John Poast\’s Guide

1. The Chicago
Bancorp Guide
to Mortgages
Chicago Bancorp is an Illinois Residential Mortgage Licensee

2. Table of Contents
One Chicago Bancorp—The Right Choice Page 3
Two The Loan Process Page 4
Three Pre- Approval Page 5
Four Shop For a New Home Page 6
Five First Time Homebuyers Page 7
Six Loan Programs Page 9
Seven Special Financing Needs Page 10
Eight What a Mortgage Payment Consists of Page 11
Nine Good Faith Estimate- Costs to Close Page 12
Ten Glossary of Mortgage Terms Page 14

3. Who we are
Chicago Bancorp—
The Right Choice
• Founded in 1995, Chicago Bancorp has grown to be one of the largest
privately held mortgage banks in the Midwest
• Chicago Bancorp lends over a billion dollars a year from our own
funds and also partners with over 40 of the best lenders in the country
to provide a multitude of lending solutions with seamless funding
• A national lender offering loans across the country
• An executive staff with over 50 combined years of experience in
mortgage banking
What we offer
• Over 100 mortgage products offered to fit each individual’s needs
• Highly competitive rates based on the large volume of loans that we
close
• We combine the optimum mix of online convenience, technology
and mortgage-banking expertise to service the needs of the borrower
• Timely processing and the ability to close loans quickly.. we can close
a loan in 10 days from application if needed
• A single point of contact to manage the overall success of the
mortgage process
Why we’re different
• Great rates and low fees are the benchmark, not the goal
• Technology meets personal service, being efficient does not mean
forgetting that real estate is not just an investment, it is a family’s home
• Chicago Bancorp has high standards… for ourselves, for our vendors, and
for the investors that we partner with to provide the highest quality
service with the most ethical standards of practice
• We control the mortgage process from beginning to end. Period. We
have in house underwriters for conventional and FHA products, our own
closing department and a contract title company on-site which allows us to
be hands on at every level of the mortgage progression from origination
through closing!

4. Borrower gets pre approved from
The Loan Process
Chicago Bancorp
Borrower shops for a new home
and signs a sales contract
Chicago Bancorp customizes a loan
for you and begins processing it
Chicago Bancorp underwrites your
loan once the appraisal is complete
Chicago Bancorp underwrites your
loan once the appraisal is complete

5. Obtaining a Pre Approval
Chicago Bancorp’s Pre Approval is a commitment to fund your
The Pre Approval
mortgage loan for a fixed period of time. A Pre Approval may include
an interest rate lock. To obtain a Pre Approval, Chicago Bancorp
evaluates your credit history and calculates your housing and debt
ratios. You should expect to verify your income, length of employment
and source of down payment.
Pare Approval legitimizes you as a serious buyer. It also gives you
additional negotiating leverage to agree on a sales price, especially if
the seller has other offers before them to consider that may be larger
offers but are not substantiated by a Pre Approval.
When seeking a Pre Approval, it is important to not misrepresent the
facts on your application. If a lender learns later that you’ve
misrepresented or omitted information on your application, your Pre
Approval may be rescinded.
Pre Approval vs. Pre Qualify
Yes, there is a big difference. Here are the differences between the
two:
Pre Qualify
A mortgage Pre Qualification is a simple calculation of the
amount of home a buyer can afford. It is solely based upon the
information that is provided by the borrower with no or little
documentation to fully assess the buyer’s financial ability.
Pre Approve
A Pre Approval is a financial document generated from your
mortgage company that substantiates your ability as a buyer.
A complete loan application has also usually been taken. The
Pre Approval Summary also provides valuable information to
the Real Estate Agent as to the amount of home a buyer can
afford and any other conditions that may be applicable.

6. 5 Things to avoid when you’re buying a home
Shop for a new home
Don’t Change Jobs
Changing jobs before or during the loan process can create a problem in
qualifying you for a loan, particularly if that job is in a different line of work or
at a lower rate of pay than your current job. Many loan programs require
borrowers to have a 2 year work history.
Don’t switch banks
It is best to leave your money where it is until your loan has closed. Moving
your money to a new bank or even into a new account can wreak havoc with
the verification process. Most new accounts opened or large deposits made
in the last six months will have to be explained as to the source of the funds.
If you are transferring money from investment or retirement accounts, make
sure you keep the withdrawal/deposit receipts and make sure you clearly
show where you deposited the money.
Avoid paying off bills
Your Mortgage Banker will advise you if it is necessary to pay off bills to help
you qualify for a loan. They will also show you the best way to pay of bills
to make sure you have the evidence needed to verify the bill has been paid
in full.
Avoid big purchase
A new large monthly payment can affect the amount of home you qualify
for and it can make it difficult to get your loan approved.
Avoid credit inquiries
Your credit score will be affected if your credit is run many times
in a short time period. Since interest rates and good credit scores
are directly linked, it is in your best interest to minimize the
number of times your credit is pulled.

