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Owning real estate is extremely fulfilling and is one of the biggest investments you will make during your lifetime. If you have been thinking about a different home, refinancing an existing home loan, using the equity in your home, or becoming a landlord, let one of our mortgage bankers take the worry out of the financing.
The sooner you visit with one of our mortgage bankers, the sooner we can advise you on next steps and help you be prepared to take action. We offer a variety of home loan options to assist you.
A conventional mortgage is any type of homebuyer’s loan available through or guaranteed by a private lender such as banks, credit unions, mortgage companies, or the two government-sponsored enterprises; Federal National Mortgage Association (Fannie Mae) and Federal Home Loan Mortgage Corporation (Freddie Mac). These loans are not offered or secured by a government entity, like the Federal Housing Administration (FHA), the U.S. Department of Veterans Affairs (VA) or the U.S. Department of Agriculture (USDA) Rural Housing service.
A conventional conforming mortgage is one whose essential terms and conditions meet the funding criteria of Fannie Mae and Freddie Mac. Primarily among those is a dollar limit, set annually by the Federal Housing Finance Agency (FHFA). Currently, in most of the U.S. a loan must not exceed $424,100. When a loan exceeds this dollar limit, it is considered a non-conforming or jumbo loan.
With a fixed interest rate loan the interest rate does not change during the lifetime of the loan. This allows the borrower to know exactly what their principal and interest payment will be. While taxes and insurance costs on the property may change from year to year, a fixed rate mortgage is a fully amortized loan where the interest rate on the note remains the same throughout the term of the loan.
An adjustable-rate mortgage, also known as a variable-rate mortgage, is a mortgage loan with the interest rate on the note periodically adjusted based on an index which reflects the cost of funds to the lender. The loan may be offered at the lender’s standard variable rate/base rate.
Adjustable rates transfer part of the interest rate risk from the lender to the borrower. The borrower benefits if the interest rate falls but pays more interest if the rate increases.
The most common indices are the rates on 1-year constant-maturity treasury (CMT) securities and the cost of funds index (COFI). A few lenders use their own costs of funds as an index, rather than using other indices. This is done to insure a steady margin for the lender, whose own cost of funding will ususally be related to the index. Consequently, payments made by the borrower may change over time with the changing interest rate (alternatively, the term of the loan may change).
A first-time homebuyer is defined as an individual who has had no ownership interest in a principal residence during the prior 3-year period. First-time homebuyer programs typically offer lower rates and have income restrictions. Let one of our mortgage bankers help determine if you meet the requirements for a first-time homebuyer loan. We work with these first-time homebuyer agencies.
USDA’s 502 Guaranteed Loan Program assists approved lenders in providing low- and moderate-income households the opportunity to own primary residences that are adequate, modest, decent, safe, and sanitary in eligible rural areas. Eligible applicants may build, rehabilitate, improve, or relocate a home in an eligible rural area.
The Veterans Administration (VA) helps service members, veterans, and eligible surviving spouses become homeowners. As part of their mission to serve, they provide a home loan guaranty benefit and other housing related programs to help veterans buy, build, repair, retain, or adapt a home for their own personal occupancy.
A VA home loan allows qualified buyers the opportunity to purchase a home with no down payment. Also, there are no monthly mortgage insurance premiums to pay.
A construction loan is typically a short-term loan used to pay for the cost of building a home. It may be offered for a set term (usually six months to a year) to allow you the time to build your home. The builder or home buyer takes out a construction loan to cover the costs of the project before obtaining long-term financing.
A home equity account is a second mortgage. Your first mortgage is typically the mortgage used to purchase your home. You can use home equity accounts to borrow against the property if you have built up enough equity. The down payment you made when you purchased your home and the monthly principal payments you’ve made since that time, along with any potential increase in property value, creates equity. You can use this equity to make home improvements, pay for college tuition, consolidate debt or go on vacation. Dacotah Bank offers the following home equity accounts:
With a home equity loan, you borrow one lump sum and make fixed monthly payments on that amount for the entire length of the term.
A home equity line of credit provides a pre-approved amount of credit that allows you to draw funds up to your maximum credit line. You make payments and pay interest only on the amount you use. You can borrow the funds from the HELOC; pay it back; and borrow it again.
If you need temporary financing, a bridge loan may be your best option. Typically, these are interest only loans taken out for 12 months or less. This gives you the ability to purchase your new home while waiting for your current home to sell.
