Eight Steps to Your New

Front DoorA Guide to Your

Gate City Bank Home loan

Step 1: Pre-ApprovalCongratulations on your decision to purchase a new home! A home purchase may be your largest and most important financial transaction, so it’s important to take the right steps in order to make the right decisions.

Start the convenient loan application process for your Gate City Bank home loan today:

OPTION 1: Call to make an appointment with a Mortgage Loan Officer.

OPTION 2: Go to gatecitybank.com

Your Gate City Bank Mortgage Loan Officer will provide you with the estimated monthly mortgage payment amount for which you have been pre-approved. They will explain loan programs and requirements, as well as financing options to help you determine the best mortgage product for you.

Your Mortgage Loan Officer will provide you with a pre-approval letter, so if you haven’t started house hunting already, now is the time!

Please see the list below for the items that your Mortgage Loan Officer will need to complete the pre-approval.

Step 2: Finding a HomeOnce you have an accepted offer on a property, notify your Mortgage Loan Officer. Your Mortgage Loan Officer will need a copy of your signed purchase agreement and there will be additional forms for you to sign to continue processing your loan.

Step 3: ApplicationAt this time, your Mortgage Loan Officer will discuss the following:

• Good Faith Estimate of Settlement Costs: This details the loan amount and all related charges and fees.

• Truth in Lending Disclosure: This lets you know what your estimated annual percentage rate of interest (APR) will be and any other program features that apply.

• An application deposit, refunded at the time of successful loan closing.

• Other forms associated with the specific loan program you have selected. Your Mortgage Loan Officer will explain these forms to you at the time of signing.

• Interest rate and the terms of your loan program.

You may be asked for additional items that are required for the loan approval process. Once we receive your confirmation to proceed, your Mortgage Loan Officer will order an appraisal (see step 5) as well as title insurance work (see step 6).

Checklist of items needed to begin the process:Assets:

Copies of the most recent statements for checking, savings, investments, and retirement accounts.

Address Information:

Current address for the past two years (If you have been at your current address for less than two years, please provide all addresses you have lived at over the past two years). If it is a rental residence, provide the landlord’s names, full address, and phone number.*First-time home buyers - please provide three years past address.

Employment Records:

• Your most recent year-to-date pay stub(s)

• Copies of your W-2s and completed Federal Income Tax Returns from the past two years

*First-time home buyers - please provide Federal Tax Returns for the past three years.

Other items may include:

• Purchase agreement for the home

• Divorce decree (if applicable)

• VA applicants will be asked for a copy of DD214 or an original statement of service and a certificate of eligibility.

• If you are applying for a refinance, you will need to provide proof of homeowner’s insurance coverage amount, premium amount, and the most recent statement for the mortgage loan(s) you are refinancing.

*If any of the information you previously provided changes, such as an employment change or a change in assets, let your Mortgage Loan Officer know.

This checklist is also available at gatecitybank.com

Step 4: Homeowner’s InsuranceNow, you will want to start shopping for homeowner’s insurance coverage. Your Mortgage Loan Officer will provide you with an information form for you to give to your agent/agency. Your policy decision should be made no later than 14 days prior to closing. Once you have selected an agent/agency, let your Mortgage Loan Officer know who you have selected.

Step 5: Home AppraisalYour Mortgage Loan Officer will make all the arrangements for the appraisal. Gate City Bank will use an approved third-party appraisal company that will inspect the property and compare it to similar properties that have sold in the area to determine the home’s current appraised value.

Once the appraiser has completed the appraisal and submitted it to Gate City Bank (which may take 3-8 weeks), your Mortgage Loan Officer will visit with you regarding the appraised value and any items that may affect your loan approval process. You will also receive a copy of the appraisal.

Step 6: Title InsuranceGate City Bank will obtain a title insurance commitment. The title insurance commitment provides Gate City Bank with the legal details of the property including any liens against the property (i.e. other loans). If you choose, you can obtain owner’s coverage for title insurance. You can obtain information regarding this from your Mortgage Loan Officer or the title company.

Step 7: Loan ApprovalDuring the final loan approval process, a Gate City Bank Mortgage Loan Underwriter reviews your loan package, appraisal, total debt ratio, credit history, employment history, and other required information to make sure it conforms to all of the guidelines required for the loan program you have chosen. The final loan approval process may take 7-10 days, once the Underwriter has received all of the information.

Step 8: ClosingCongratulations! You’re finally here! Gate City Bank will prepare the documents that you will sign at closing. The title company will prepare the final settlement statement which includes all of your closing costs. Your Mortgage Loan Officer will notify you with the total dollar amount that you will need to provide to the title company. This amount needs to be in the form of an official/cashier’s check or wire transfer payable to the title closing company.

Your Mortgage Loan Officer will be present at the closing, as well as a representative from the title company, and your Realtor, if applicable.

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HOME LOANSLocally approved, serviced, and financed!

• The servicing of your loan stays at Gate City Bank for the entire life of the loan.