7. 5 simple steps to the process
First Time Home Buyer
The home buying process can seem overwhelming to a first time buyer. The
better you understand how the process works, the less intimidated by the
process you will be.
Pre Approval
Before a borrower begins their search for a new home, they should
always be Pre Approved. This process helps to determine what they
can afford. Your realtor will submit your Pre Approval certificate with
the purchase offer to the seller which enhances the offer and will
make you more attractive to the seller.
Loan Application
Once all parties have agreed to the purchase price and terms have
been signed, there is an executed contract, which becomes the
foundation of the new mortgage.
There are now 3 steps that need to be accomplished by the borrower
in order to proceed with the loan.
1.Decide on a loan program
2.Sign all necessary loan documents
3.Borrower must gather all their personal documentation to submit
Lock your rate
The borrower may choose to lock their rate at the time of application
or may choose to float their loan to be locked at a later time.
Generally speaking, the best pricing is available at 30 and 45 day
locks. The lock period needed will depend on the closing date stated
in the contract.
Continued….

8. Approval Process
First Time Home Buyer
There are three major steps that are being accomplished between the
application signing and the closing with Chicago Bancorp.
1.Appraisal—an appraisal is necessary to close your loan. Chicago
Bancorp will order an appraisal on the property to determine the
value to be sure that you are paying a fair market value for the home
you are purchasing.
2.Title and Escrow—the real estate attorneys will generally order
these services and then forward the findings to Chicago Bancorp so
that we may included them in our final package.
3.Underwriting—each loan will be sent to an approved underwriter in
our office who reviews the application, supporting documentation,
financial information, sales contract, appraisal and title to be sure all
necessary criteria and regulations are met.
Closing
The day before closing, the Title Company will generate a final
statement of charges that incorporate the lender’s attorney’s,
realtor’s and title fees as well as taxes and insurance escrows.
On the closing day, all final clsoing documents will be signed at a Title
Company.
Most of the time, your first mortgage payment will not start until
after the first FULL month of the closing date unless the lender has
issued an interest credit.

9. Fixed Rate
Fixed Rate mortgages are available for 30 years, 20 years, 15 years, and
even 10 years. There are also “biweekly” mortgages, which shorten the
Loan Programs
loan by calling for half the monthly payment every two weeks. (Since there
are 52 weeks in a year, you make 26 payments, or 13 “months” worth,
every year.)
Fixed rate fully amortizing loans have two distinct features. First, the
interest rate remains fixed for the life of the loan. Secondly, the payments
remain level for the life of the loan and are structured to repay the loan at
the end of the loan term. Property taxes and homeowners insurance may
increase, but otherwise your monthly payments will remain stable. The
most common fixed rate loans are 15 year and 30 year mortgages.
Adjustable Rate
These types of loans have interest rates that are fixed for a specified term
(10, 7, 5, 3, or 1 year) and then adjust periodically based on changes in a
pre-selected index. The most common indexes for these mortgages are
Treasury, LIBOR or COFI indexes. Adjustable rate mortgages have lower
initial interest rates during the fixed initial term than a long term fixed
rate loan which translates to a lower monthly payment. These types of
loans are especially attractive to first time homebuyers who are usually in
their first home less than five years or to any buyers who do not plan on
living in the home for the full term of a long fixed rate (i.e. 30 years).
HELOC
A Home Equity Line Of Credit loan enables you to borrow money against
the equity (the value of your home minus what you owe) you have built
up in your home. This loan is subordinated to the existing first mortgage.
Home equity loans are often used to pay off credit card debt, pay college
tuition or to make improvements on a home. A HELOC is a form of
revolving credit in which your home serves as collateral. There are also
closed end home equity loans which sometimes better suit a specific loan
scenario than an open line.

