Mortgage Frequently Asked Questions
General mortgage questions
Q: Can customers apply for a mortgage loan via the telephone?
A: Yes. Our Mortgage Consultants are available from 7 a.m. to 8 p.m. CST to start an application. Please call the bank toll-free 24 hours a day at 1-877-SF4-BANK / 1-877-734-2265.
Q: What is a pre-qualification?
A: A pre-qualification will estimate how much money you are eligible to borrow before you apply for a mortgage. Be prepared to provide basic information such as income, debts and assets. A pre-qualification is not a pre-approval or loan approval.
Q: Can I apply for a loan before I have a home to purchase?
A: Yes. You may provide the required documentation for a loan pre-approval to verify income, debts and assets prior to your purchase. Once we obtain a credit report, we can make a credit only loan decision. This process is called a pre-approval. Since the property to be purchased is typically not known for a pre-approval, estimated sales price and loan amount are used to make a loan decision. The interest rate can be locked-in on a pre-approval with a rate lock fee of $250.
Q: What is an appraisal?
A: An appraisal is a report made by a certified appraiser who provides a professional opinion or estimate of property value. When you apply for a mortgage loan with State Farm Bank, we will initiate the process to get an appraisal ordered.
Q: How important is my credit?
A: Your credit is an important consideration for determining your creditworthiness. Information in your credit report is prepared by a credit bureau or consumer reporting agency. Any late payments or other adverse information contained in your credit report will receive additional review during the underwriting of your loan application, and may require further written explanation(s) or documentation from you as we consider your loan request.
Q: What are closing costs?
A: Closing costs cover all the fees and expenses associated with a loan transaction. Closing costs may include fees for an appraisal, credit report, title insurance, survey, and points. Closing costs vary depending upon the loan product and the fees that are customary in your area:
Q: What are discount points and how are they calculated?
A: Discount points are a one-time charge (or credit) by the lender. Each point is equal to 1% of the principal loan amount and can be paid to buy down the applicable interest rate. If you choose to pay points, they are typically paid at the time of closing. Discount points may be negotiated in the Purchase Contract to be paid by either the seller or borrower. Contact a Mortgage Consultant for more information.
Q: What is title insurance and why do I need it?
A: Title insurance protects the lender (lender's policy) and the homeowner (owner's policy) against loss resulting from disputes over ownership of the property.
Q: Who do I contact once my loan is in process and how would I update my application?
A: To update your application or ask a question about the process, contact a Mortgage Consultant. Once you submit your application, we will contact you to let you know the name of the Mortgage Consultant processing your loan and how to contact them.
Q: What is Private Mortgage Insurance (PMI)?
A: PMI is insurance provided by non-government insurers that protect the lender against loss if a borrower defaults. Typically PMI is required if your down payment is less than 20 percent of the purchase price. For example, on a purchase price of $100,000.00, PMI would be required if you put less than $20,000 (20% of $100,000) as a down payment.
Q: Will I always have to pay Private Mortgage Insurance (PMI)?
A: PMI will be canceled in accordance with federal law. We recommend you contact a Customer Service Representative to ask about your specific situation. On an annual basis, we will disclose information about PMI cancellation.
Q: What information do I need to apply for a loan?
A: In all mortgage applications, State Farm Bank will ask for information regarding your employment, income, assets, debts and the prospective property you intend to purchase. Other information may be needed depending upon your situation.
For more information see the Application Checklist.
Product information
Q: What is the difference between a Fixed Rate Mortgage and an Adjustable Rate Mortgage?
A: A fixed rate mortgage is a loan in which the interest rate does not change during the entire term of the loan. With this type of mortgage your monthly payments for principal and interest never change.
With an adjustable rate mortgage (ARM) the interest rate may periodically adjust on the basis of changes in a specified index. ARM loans can allow you to buy a more expensive home since the interest rate is usually lower than a fixed rate mortgage.
The right type of mortgage for you depends on many factors including:
- Your current financial picture
- How you expect your finances to change
- How long you intend to keep your house
- How comfortable you are with your mortgage payment changing from time to time
- How much risk you are willing to take.
Q: What is a jumbo loan?
A: A jumbo loan is a mortgage that exceeds the maximum loan amount established by Fannie Mae and the Federal Home Loan Mortgage Corporation (Freddie Mac). Jumbo loans are also referred to as "non-conforming" loans.
Q: When can I lock my interest rate?
A: Typically, you can lock your interest rate after submitting your application and providing a copy of your Purchase Agreement or Sales Contract. State Farm Bank offers a wide range of lock-in periods depending on your needs. If you do not lock your rate at application, you must lock no less than five business days prior to closing.
Q: What term (length of loan) is best for me?
A: While the monthly payments on a 30-year mortgage are lower than those for a 10, 15 or 20-year mortgage, a shorter-term can save you a considerable amount of money because of the way the mortgage amortizes. In addition, many times a shorter-term mortgage is available at a lower interest rate.
