Alex MargulisWhen you review your Sioux Falls mortgage, you may notice a number of different sections known as clauses or covenants, which govern the details of the mortgage transaction and ownership of the property thereafter. Considering the sheer amount of paperwork required in a home purchase, you’ll be better equipped if you can walk into each meeting knowing what some of these basic clauses mean before you begin putting your signature to paper. Prepayment clause This clause protects the borrower against "early payment" penalties--essentially stating there will be no additional fees demanded if the loan is paid off earlier than originally contracted. Acceleration clause This clause, on the other hand, protects the lender by triggering a legal demand for the full loan to be repaid at once, should conditions such as borrower default exist. Due-on-sale clause A variation of the acceleration clause, this allows the lender to ask for the full loan repayment if the property is sold or otherwise transferred to somebody else. Assumption clause In increasingly rare cases, a mortgage may be “assumable,” meaning that rather than the receiving a new mortgage, they are allowed to simply take on the previous owner’s mortgage and monthly payments. This setup also allows the buyer to forgo settlement costs and loan application procedures, and possibly even assume the seller’s interest rate. Most current mortgages, however, provide the opposite clause on the mortgage--a "nonassumption" clause. Conversion clause A clause specific to ARM mortgages, this gives the borrower an option to convert the ARM to a fixed-rate mortgage (usually for a fee, and often only within a specific time-frame). Insurance covenant The mortgage lender may add this to the contract to ensure that the buyer protects the home with a reasonable amount of property insurance. The covenant often allows the lender to purchase coverage at the borrower’s expense, if the borrower does not take responsibility on their own to keep this coverage. Although the prospect of reading your mortgage paperwork may seem daunting, in many cases, the clauses of a contract are simply common-sense statements included in the legal paperwork. Speak with your attorney and loan officer; they’ll help make sure you understand everything you’re signing!
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| Featured Rate | |
|---|---|
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CIT Bank
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1.10%
Date: May 14, 2012
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Ally Bank
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1.09%
Date: May 15, 2012
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| Highest Rates Recent Rate Changes | |
| American State Bank 2 Year CD Account |
1.40%
Date: May 10, 2012
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| Primebank 2 Year CD Account |
1.35%
Date: Apr 30, 2012
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| Northwestern Bank 2 Year CD Account |
1.25%
Date: May 17, 2012
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| Citizens State Bank Sheldon, IA 2 Year CD Account |
1.00%
Date: May 14, 2012
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| Sioux Empire Credit Union 2 Year CD Account |
0.75%
Date: Apr 30, 2012
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| Dakotaland Federal Credit Union 2 Year CD Account |
0.75%
Date: Apr 27, 2012
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| Northwestern Bank 2 Year CD Account |
1.40% to
1.25% Date: May 17, 2012
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