As a standard practice we will provide a copy of your appraisal at closing.

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Are there any special requirements for condominiums?

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 ensure 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.

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I'm purchasing a home. Do I need a home inspection and an appraisal?

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 ask questions about the condition of the home.

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I've heard that some lenders require flood insurance on properties. Will you?

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 that 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.

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How long does it take for the property appraisal to be completed?

Licensed appraisers who are familiar with home values in your area perform appraisals. We order the appraisal as soon as the application is approved. Generally, it takes 15-30 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, and an interior inspection of the home is necessary, the appraiser should contact you to schedule a viewing appointment. If you don't hear from the appraiser within seven 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, if you are using one, or the seller to schedule an appointment to view the home.

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Does Texana Bank provide financing for manufactured homes?

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 also 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.

The home must 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.

The 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.

The home 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.

The home must be at least double-width, 24 feet wide, and have a minimum 600 square feet of gross living area. It must be acceptable to typical purchasers in the market area.

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Closing & Beyond

What happens at the loan closing?

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.

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Will I need to have an attorney represent me at 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.

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Can I get advanced copies of the documents I will be signing at closing?

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.

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Who will be at the closing?

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!

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I won't be able to attend the closing. What other options are there?

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.

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If I apply, where will the closing take place?

We use a network of closing agents and attorneys to conduct our loan closings. We'll schedule your closing to take place in a location that is located near your home for your convenience.

We'll deliver our loan documents and wire transfer your loan funds to the closing agent or attorney prior to closing so that they'll have plenty of time to prepare for your closing.

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Can I make my monthly payments with an automated debit from my checking account?

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.

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