A jumbo loan is a larger loan needed when the amount exceeds the conforming loan limits set by the Federal Housing Finance Agency (FHFA). As a result, it is not eligible to be purchased, guaranteed or securitized by Fannie Mae or Freddie Mac. Designed to finance luxury properties and homes in highly competitive local real estate markets, jumbo loans come with unique underwriting requirements and tax implications.
FHFA sets the conforming loan limit size for different areas annually. The limit has generally been over $400,000.
Buying a house can be an overwhelming and complicated process. Our mortgage bankers are here to walk you through each step of the process making it a stress-free experience. While you are busy getting ready to move we can take care of the financing.
The first step to your new home or refinance is filling out an application. You can choose to come in, call, or click. Be sure to fill out your application as accurately as possible. We use this information to determine your monthly payment, the loan amount for which you may qualify, cash needed for closing, and determine which loan program may be best for you. If you are buying, this will give you the needed information to find your next home.
Once you have reviewed the loan estimate (LE) and are ready to proceed, we will begin processing your file. This includes ordering the appraisal, title commitment, survey, and any verification requests that are needed. If there are any irregularities on your credit report, we will work with you to get them resolved as well. This is when you will be provided with a list of items we need from you. The sooner you provide these items, the sooner we can proceed to underwriting.
Once your loan file is complete, it is submitted to an underwriter for review. Their job is to review everything and ensure your loan is accurate and well documented. If there are missing items or necessary clarifications, they will request the information from your mortgage banker and your mortgage banker will work with you to resolve any issues.
After the underwriter gives us the ‘clear to close’ we are ready to sign the closing disclosure. This disclosure contains a summary of your loan including the term, rate, monthly payment, closing costs, and the amount of check or funds to close. A three-day waiting period is required by regulation. Once this time passes we are ready to sign loan papers.
Loan closing can take place at a title company or settlement agent’s office. If you are buying a house, it is customary for the sellers to be in attendance as well and it provides you the perfect opportunity to ask any last minute questions about the property. Your mortgage banker will work with your Realtor and settlement agent to coordinate the signing of the paperwork. There are a lot of papers to sign, but once you have finished, the keys are yours!
Purchasing a home may be a very complicated process. We want your loan to be as easy and convenient as possible, so qualifying loans may be serviced here at Dacotah Bank. You will get the same exceptional service you have come to expect.
Eliminate the worries and hassles that can arise when you work with large, out-of-state loan servicing departments! We would love to be your trusted experts for your real estate financing.
Call, click, or come in to learn more!
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Or mail it to -
PO Box 1950
Aberdeen, SD 57402-1950
If you escrow for your tax and insurance payments, we will –
If you choose not to escrow, proof of insurance and payment of real estate taxes will be required.
If your insurance coverage lapses, Dacotah Bank will force-place insurance to cover your home. This pertains to both hazard insurance and flood insurance. Force-placed insurance will only protect the lender – not the property owner. This insurance is more expensive than insurance purchased by the property owner. The payments of force-placed insurance premiums are the responsibility of the property owner.
Mortgage insurance is required if your loan amount exceeds 80% of the appraised value of your property. Mortgage insurance protects the lender in the event the mortgagor discontinues making payments on the loan. Mortgage insurance premiums will be escrowed. Cancellation of mortgage insurance is allowed under certain circumstances.
Maintaining a current account status will improve your credit rating. When your account becomes past-due, it may be reported to a credit bureau. Late payments, missed payments, or other defaults on your loan will negatively affect your credit rating.
Dacotah Bank’s online banking is available 24 hours a day and gives you access to all your Dacotah Bank accounts.
If you believe your account information is inaccurate, please Contact Us.
Damage to your home can be overwhelming. Let us help!
Dacotah Bank is here to help you through the financial aspects of major home repairs. We will guide you in what type of documentation you will need to gather from your insurance provider and contractors.
If you are having financial difficulty please contact Dacotah Bank as soon as possible. The sooner we understand your situation, the sooner we may be able to assist you. The following options may be available if you become past due.
If you are not able to continue paying your mortgage, there may be alternatives to foreclosure. Your best option may be to find more affordable housing. As an alternative to foreclosure, you may be able to sell your home and use the proceeds to pay off your current loan. In some situations a short sale or deed-in-lieu of foreclosure may be an option. Call your mortgage banker for assistance.
For mortgage counseling or assistance information visit the U.S. Department of Housing and Urban Development's (HUD) website.
If you would like information for counseling agencies or programs in your area, call the HUD at (800) 569-4287 or visit the U.S. Consumer Financial Protection Bureau website.