Q: Does State Farm Bank have products to help first-time homebuyers and/or low-to-moderate income homebuyers?
A: Yes. State Farm Bank has Affordable Housing Mortgages designed to help more people afford a home. For more information about our products, see our Affordable Housing Center.
Q: What are "conforming" and "non-conforming" loans?
A: A "conforming" loan meets loan limits and established by Fannie Mae and the Federal Home Loan Mortgage Corporation (Freddie Mac). "Non-conforming" loans or "jumbo" mortgages exceed these limits.
Q: What is a convertible mortgage?
A: A convertible mortgage allows a borrower to convert from an Adjustable Rate Mortgage (ARM) to a Fixed Rate Mortgage (FRM) during specified time periods. A conversion fee and certain conditions usually apply. Not all ARMs are convertible. State Farm Bank does not offer convertible ARM mortgages.
Q: What are State Farm's mortgage rates and how do customers find them?
A: Call your State Farm agent or 1-877-SF4-BANK / 1-877-734-2265.
Refinance
Q: Should I refinance my home?
A: Although each situation is different, there are several reasons to refinance including:
- To lower your monthly principal and interest payments.
- To move to a secure, fixed rate loan.
- To lower your interest rate.
- To take cash out of the equity in your home to consolidate debt or for home.
Q: If I refinance, do I need a new appraisal and credit report?
A: Generally, a new appraisal and credit report are necessary.
Q: What is cash-out refinance?
A: The difference between your loan balance and the value of your home is called equity. If you have held your mortgage for some time, you've probably begun to reduce the outstanding principal on your loan and increase the amount of equity in your home.
You may be able to refinance your home for more than what you currently owe and take the extra loan proceeds in the form of cash. On a cash-out refinance you may use the cash for home improvements, college costs, new car or other major purchases.
Q: What are closing costs to refinance?
A: Closing costs vary depending on your location and the purpose of the loan as well as differences in third party fees. To find out what a refinance may cost you, please call one of our Mortgage Consultants toll-free at 1-877-SF4-BANK / 1-877-734-2265.
Q: Do I have to qualify again?
A: Yes, you will have to qualify for the refinance loan. However, the process can often be streamlined and expedited. Contact one of our Mortgage Consultants to learn how the State Farm Bank refinance program fits your needs.
For more information, please call State Farm Bank toll-free 1-877-SF4-BANK / 1-877-734-2265.
Servicing
Q: When will I receive my annual tax and interest statement?
A: We are required by Federal law to provide an annual tax and interest statement (1098 form) on or before January 31. The annual statement is an accounting of funds collected and disbursed for the previous calendar year.
It is recommended that you reconcile your balances each year on your tax and interest statement to validate proper payment application. This is especially important if additional funds have been remitted for principal curtailments.
Please contact the IRS or your tax accountant for tax preparation requirements. State Farm Bank cannot offer tax preparation information or advice.
DUPLICATE STATEMENTS ARE AVAILABLE. THERE MAY BE A CHARGE OR DUPLICATE STATEMENTS.
Q: Do I need to notify State Farm Bank if my name or marital status changes?
A: Yes. Send a copy of the recorded legal document that reflects the change. For address information, please reference your monthly billing statement or call State Farm Bank at 1-877-SF4-BANK.
Q: How do I remit my payments?
A: You should mail each payment with the coupon from your Mortgage Billing Statement to State Farm Bank in the envelope provided with the statement. For payment information, please reference your monthly billing statement. If you do not receive your Mortgage Billing Statement 10-14 days prior to the due date of your payment, please contact State Farm Bank toll-free at 1-877-SF4-BANK / 1-877-734-2265. If you do not have a coupon, please submit your payment by writing the account number directly on the check. Please mail your check to:
Payments Only - Regular Mail
Only payments should be directed to this address.
This is not a State Farm Bank office but a payment processing facility only. State Farm Bank
PO Box 986
Newark, NJ 07184-0597
Payments Only - Overnight Mail
State Farm Bank
425 Phillips Boulevard
Ewing, NJ 08618
General Correspondence
Any correspondence (no payments) about your mortgage should be directed to State Farm Bank. For address information, please reference your monthly billing statement or call State Farm Bank at 1-877-SF4-BANK.
State Farm Bank
PO Box 77404
Ewing, NJ 08628
Q: When are my payments due?
A: Most monthly payments are due on or before the first of each month. Please allow 5-7 days for mailing. Payments are posted on the date of receipt, not on the postmark date. Refer to your Mortgage Note for the exact due date. The payment due date stated on your Mortgage Note cannot be changed.
Q: What if I want to remit more than one payment at a time?
A: If you are making two or more payments, send a check for the total amount with the coupon from your Mortgage Billing Statement and note on the coupon how many month's payments you are enclosing.
Q: What if I want to make additional principal payments?