10. FHA loan
FHA, also know as the Federal Housing Administration, operates under the
control of the Department of Housing and Urban Development (HUD) and
Loan Programs
has the primary responsibility for administering the government home
loan insurance program. This program allows buyers who might otherwise
not qualify for a home loan to obtain one because the risk is removed from
the lender by FHA. The most popular FHA home loan program nationwide
only requires a minimum of 3.5% from the borrower and permits 100% of
their money needed to close to be a gift from a relative. The main
advantage to a FHA home loan is that the credit criteria for a borrower is
not as strict as FNMA or FHLMC. Someone who may have had a few credit
problems should not have a problem obtaining FHA financing.
VA loan
VA loans are designed to provide assistance in purchasing a home for
United States Veterans. In most cases, no down payment is required
(unless required by the lender or the purchase prices I more than the
reasonable value of the property) and the parameters for attaining the
loan are less stringent. VA guaranteed loans are made by private lenders
to eligible veterans for the purchase of a home which must be for their
own personal occupancy.
Jumbo
A Jumbo mortgage is designed for those who wish to take a loan out for
more than the conforming loan limit of $417,000. A jumbo mortgage can
go as high as $5,000,000. Jumbo loans are available in many variations
including ARMs, fixed rate, and interest only. Lending criteria tend to be
more stringent due to the increased risk of loaning a larger sum of
money.

11. Principal
Mortgage Payment?
What Makes up My
The amount of money borrowed. Each month when a mortgage
payment is made, a small portion of the principal is being paid back.
Over the life of the loan, the portion towards principal will increase and
the portion towards interest will decrease.
Interest
The cost of borrowing money.
Property Taxes
Taxes are paid to local governments. Lenders collect taxes through
monthly payments that they then sue to pay the property taxes when
they are due.
Hazard Insurance
All lenders require that borrowers have hazard insurance which
protects the borrower against any financial losses that might result
due to a fire, flood or other “hazard.” the hazard insurance policy
must be paid in full for one year at the time of closing.
Mortgage Insurance
An insurance policy that pays mortgage lenders for their financial losses
if a borrower fails to repay a loan. Mortgage insurance is required on
any loan that is greater than 80% of the home value.

12. Good Faith Estimate

13. Good Faith Estimate

14. Adjustable Rate Mortgage (ARM)
A mortgage that permits the lender to adjust its interest rate periodically on
the basis of changes in a specified index. Ex: 3/1 ARM is a mortgage rate that
is fixed for the first 3 years and can then fluctuate annually based on the
current market.
Adjustment Period
Glossary
The period that elapses between the interest rate change dates for an
adjustable rate mortgage (ARM).
Amortization
The gradual repayment of a mortgage loan by installments
Amortization Term
The mount of time required to amortize the mortgage loan. The
amortization term is expressed as a number of months. For example, for a
30 Year fixed rate mortgage, the amortization term is 360 months.
Annual Percentage Rate (APR)
The cost of a mortgage stated as a yearly rate; includes such items as
interest, mortgage insurance, and loan origination fee (points).
Appraised Value
An opinion of a property’s fair market value, based on an appraiser’s
knowledge, experience, and analysis of the property.
Appreciation
An increase in the value of a property due to changes in market conditions or
other causes. The opposite of “Depreciation.”
Biweekly Payment Mortgage
26 biweekly payments are each equal to one-half of the monthly payment
that would be required if the loan were a standard 30 year fixed rated
mortgage, and they are usually drafted from the borrower’s bank account.
The result for the borrower is a substantial savings in interest.

15. Bridge Loan
A short-term loan collateralized by the borrower’s present home which is
currently on the market to be sold that allows the future proceeds of the sale
to be used for closing on a new house before the present home is sold.
Cash-Out Refinance
A refinance transaction in which the amount of money received from the new
Glossary
loan exceeds the total of the money needed to repay the existing first
mortgage, closing costs, points, and the amount required to satisfy any
outstanding subordinate mortgage liens. In other words, a refinance
transaction in which the borrower receives additional cash that can be used
for any purpose.
Closing Costs
Expenses (over and above the price of the property) incurred by buyers and
sellers in transferring ownership of a property. Closing costs normally include
an origination fee, an attorney’ fee, taxes, an amount placed in escrow, and
charges for obtaining title insurance and an appraisal.
Escrow Account
The account in which a mortgage servicer holds the borrower’s escrow
payments prior to paying property expenses. A borrower typically provides
funds that will pay taxes, mortgage insurance, hazard insurance premiums,
and other payments when they are due.
Fixed Rate Mortgages
A mortgage in which the interest rate does not change during the entire term
of the loan.
Fixed Period Adjustable Rate Mortgages
This type of adjustable rate mortgage (ARM) maintains the same initial
interest rate for the first 3, 5, 7, or 10 years of your loan.
Good Faith Estimate
The good faith estimate is a disclosure from your lender the outlines the costs
you will incur to obtain your mortgage. It is based on the lender’s typical loan
origination costs for the area where the property you are purchasing is
located.