• Insurance claim checks can be brought to any Gate City Bank office.

• Payments can be made at any Gate City Bank office.

• Your questions can be answered at any Gate City Bank office.

GC 1050 (R 03/15)

Member FDIC

COMMON LOAN TERMS

Additional Principal Payment: A way to reduce the remaining balance on the loan by paying more than the scheduled principal amount due.

Adjustable Rate Mortgage (ARM): A mortgage with an interest rate that changes during the life of the loan according to movements in an index rate. Sometimes called AMLs (adjustable mortgage loans) or VRMs (variable-rate mortgages).

Annual Percentage Rate (APR): The cost of credit, expressed as a yearly rate including interest, mortgage insurance, and loan origination fees.

Appraised Value: An opinion of a property’s fair market value, based on an appraiser’s knowledge, experience, and analysis of the property.

Asset: Anything owned of monetary value including real property, personal property, and enforceable claims against others (including bank accounts, stocks, mutual funds, etc.).

Closing: A meeting held to finalize the sale of a property. The buyer signs the mortgage documents and pays closing costs. Also called “settlement”.

Closing Costs: These are expenses - over and above the price of the property - that are incurred by buyers and sellers when transferring ownership of a property. Closing costs normally include an origination fee, property taxes, charges for title insurance and escrow costs, appraisal fees, etc.

Credit Report: A report detailing an individual’s credit history that is prepared by a credit bureau and used by a lender to determine a loan applicant’s creditworthiness.

Default: Failure to make mortgage payments on a timely basis or to comply with other requirements of a mortgage.

Delinquency: Failure to make mortgage payments on time.

Deposit: This is a sum of money given to bind the sale of real estate, or a sum of money given to ensure payment or an advance of funds in the processing of a loan.

Down Payment: Part of the purchase price of a property that is paid in cash and not financed with a mortgage.

Equity: The amount of financial interest in a property. Equity is the difference between the fair market value of the property and the amount still owed on the mortgage.

Escrow Payment: The part of a mortgagor’s monthly payment that is held by the servicer to the pay for taxes, hazard insurance, mortgage insurance, lease payments, and other items as they become due.

FHA Mortgage: A mortgage that is insured by the Federal Housing Administration (FHA). Also known as a government mortgage.

Fixed Rate Mortgage (FRM): A mortgage interest rate that is fixed throughout the entire term of the loan.

Interest: The fee charged for borrowing money.

Late Charge: The penalty a borrower must pay when a payment is made a stated number of days after the due date.

Loan: A sum of borrowed money (principal) that is generally repaid with interest.

Loan-to-Value (LTV) Percentage: The relationship between the principal balance of the mortgage and the appraised value (or sales price if it is lower) of the property. For example, a $100,000 home with an $80,000 mortgage has an LTV of 80 percent.

Lock-In Period: The guarantee of an interest rate for a specified period of time by a lender, including loan term and points, if any, to be paid at closing.

Maturity: The date on which the principal balance of a loan becomes due and payable.

Mortgage: A legal document that pledges a property to the lender as security for payment of a debt.

Mortgage Insurance: A contract that insures the lender against loss caused by a mortgagor’s default on a government mortgage or conventional mortgage. Mortgage insurance can be issued by a private company or by a government agency.

Note: A legal document that obligates a borrower to repay a mortgage loan at a stated interest rate during a specified period of time.

Origination Fee: A fee paid to a lender for processing a loan application.

Prepayment Penalty: A fee that may be charged to a borrower who pays off a loan before it is due.

Pre-Approval: The process of determining how much money you will be eligible to borrow before you apply for a loan.

Principal Balance: The outstanding balance of principal on a mortgage not including interest or any other charges.

Principal, Interest, Taxes, and Insurance (PITI): The four components of a monthly mortgage payment. Principal refers to the part of the monthly payment that reduces the remaining balance of the mortgage. Interest is the fee charged for borrowing money. Taxes and insurance refer to the monthly cost of property taxes and homeowners insurance, whether these amounts that are paid into an escrow account each month or not.

Rate Lock: A commitment issued by a lender to a borrower or other mortgage originator guaranteeing a specified interest rate and lender costs for a specified period of time.

Real Estate Settlement Procedures Act (RESPA): A consumer protection law that requires lenders to give borrowers advance notice of closing costs.

Recording: The noting in the registrar’s office of the details of a properly executed legal document, such as a deed, a mortgage, a satisfaction of mortgage, or an extension of mortgage, thereby making it a part of the public record.

Security: The property that will be pledged as collateral for a loan.

Underwriting: The process of evaluating a loan application to determine the risk involved for the lender. Underwriting involves an analysis of the borrower’s creditworthiness and the quality of the property itself.

VA Mortgage: A mortgage that is guaranteed by the Department of Veterans Affairs (VA). Also known as a government mortgage.

(701) 293-2400 • (800) 423-3344 • gatecitybank.com