A: Extra principal payments can be made in any dollar amount, unless otherwise stated in your Mortgage. It is required that the account be current and recommended that the funds be remitted with your regular monthly payment. Please indicate how additional funds are to be applied in the payment distribution box on your Mortgage Billing Statement coupon. Making additional principal payments will reduce your outstanding balance and shorten the term of your fixed rate loan; however, it will not reduce the regular principal and interest portion of your payment.
Q: Can I have my monthly payment drafted from my bank account?
A: Yes. We recommend our automatic draft of your monthly mortgage payment from your checking or savings account. Payments are drafted on the first, fifth, or fifteenth working day of each month. There is no charge for this service and your payment is never late. Additional principal payments can also be drafted with your monthly payment.
Forms are available by calling State Farm Bank toll-free at 1-877-SF4-BANK / 1-877-734-2265.
Q: Will my payment change?
A: It is possible that your monthly payment will change. The principal and interest portion of a fixed rate loan does not change. If you have an adjustable rate mortgage, the principal and interest portion may change as outlined in your mortgage.
An escrow account may be maintained for the payment of real estate taxes, dwelling and/or flood insurance premiums, mortgage insurance premiums and any other items related to your mortgage loan. If your escrow figures change, so will your monthly payment. As your mortgage contract states, your monthly escrow payment must be one-twelfth of the annual escrowed items.
Q: How will I know when my payment changed?
A: You will receive an Annual Escrow Account Disclosure statement notifying you of any change to your escrow payment.
If the principal and interest portion of your payment changes you will receive a letter notifying you of the new interest rate and principal and interest payment amount.
Q: Where should I send tax bills I receive that should be paid through my escrow account?
A: When submitting tax information, please reference your monthly billing statement or call State Farm Bank at 1-877-SF4-BANK. Send to:
State Farm Bank
6053 S. Fashion Square Blvd.
Suite 200
Murray, UT 84107
Q: What if I don't have an escrow account for real estate taxes?
A: You are responsible for payment of your real estate taxes. State Farm Bank will contact your taxing authority to confirm real estate taxes are paid. If real estate taxes are delinquent, an escrow account will be established to pay the delinquent real estate tax and your monthly payment will be adjusted to cover the delinquent and future real estate tax payments.
Q: What is the minimum allowable insurance coverage?
A: The policy coverage amount must be sufficient to cover the loan balance and cover 100% of the Insurable Value as determined by your insurance carrier.
Q: What is the maximum allowable insurance deductible?
A: The maximum deductible for homeowners and flood insurance is the higher of $1,000 or 1% of the face amount of the policy.
Q: Is flood insurance required?
A: Federal law mandates that we perform a flood search on your property at the time of closing and that we monitor flood map changes for the life of the loan. If your insurable improvement is determined to be located in a Special Flood Hazard Area or Zone A as determined by the Federal Emergency Management Association (FEMA), we require a flood policy and will maintain an escrow account for the payment of premiums.
Q: What is mortgage insurance?
A: Insurance that protects mortgage lenders against loss in the event of default by the borrower. Private companies provide mortgage insurance (PMI) for conventional loans.
Q: Can Private Mortgage Insurance (PMI) be canceled?
A: Under certain circumstances, you may be able to request a waiver of PMI. The conditions for cancellation of the PMI will be determined by the holder of your Mortgage Note at the time of your written request. The Mortgage Note Holder may consider factors including, but not necessarily limited to: loan-to-value ratio, appraised value of the property, occupancy status, payment record and length of time since loan was closed. It is possible that there may be no obligation on the part of the parties involved to approve cancellation of PMI coverage. Certain mortgage loans may require PMI for the life of the loan.
Q: How do I obtain a payoff statement?
A: If you need payoff figures please call 1-877-SF4-BANK. Requests can also be made in writing or by facsimile. Please reference your monthly billing statement for additional information.
State Farm Bank
PO Box 77404
Ewing, NJ 08628
Fax 1-609-538-4005
Payoff figures can also be obtained by calling State Farm Bank toll-free at 1-877-SF4-BANK / 1-877-734-2265. Verbal payoff figures are not available. Payoff statement requests are processed upon receipt. Please allow sufficient mail time.
Q: When my loan pays off will I get a refund of my private mortgage insurance (PMI) premium?
A: When your conventional insured loan is paid in full, State Farm Bank will automatically send a termination notice to the private mortgage insurer. They will determine if a mortgage insurance refund is due and the amount. Any refund due will be mailed directly to you from the private mortgage insurer. Please allow several weeks for processing.
Q: When can I expect to receive my escrow funds after loan payoff?
A: Escrow funds on deposit at the time of payoff will be refunded to you within 30 days of the date of payoff. If you still own the property, you will be responsible for your real estate taxes and dwelling or flood premiums. State Farm Bank will not cancel your dwelling or flood policy. If the property has been sold, you should contact your insurance agent or cancel your dwelling/flood insurance premium.
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