16. Hazard Insurance (Homeowners Insurance)
The insurance should be equal to at least the replacement cost of the
property you want to purchase. Replacement cost coverage ensures that your
home will be fully rebuilt in case of a total loss. Most home buyers purchase a
homeowners insurance policy that includes personal liability insurance incase
someone is injured on their property, personal property coverage for loss and
damage to personal property due to theft or other events, and dwelling
Glossary
coverage to protect the house against fire, theft, weather damage, and other
hazards. If the home you are purchasing is located near water, you may need
flood insurance as part of your homeowners protection. Lenders generally
require the first year’s premium to be paid in full prior to the closing as well as
escrowing the monthly breakdown to pay the premium in full when it comes
due annually.
Investment property
A property that is not occupied by the owner
Liabilities
A person’s financial obligations. Liabilities include long-term and short-term
debt, as well as any other amounts that are owed to others.
Lien
A legal claim against a property that must be paid off when the property is
sold.
Loan Application
The loan application is a detailed form designed to provide information to
originate your loan. Lenders use the application to evaluate whether or not
they can give you a loan, and if , so the amount of money they can lend you.
The loan application form requests information such as bank account balances
and account numbers, employment and income information and liabilities.

17. Loan Commitment
The commitment letter states the dollar amount of the loan being offered,
the number of years you have to repay the loan, the loan origination fees
and/or points, the annual percentage rate, and the monthly charges. This
letter conveys the intent of the lender and buyer to complete the purchase
by the terms that are listed any conditions that are still pending to be cleared
in order to close the loan will also be indicated on the commitment letter.
Glossary
Origination Fee
The loan origination fee covers costs of processing the loan. It is often
expressed in points. One point is 1% of the mortgage amount. For Example,
a $100,000 mortgage with a loan origination fee of 1 pt. would mean you pay
$1,000.
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 a LTV percentage of 80%.
Interest Rate Lock
A written agreement in which the lender guarantees a specified interest rate
if a mortgage goes to closing within a set period of time.
Mortgage Banker
An individual that represents the bank which funds the purchase at the
closing table. Mortgage companies then typically transfer the servicing rights
to other investors. Mortgage Bankers generally control the origination and
closing and then transfer the loan to post-closing for resale in the secondary
mortgage market.
Mortgage Insurance
A contract that insures the lender against loss caused by a mortgagor’s
default on a government or conventional mortgage. Mortgage insurance can
be issued by a private company or by a government agency such as the
Federal Housing Administration (FHA).

18. Pre Approval
When you work with your lender to get Pre Approved, you are getting an
indication of how much money you will be eligible to borrow when you apply
for a mortgage.
Pre Qualification
The process of determining how much money a prospective home buyer will
Glossary
be eligible to borrow before they apply for a loan.
Survey
A drawing of map showing the precise legal boundaries of a property, the
location of improvements, easements, rights of way, encroachments, and
other physical features.
Title
A legal document evidencing a person’s right to or ownership of a property.
Title Insurance
Insurance that protects the lender (lender’s policy) or the buyer (owner’s
policy) against loss arising from disputes over ownership of a property. Your
lender will require that you buy title insurance to ensure that you are
receiving a “marketable title.”
Transfer Tax
State of local tax payable when title passes from one owner to another.
Truth in Lending (TIL)
A federal law that requires lenders to fully disclose, in writing, the terms and
conditions of a mortgage, including the annual percentage rate (APR) and
other charges. Your lender should provide you with the Truth in Lending
(TIL) Statement within three business days of your loan application
Underwriting
The process of final evaluation of a loan application to determine the risk
involved for the lender determined by the parameters of the selected loan
program. Underwriting not only involves the analysis of the borrower’s
creditworthiness and financial profile but also the quality of the property
itself.