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Kent Bank is your source for Real Estate Mortgages and Home Equity Lines of Credit.

You can rely on Kent Bank for objective information about the dozens of Real Estate loan types available to insure that your home loan is a perfect fit for your budget and lifestyle.

Kent Bank is a leading Real Estate lender in northwest Illinois – providing more that $30,000,000 in mortgages during 2006.

Getting Started

Can you afford to buy a home?

Part of answering this question involves figuring out how much you're able to pay every month for a mortgage, including principal, interest, property taxes and property insurance. In general, we require that your monthly housing payment be no more than 28 to 33 percent of your gross monthly income.

In addition, your total monthly debt payments, including your mortgage costs, car loans, student loans, credit cards and others, generally should not exceed 40 percent of your gross monthly income.

In addition, the following also play an important role:

• The type of loan you choose
• The interest rate you pay
• The amount of down payment you make

A good way to determine what you're able to afford is to get prequalified for a mortgage. Call us at 1815.235.2711 or 1.815.443.2711 to start the process of getting prequalified.

Complete a Mortgage Loan Application

You may complete a Mortgage Loan application on-line at www.kentbnk.com . Your completed application will then be reviewed and we'll start the process. We'll analyze your income and expenses, obtain your credit history and note your credit score.

Information you may need to provide to apply for a mortgage:
Employment information. Names, addresses and telephone numbers of all your employers for the last two years.

W-2s. These are the forms you get from your employer every year to file your income tax returns. Usually you will need to provide copies of your W -2s for the two most recent years. You may also provide other income information, such as social security, pension, interest or dividends, rental income, and child support or alimony, if you choose to have them considered. Self-employment income may also be considered.
 

Pay stubs. Provide your pay stubs that cover the 30-day period before the date of your mortgage application.
 

Federal income tax returns. If you are self-employed, or more than 25% of your income comes from commission, overtime or bonuses, you may need to provide complete copies of federal income tax returns you filed for the two most recent years.
 

Bank statements. You may need to provide statements from all your accounts (checking, savings, mutual funds, money markets, certificates of deposits, 401(k) or other retirement accounts) for the last two months to verify the exact amount of cash you have available for your down payment and other costs associated with your home purchase. For certain mortgage loans, a portion of the down payment may come from a gift from a family member or a grant from a local down payment assistance program.
 

Current debts. You'll need to provide the account numbers, current balances and the minimum monthly payments of all credit accounts, such as loans, credit cards, child support and other payments you make each month.

Once all the required documentation has been gathered, your application is reviewed to determine your eligibility for a mortgage loan.  

About credit reports

Credit reports document your financial behavior over the past seven years — how much credit you have, how long you've had it and whether you pay your bills on time, among other things. Knowing what information is in your report can help you identify any problem areas and plan what steps you might take to correct them.

Three credit reporting agencies — Equifax, TransUnion and Experian — maintain credit reports. Lenders like Kent Bank buy credit reports to help them decide whether to offer you a mortgage loan.

Your credit report also carries your credit score, a numeric ranking between 300 and 850 that many lenders use to decide whether you are creditworthy. The score is used to help predict whether you'll repay a loan. It's calculated using five sources:

• Payment history
• Amount owed
• Length of credit history
• New credit
• Types of credit in use

In addition to telling lenders your creditworthiness, your credit score can also influence the interest rate you pay. In many cases the higher your score, the lower your interest rate.

The Down Payment

The down payment is the cash you put down to buy a home. It demonstrates your financial commitment to the purchase. In general, Kent Bank requires that you make a down payment equal to 3 to 20 percent of the value of the home. Making less than a 20 percent down payment may require you to pay for private mortgage insurance.

The best way to save for your down payment is to create a budget that includes ‘paying yourself' -- steering a portion of your income to savings or investments. As a general rule, we recommend that if you plan to buy within five years, consider building your down-payment using FDIC insured savings accounts and certificates of deposit. Any Kent Bank Personal Banker can help you set up these accounts.

Getting help

A parent or other related individual can give up to $10,000 a year to another person without having to pay gift taxes. You'll usually need to have a signed "gift letter" that says you do not have to repay it.

Mortgage choices

There are dozens of mortgage loan variations available. Selecting the one that fits your needs is important.

