You may understand that a down payment is typically required to purchase a home, but it is also important to set expectations for closing costs as well. Closing costs help pay to set up the loan, many of the costs are the same at most institutions, and these costs can be paid for in a few different ways. In a nutshell: It is part of your responsibility as a homebuyer to understand closing costs. Closing costs are what you pay to close on a home purchase, set up your mortgage, and fill your escrow account. You should expect closing costs to be between 2% and 3% of the purchase price. Sometimes a seller can contribute to cover part, or all of these costs, however even less known is that your lender can potentially give you credits towards closing costs for taking a higher interest rate. Definition The term closing costs can cover a few things, however my definition is: the total upfront costs of a home mortgage. Closing costs in this article are n...
When considering a new mortgage, it only makes sense that you review the same credit report that the bank/lender will use once you apply. There are three main credit reporting agencies which the majority of home lenders pull credit from when you apply for a mortgage, both when buying and refinancing. FICO® scores based on reports may vary between the three, but your middle score of the three is typically used when qualifying for a mortgage. The term FICO® scores and Credit Reports are interesting, read on if your curiosity is strong right now, or skip to the next section to continue. FICO (Fair Isaac Corporation) was founded in 1956 by an engineer and mathematician. At this time credit cards were gaining popularity, and the credit limit to offer somebody became increasingly difficult to determine, especially if the one applying was in a different geographical region. Think about this, befor...
These two loan options go head to head for the home buyers who typically have less than 10-20% for a down payment. Both options offer an affordable path to home ownership, and both exist because they fit different applicant criteria. This is a lot of information and can be overwhelming at first! When you’re ready, I can work through both with you and start a strategy for your personal situation and plans. The Basics: A low down payment minimum is required for each. Mortgage insurance is set up differently but it is required with both (if you’re putting less than 20% down). It is not required that you be a first-time home buyer for either. Each has a minimum credit score requirement which also depends on the lender you work with. Both programs require you to occupy the house you purchase using the loan. Key Differences: Mortgage Insurance: FHA is fixed at one rate, no matter what your credit score is, as long as you qualify. FHA mortgage ...
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