The FHA, Federal Housing Authority, was created in 1934 as part of the National Housing Act . The FHA insures mortgages made by banks and other lenders. They also help to increase housing standards and create a more stable lending environment.
FHA loans are a popular choice for first-time homeowners. The credit restrictions and down payment requirements are lower than that of conventional loans. There are however tighter restrictions on the condition of the property.
Here's a few characteristics of FHA mortgage loans:
-Minimum down payment is 3.5% of purchase price
-FHA charges an upfront mortgage insurance premium(MIP) . This amount can be financed into loan.
-Down payment gifts are prohibited for anyone that will benefit from the transaction
-Debt-to-income (DTI) ratios are relaxed
Target customer for FHA loan: less than perfect credit, lower income, less cash available for down payment
Saturday, May 14, 2011
Friday, May 13, 2011
"Tell me about conventional loans."
The most dominant mortgage loans in today's market are known as a conforming loans and these loans follow the guidelines set by Fannie Mae and Freddie Mac .
A conforming loan is described as a loan securing a single-family residence with a value of $417,000 or less. However, in areas such as Alaska and Hawaii, the conforming mortgage limit rises to $625,000.
Conventional loans have their own set of minimum guidelines. Borrowers must have a down payment of at least 5% of the purchase price. Borrowers must have credit scores no lower than 620. With that being said, scores lower than 740 are going to be subject to additional fees and rate increases.
Conventional loans with an amount higher than $417,000 are called non-conforming or jumbo loans.
Conventional loan terms are usually 15 or 30 years but some lenders will also offer 10, 20 or 25 year terms. In most cases, the shorter then term, the lower the interest rate.
Variable or adjustable rates are also available on conventional loans. Usually the interest rate is fixed for 3, 5 or 7 years. After the fixed-rate period, the interest rate can change.
These loans are subject to private mortgage insurance(PMI).
Target customer for conventional mortgage loan: excellent credit, has at least 5% down payment
A conforming loan is described as a loan securing a single-family residence with a value of $417,000 or less. However, in areas such as Alaska and Hawaii, the conforming mortgage limit rises to $625,000.
Conventional loans have their own set of minimum guidelines. Borrowers must have a down payment of at least 5% of the purchase price. Borrowers must have credit scores no lower than 620. With that being said, scores lower than 740 are going to be subject to additional fees and rate increases.
Conventional loans with an amount higher than $417,000 are called non-conforming or jumbo loans.
Conventional loan terms are usually 15 or 30 years but some lenders will also offer 10, 20 or 25 year terms. In most cases, the shorter then term, the lower the interest rate.
Variable or adjustable rates are also available on conventional loans. Usually the interest rate is fixed for 3, 5 or 7 years. After the fixed-rate period, the interest rate can change.
These loans are subject to private mortgage insurance(PMI).
Target customer for conventional mortgage loan: excellent credit, has at least 5% down payment
Rent vs. Buy Calculator
Handy calculator that helps you determine whether or not a mortgage is right for you.
Rent vs Buy Calculator
Should I Refinance?
This calculator will help you decide if it's worth your time & money to refinance your mortgage.
Should I Refinance?
Extra Payment Calculator
Seeing as how our mortgage payment is probably costing us a lot in interest, we want to pay it off early. Lucky for you, there's a calculator for that.
Mortgage Calculator
Down payments
Conventional mortgage loans require minimum of 5% of purchase price down. So if you buy a house for $100,000, 5% of that is $5,000.
FHA mortgage loan require minimum of 3.5% of purchase price down. So if you buy a house for $100,000, 3.5% of that is $3,500.
Rural development(RD) loans may require no down payment.
Don't forget about closing costs though. Most purchase transactions require closing costs be paid up front, at closing.
FHA mortgage loan require minimum of 3.5% of purchase price down. So if you buy a house for $100,000, 3.5% of that is $3,500.
Rural development(RD) loans may require no down payment.
Don't forget about closing costs though. Most purchase transactions require closing costs be paid up front, at closing.
Wednesday, May 11, 2011
Rate watch....
Rates were up a little today. Not much but like i said earlier, better chance they rise than keep falling. Take advantage now!
Tuesday, May 10, 2011
Shop around for homeowners insurance
Be sure to get multiple quotes for your homeowners insurance. I recently saved 40% by changing companies.
Also, when you combine your homeowners insurance and car insurance under the same company, they usually offer a discount. Discounts rule.
Also, when you combine your homeowners insurance and car insurance under the same company, they usually offer a discount. Discounts rule.
Sunday, May 8, 2011
Rate Watch
Over the past 2 weeks.....
30 year interest rate has dropped to around 4.70%
15 year rate has dropped to around 4%
10 year rate has dropped to around 3.3%
Remember, rates have a greater propensity to increase than decrease. Watch rates for a short period of time, maybe a week, decide what rate you like, lock it and don't look back. Missing out on that .05% lower rate wont hurt near as much as increase of .1%.
Don't let your mortgage cost more than it should!
30 year interest rate has dropped to around 4.70%
15 year rate has dropped to around 4%
10 year rate has dropped to around 3.3%
Remember, rates have a greater propensity to increase than decrease. Watch rates for a short period of time, maybe a week, decide what rate you like, lock it and don't look back. Missing out on that .05% lower rate wont hurt near as much as increase of .1%.
Don't let your mortgage cost more than it should!
The time is now....
With thousands of homes for sale, decreased property values and historically low interest rates, now is the perfect time to purchase your dream home or maybe an investment property.
It's a perfect storm for buyers.
Are you prepared?
It's a perfect storm for buyers.
Are you prepared?
Welcome to Mortgages 101
Chances are, your home will be the biggest cost of your life. Don't you think you should know everything you can before making the leap?
Over the course of this blog, I'll discuss everything from mortgage basics, rates, the ever-changing mortgage regulations and everything in between.
Stay tuned.....
Over the course of this blog, I'll discuss everything from mortgage basics, rates, the ever-changing mortgage regulations and everything in between.
Stay tuned.....
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