Fixed-rate loan. The interest rate is set for the full length of the loan. Because the monthly payment for principal and interest stays the same for the life of the loan, it's easier to plan a budget.
 

Adjustable-rate loan. An adjustable-rate mortgage (ARM) usually starts with a lower initial interest rate than traditional fixed-rate loans. After a set initial payment period (usually 1, 3, 5, 7 or 10 years), the interest rate may change periodically based on market conditions. As the rate changes, your monthly payment changes. ARM loans feature an adjustment "cap" which limits how much the interest rate can go up. This helps protect you from large increases in your monthly payment. If you plan on being in your home for a shorter period of time, or expect your income to increase over the years, an ARM loan may be right for you.

Loans for First Time Homebuyers

These affordable financing programs can help make it easier to buy a home since they require little or no money down and offer flexible credit and income guidelines.

Kent Bank's First Time Homebuyer programs are easy to understand and apply for.

How important is buying a home? Very.

Home ownership can provide financial benefits that could potentially help your financial situation for life:

Interest Deductions
You may be able to deduct the interest on your home loan, as well as the real estate taxes you pay annually. Be sure to consult your tax advisor. Because of this tax advantage, it may actually be cheaper to own than rent.

Equity
If the value of your property increases as you pay down your mortgage, you build equity that can be used to finance other major purchases, or as a down payment on a future home.

Protection Against Inflation
Home ownership could help you counteract rising inflation. Although past performance cannot guarantee future trends, real estate has historically appreciated at a higher rate than inflation in our area.

Kent Bank mortgage experts work with you throughout the home-buying process to help make buying your first home as easy as possible. Together, we can help you understand how owning a home is more valuable, and attainable, than you may realize.

Repayment schedule

Consider how quickly you'd like to repay your loan — within 15 years, 20 years, 25 years, 30 years? Typically, the sooner you repay the loan, the more you'll save in interest payments. However, the longer you extend the term of your financing, the lower your monthly payments may be. When choosing a loan term, consider your budget, your long-term spending patterns, your income over the life of the loan and how long you plan to stay in your home.

Closing costs. In addition to your down payment, you will need to pay closing costs for processing your loan and transferring the property ownership from the seller to you, the buyer. When you apply for a loan, Kent Bank will give you an estimate of closing costs, which may include:
 

• Origination fees, which are the costs of processing your loan (including property survey and appraisal)
   
• Items paid in advance, including first-year hazard insurance premium and first-year flood insurance premiums, if required
   
• Escrow account, an account held by the lender into which the homebuyer usually pays for city/county property taxes, mortgage insurance, hazard insurance and flood or earthquake  
• Title insurance charges
   
• Recording and transfer charges
   
• Attorney's fees

Mortgage insurance. If your down payment is less than 20% of the home purchase price, you can expect to pay some form of mortgage insurance. Home loans that are insured let you buy a home with a lower down payment than the lender would otherwise require. Mortgage insurance costs vary, depending on the amount of your down payment, the type of loan you select and your credit score. Two government agencies — the Federal Housing Administration (FHA) and the Veterans Administration (VA) — provide insurance for certain kinds of mortgage loans. Mortgage insurance is also available from private companies that regularly work with Kent Bank.

Property appraisal. An appraisal provides an estimate of the market value of the home that you wish to buy and is based on similar homes sold in the neighborhood. Kent Bank usually grants up to a certain percentage of the property's value in a mortgage loan. This percentage is called the loan-to-value (LTV) ratio. The rest of the property value is covered by your down payment.
 

Hazard insurance. Hazard insurance (sometimes referred to as a homeowner's policy) protects you and Kent Bank from loss in the event the home is damaged or destroyed by fire, storm or other hazards. You're responsible for obtaining hazard insurance prior to closing and for providing proof of insurance to your lender. The lender may also require additional insurance against loss by flood or earthquake.

The Closing

The closing is the final step in which the home is transferred to you. Once your loan is approved, a closing date is set. The purpose of the closing is to make sure the property is ready to be transferred to you from the seller.

To ensure that the transfer can be made, Kent Bank normally prepares the following items ahead of time:

Title search and report. Research of land records, court records and other legal documents to determine if the seller has a clear, marketable title to transfer to you.
 

Title insurance binder. Indicates the result of the title search and assures the lender the title to the property qualifies for a title insurance policy.
 

Survey. Confirms the property boundaries are as described in the purchase and sale agreement.

