Types of Residential Real Estate Loans

Conventional Loans Conventional loans require 20 percent down, and therefore do not require mortgage insurance. They can be obtained directly through the State Bank of Alcester or through the bank and then sold to Fannie Mae (FNMA). In either case, the State Bank of Alcester will service these loans. State Bank of Alcester Conventional Loans Fixed-Rate, Long-Term Loans Adjustable-Rate, Long-Term Mortgage (ARM) Loans Long-Term FNMA Loans For more information, contact Kathy. South Dakota Housing Development Authority (SDHDA) Commonly known as the "First-Time Homebuyer Program", this program provides below-market fixed interest rate mortgage loans for first-time homebuyers purchasing or building a residence in South Dakota. The State Bank of Alcester has been originating these loans for more than 30 years, and 100 percent financing is available. To qualify for this program, manufactured housing must be permanently affixed to the land by a foundation, taxed as real estate and be an FHA approved model. When purchasing or building a home in the country, SDHDA can only finance the residence and the land required to reasonably maintain the basic livability of the residence. The land cannot provide a source of income, the property cannot be subdivided in the future and outbuildings cannot be financed with the proceeds of a mortgage loan. For more information, contact Kathy or visit the SDHDA website. Community Home Improvement Program (CHIP) This program offers low-interest loans for low-to-moderate income homeowners for the improvement, repair or addition to the borrower's present single family home. Interest rates are very attractive and dependent on the applicant's income. There are no origination fees, discount points, surveys, appraisals or title searches required with this loan program. CHIP loans have level monthly payments and are amortized over a term up to seven years. Loan amounts range from $500 to $15,000. If you do not qualify for a CHIP loan, other home improvement loans are available. For more information, contact Kathy or visit the SDHDA website. United States Department of Agriculture (USDA) Rural Development (RD) Loan Guarantee Program Under the terms of the USDA Rural Development Loan Guarantee program, an individual or family may borrow up to 100 percent of the appraised value of the home, which may eliminate the need for cash for a down payment or closing costs. A common barrier to owning a home for many low-income people is the lack of funds to make a down payment. The availability of the loan guarantees makes the reality of owning a home available to a much larger percentage of Americans. For more information, contact Kathy or visit the USDA Rural Development website. Veterans Affairs (VA) Loan Guarantee Program VA's guaranty allows the bank to offer veterans loans with more favorable loan terms. The amount of guaranty depends on the loan amount and whether the veteran used some entitlement previously. The amount of the guaranty also depends on the appraised value of the property. The local VA office can provide more details on guaranty and entitlement amounts. For more information, contact Kathy or visit the VA Home Loans website. Home Equity Line of Credit (HELOC) Take advantage of the cash value of your home and decide what you want to do with the money. By using the equity of your home, you can qualify for a sizable amount of credit at an interest rate that is relatively low, plus you may be allowed to deduct the interest on your taxes because the debt is secured by your home. You should consult a tax adviser regarding the deductibility of your interest. For more information, contact Kathy. Product descriptions contained herein do not take the place of required disclosures under federal and state regulations. Please contact us for disclosures appropriate to these accounts. Calculators Can your income qualify for the mortgage? Calculate your monthly mortgage loan payment.

What do we need to know to approve you for a loan? Do you have the required cash for down payment and closing costs? Save at least $1000 to $1200 for closing costs on a first-home mortgage. Do you have enough income to support your monthly payments, including the new house payment? You should be using less than 40 percent of your income for all your monthly payments. Does your past credit history show any delinquencies or late payments? You can get your credit report from any of the following credit reporting agencies. Trans Union Credit Services 1-800-888-4213 Equifax Credit Services 1-800-685-1111 Experian Credit Services 1-888-397-3742

Terms You Need to Know When Purchasing a Home Purchase Agreement: agreement between buyer and seller as to the purchase price of the home Mortgage Loan: loan secured by real estate Down Payment: cash difference between purchase price and loan (usually 20 percent of purchase price, but is not needed if mortgage insurance is purchased) Credit Report: summary of all credit you have had for the past 10 years Appraisal: report on the value of your house Survey: shows boundaries of legal description and where buildings are situated Homeowner’s Insurance: insurance against theft, wind, fire and other damage to your house Title Insurance: assures that the house is in your name and that there are no other debts or liens against it Credit Life Insurance: pays for your house if one of the borrowers dies Mortgage Insurance: must be purchased if you do not have a 20 percent down payment Adjustable Rate Mortgages (ARMs): mortgages that have interest rates that adjust over the loan term. This means that the interest rate and the amount of the monthly payment can go up or down. ARMs carry risks in periods of rising interest rates, but can be cheaper over a longer term if interest rates decline.