Foreclosure Prevention Scams exist! Beware of any person or company that –
If you believe you have been a victim of a foreclosure rescue scam, visit www.preventloanscams.org or call (888) 995-4673.
If your name, telephone number or address changes, please call, click, or come in to provide us updated information.
An abbreviation for annual percentage rate, APR is how much your loan will cost over the course of a year. This figure is usually higher than the interest rate because it takes into account the interest charged as well as any fees or additional costs. Since all lenders use the same formula, it is a fair way to compare the cost of a mortgage rather than just the interest rate.
A credit score is a number that represents a person’s creditworthiness. Typically a three-digit number from 300 to 850, it is a product of a mathematical model that evaluates an individual’s credit report information and, based on the analysis of millions of credit transactions used to build the model, produces the score.
Some landlords use credit scores when vetting prospective tenants. Property and casualty companies use them in underwriting insurance applicants. Mortgage lenders, insurers, and investors use them to determine whether they are willing to make, insure, or purchase mortgage loans and at what price.
Yes. Three companies serve as the main repositories of borrower credit data. There are several credit score vendors that use that data. There are also many companies who sell reports containing credit data and scores, sourced from those repositories and score vendors. Each credit score vendor has a different approach and some have several models designed for a particular purpose, such as auto lending or mortgage lending. In addition, there are multiple versions of scores available as credit score providers work to improve the predictive power of their scores. In the case of mortgage lending, each borrower’s credit report comes with three credit scores, one from each of the three repositories.
It depends on what you are trying to accomplish. If your goal is to use the score with the greatest predictive power for a particular type of financial forecasting, you may choose a score different from the one you would use in the origination of a mortgage loan. In the case of mortgage lending, most lenders use the same version from the same credit score provider largely because it has been the de facto standard for many years. That is not to say that some mortgage lenders aren’t using other versions of that score or scores from other providers.
There are several reasons scores may differ. First, credit report information is dynamic. Creditors regularly submit updated information to credit repositories. Because credit scores are derived from the dynamic data in the credit repositories, credit scores can change regularly. Second, there are multiple credit score providers, each with different scoring models. Third, each credit score provider has multiple versions of its score in the market at any given time. Finally, not all creditors report to credit repositories. Those that do may not be reporting accurately or in a timely manner (although that has improved significantly over the years).
Closing, or settlement fees, include but are not limited to loan origination fees, appraisal fees, title searches, title insurance, surveys, taxes, recording fees, and credit report charges. These fees are paid in addition to the price of the property by the buyers and sellers to complete a real estate transaction.
Escrow accounts are usually required by lenders to cover property taxes, homeowner’s insurance, flood insurance, and mortgage insurance. After an initial deposit, borrowers make monthly escrow payments as part of their mortgage payment.
A loan estimate is an accurate estimation of fees associated with a loan provided to the customer by a mortgage lender or broker. A LE is required by law under the Real Estate Settlement Procedures Act (RESPA). The estimate must be provided within three business days of applying for a loan.
Borrowers can pay a lender points to reduce the interest rate on the loan, resulting in a lower monthly payment. The cost of one point is equal to one percent of the loan amount. Depending on the borrower, each point can lower your interest rate by one-eighth to one-quarter of one percent.
Until you have locked in the interest rate with your lender, the rate on your loan can change. Typical rate locks are good for up to 90 days but can be longer depending on your type of loan. Speak with our experienced mortgage banker to help guide you.
The receipt of gift funds is a great way to help with the costs of purchasing a home. However, there are certain documentation requirements when utilizing this method to help with your down payment and closing costs. Speak with your mortgage banker to learn the details.
The beginning interest rate on an ARM.
The length of time the interest rate on an ARM is scheduled to remain unchanged. The rate is reset at the end of this period and the monthly loan payment is recalculated.
Most lenders tie ARM interest rate changes to changes in the index rate. Lenders base ARM rates on a variety of indices, the most common being rates on one, three, or five-year Treasury securities.
The percentage points that lenders add to the index rate to determine the ARM’s interest rate.
The limits on how much the interest rate or the monthly payment can be changed at the end of each adjustment period or over the life of the loan.
Sometimes used as a promotional aid, an initial discount offers a lower interest rate the first year of the loan. The interest rate would increase the following year.
This means the mortgage balance is increasing. This occurs whenever the monthly mortgage payments are not large enough to pay all the interest due on the mortgage. This may be caused when the payment cap contained in the ARM is so low the principal plus interest payment is greater than the payment cap.
The agreement with the lender may have a clause that allows the buyer to convert the ARM to a fixed-rate mortgage at designated times.