Well, sewer or septic certificate. Certifies that the sewage and water supply work properly. The sales contract will state whether you or the seller is responsible for these inspections and certificates.

Title insurance. Title insurance protects your lender against losses that may be incurred because of a defect in the title, a forgery, a recording error, claims of undisclosed or unknown spouses or heirs, and other risks that did not appear in the public records when the title search was done.
 

Hazard insurance. Hazard insurance (also referred to as a "homeowner's policy") protects you and Kent Bank from loss in the event the home is damaged or destroyed by fire, storm or other hazards. You are responsible for obtaining hazard insurance prior to closing and for providing proof of insurance to Kent Bank. We may also require additional insurance against loss by flood or earthquake.

Under the law every consumer has the right to equal access to credit and the right to full disclosure of all costs associated with obtaining a mortgage.

The Equal Credit Opportunity Act (ECOA) provides for equal access to credit regardless of:

• Race
• Religion
• Age
• Color
• National origin
• Sex
• Marital status
• Income from public assistance programs
• Applicant has in good faith exercised any right under the Consumer Credit Protection Act

There are additional protections if you have a physical or mental disability.

For more information on your housing rights, contact the U.S. Department of Housing and Urban Development (HUD) and request the Fair Housing — It's Your Right brochure.

In addition, the ECOA requires that you be notified as to whether your application has been approved as requested, modified or rejected within 30 days of the completed application. Specific reasons for rejection must be given to you, in writing, at the time of rejection or upon your written request for the specific reasons. An application is considered complete once the lender has received all the information necessary to make a loan decision.

This may include such information as:

• Credit reports
• Employment/income verifications
• Appraisals
• Approvals by insurance companies
• Additional information, as required

Additional consumer protection laws include:
Real Estate Settlement Procedures Act (RESPA). RESPA requires lenders to give you advance notice of estimated closing costs in purchase and refinance transactions.
 

Truth-in-Lending Act. The Truth-in-Lending Act requires all lenders to fully disclose, in writing, the terms and conditions of a loan including the Annual Percentage Rate (APR), which reflects the cost of obtaining credit.

You'll be provided with an estimate of your closing costs soon after your application has been received. These estimates will change if you change the product type or loan amount. If this should occur, be sure to ask how the changes will impact your closing costs.

Call us at 1815.235.2711 or 1815.443.2711 to get started or to have your questions answered.

Kent Bank New Home Construction Mortgages

In our experience, building a new home often doesn't go quite as smoothly as it should. Negotiations with contractors, unexpected costs, change orders and a hundred other details can make building a real headache.

Kent Bank Construction Mortgages are designed to provide you flexibility and simplicity during the building process. Kent Bank Construction loans operate as a hybrid between a line of credit and a loan. You close on the loan before construction begins, but you don't pay interest until the money is disbursed, usually over a period of time.

Advantages:
Save interest costs – interest is charged only on the amounts ‘drawn' as the construction proceeds
Save time and money -- one time closing can save hundreds of dollars in closing costs
Flexible – both fixed and adjustable rates over a variety of terms matched to your construction timetable.

Kent Bank Home Equity Line of Credit
Using the Equity in your home (the difference between the value of your home and the amount you owe on it) as collateral, Kent Bank establishes a revolving line of credit up to 90% of the equity. Use your line for home improvements, education funding, a second home and other major purchases or expenses. Interest on the loan may be tax deductible. (Consult a tax advisor about tax deductibility of interest.) Once your credit line is established, you'll access your line using Kent Bank convenience checks.

Kent Bank Home Equity Lines are available with fixed and variable interest. Interest is calculated only on the amount of the loan actually in use. Interest is paid monthly and principal can be repaid at any time during the life of the loan.

Kent Bank offers the Home Equity Line of Credit with NO CLOSING COSTS!

Kent Bank Home Equity Loan
Also using the equity in your home, a Kent Bank Home Equity Loan is an installment loan for a specific amount. Interest on a Home Equity Loan may be tax deductible. (Consult a tax advisor regarding tax deductibility of interest.) On the funding date, all of the principal is advanced for your use.

Kent Bank Home Equity Loans are available with fixed and variable interest. Interest and principal payments are paid monthly according to the loan payment schedule.

Call us at 1815.235.2711 or 1815.443.2711 to get started or to have your questions answered.