What credit score do you need to qualify for a conventional home loan?

Everyone’s heard tales of how difficult it is to qualify for one of the most coveted products in the mortgage world: the conventional loan. Although there’s nothing particularly exciting about these mortgages, they do offer lower mortgage insurance rates and fewer fees at closing than other types of home loans.

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Are mortgage closing costs negotiable?

First and foremost, it is imperative to remember that you ultimately choose your mortgage lender, which means, there are choices – and the lender has the primary impact on the charges tacked on to your closing costs. This fact is advantageous to the buyer and should be used as a tool to compare estimated closing costs that lenders detail in the Loan Estimate.

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Are closing costs included in the mortgage loan?

Closing costs are the fees charged for services provided by your lender to assist in closing on a property. The fees are typically required to be paid upfront at closing; however, depending on your specific loan to value ratio, and the equity in your home or loan type, you may be able to roll the closing costs into the mortgage loan. 

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How Much Does it Cost to Close on a House?

Closing costs are the charges paid to purchase and settle on a property and are unrelated to reducing the principal loan amount. Usually, the amount paid for closing is between two and five percent of the price of the home, and typically the fees are listed on an estimate provided by the lender in response to your submitted application for the home loan.

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How Long Does it Take for a Closing on a House?

Your offer was accepted and you’ve now entered the closing period (dun dun dun!). The window of time it takes to close on a home may depend on many variables – I know, as if the process could actually get any easier. Generally speaking, the time frame for closing on a home should be noted on your sale contract to give you an idea and will typically take 30-45 days on a home that is financed.

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What is the Meaning of Amortization?

Amortization refers to a type of payment schedule that some home loans utilize. The payment schedule is made up of equal payment amounts that are stretched over a designated amount of time (the loan term). For the purpose of an amortization schedule, each payment is divided into two portions. There is a portion that is made up of interest (the cost of the loan), and a portion that is made up of principal (the value of the borrowed sum).

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What is an Interest-Only Mortgage?

When most homeowners get a mortgage, they start paying both the interest and the principal immediately -- but they don’t always have to. One kind of home loan, called an interest-only mortgage, allows the buyer to put off paying any of the principal for a number of years while they save money and strengthen their financial position. But, just because you don’t have to pay principal doesn’t mean you can’t; many homebuyers just like to have an option that frees up more cash for their budget.

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What is an Interest-Only Mortgage?

When most homeowners get a mortgage, they start paying both the interest and the principal immediately -- but they don’t always have to. One kind of home loan, called an interest-only mortgage, allows the buyer to put off paying any of the principal for a number of years while they save money and strengthen their financial position. But, just because you don’t have to pay principal doesn’t mean you can’t; many homebuyers just like to have an option that frees up more cash for their budget.

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What Credit Score Do You Need to Get a Home Equity Loan?

Can you get a home equity loan with a bad credit score? You’re hoping so, now. When you bought your house, the pink bathroom was cute and retro, but after living with it for years, you’re about ready to spray paint the whole thing just to get a break. But with bad credit, what are your options when it comes to renovating?

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Acceptable Credit Score for a Home Equity Loan

Home equity loans can help homeowners pay for big expenses without having to refinance their homes or take out a personal loan. Instead, the equity in your home acts like a piggy bank, allowing you to take out a separate loan for a specific purpose (or, in the case of a HELOC, establish a credit line) and repay it over a longer period of time than other types of credit generally allow. It’s an affordable option for many people, but there are guidelines for underwriting home equity loans, and credit scores are included in that mix.

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DTI: Debt to Income Ratio in Home Loans

DTI, or debt-to-income ratio, is a measurement that banks and other lenders use to compare an individual’s debt payments to their overall income. They usually use this as a way to determine someone’s predicted ability to repay future debts. You can calculate DTI by dividing your total monthly debt (recurring expenses only), by your gross monthly income.

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Finding Home Equity Loans with Bad Credit

When the going gets tough, sometimes, the tough get a home equity loan. There are always going to be times in life when you could use an injection of cash, whether that’s because you’re trying to breathe life into a startup, needing to update your kitchen, or you just got a little behind on bills. A home equity loan can be an excellent weapon in your life improvement war, but if your credit is on the poor side, it can make finding a home equity loan tricky.

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What Is Jumbo Adjustable Rate Mortgage Loan?

An ARM jumbo loan is an adjustable rate mortgage that exceeds the Fannie Mae and Freddie Mac loan-servicing limits. This amount, for most American counties, is $453,100. For more expensive areas, that limit can go as high as $679,650. Right now, ARM jumbo loans are becoming incredibly popular -- with statistics suggesting that around 75% of ARMs currently issued are actually for jumbo loans. Of that 75%, 47% of those home loans are for more than $1 million.

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Hybrid ARM: Hybrid Adjustable Rate Mortgages in Home Loans

A hybrid ARM is a mortgage that combines elements of a traditional fixed-rate mortgage and an adjustable-rate mortgage. To do this, a hybrid ARM has two parts, or stages: during the first part of the loan, the interest rate is fixed, meaning it doesn’t change. During the second part, the rate will change based on a specific market index. 

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FHA 7/1 ARM: FHA 7/1 Adjustable Rate Mortgage in Home Loans

An FHA 7/1 ARM is a kind of hybrid home loan that’s insured by the Federal Housing Administration (FHA). If you get a FHA 7/1 ARM, your interest rate will be fixed for the first seven years of the loan, and can then be adjusted afterward when the variable interest rate portion of the loan begins. Like other ARMs, FHA 7/1 ARM variable interest rates are based on a index rate -- which is usually the rate at which banks in a certain area lend money to each other.

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3/1 ARM: 3/1 Adjustable Rate Mortgage in Home Loans

A 3/1 ARM is an adjustable-rate mortgage in which the rate is fixed for the first three years of the loan. As a hybrid mortgage, it has elements of both a traditional fixed-rate mortgage and an adjustable (or variable) rate loan. As with pretty much all hybrid rate mortgages, the shorter the period of the fixed-rate part of the loan, the lower the initial interest rate. That’s the bank’s way of compensating you for the increased risk you’re taking on when the adjustable part of the mortgage kicks in.

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