Mortgages - What you need to know!

For potential homeowners, especially first-time buyers, deciding what loan to choose can make all the difference in securing a mortgage. This page describes two of the most popular loan types: conventional mortgage loans and FHA mortgage loans. To determine which loan best suits your circumstances, take some time to consider the pros and cons of each and make an educated decision. The Differences between FHA vs. Conventional The differences between an FHA loan and a Conventional loan are many, but the differences in value are subjective. FHA home loans are for those with low credit scores and in need of down payment assistance Conventional home loans are for those with a credit score over 720 and over 20% for down payment FHA Loan Advantages Low Down Payments (3.5% minimum) Low minimum Credit Score (500) New High Loan Limit ($729,750, but determined by county limit) Easy Streamline Refinancing Available Easier Qualification Guidelines Government Provided Down P...

When you purchase a new home, there are costs associated with buying that go beyond just the down payment. These costs can be similar for refinances and they are commonly referred to as closing costs. The term closing costs generally refers to all the costs associated with closing a home purchase or refinance. A more accurate term to reflect these costs is settlement costs. Settlement costs include 4 categories; lender fees, third party fees, prepaid items and taxes/government fees. Let's discuss each of these categories separately. Lender Fees  (fees charged directly by the lender) Origination Fee In order to process a mortgage application, lenders may charge a flat upfront fee, or a percentage of the mortgage loan. This is referred to as the Origination Fee. Some lenders may not charge an origination fee. Origination fees are paid at the time of closing. Points In order to lower your interest rate, you might want to consider paying points. One point is equal to 1% of the ...

As with everything else about real estate, sales contracts or purchase agreements vary from state to state -- and even by real estate company in some places. Variations in regulations place even greater emphasis on working with professionals with local knowledge. While the terms used may change from place to place, there are seven common terms that are particularly important for you to understand. 1. Buyer cost sheet.  Technically, this sheet is not part of the purchase contract, but it's still important. A property purchase agreement can range from a few pages to a dozen or more, depending on your location and the complexity of the transaction. Buyers need to focus closely on the buyer cost sheet, sometimes called "cash to close." The buyer cost sheet -- typically generated by your lender but sometimes given to you by a Realtor -- should include everything you will be responsible for paying when you buy a home. Items included on a buyer cost sheet may inclu...

Home buying basics Buying a home is probably the biggest investment you’ll ever make in your lifetime. Here are some basic tips to get you started as you plan for your purchase. Once you've decided to take the plunge and switch from renter to homeowner, your first step should be to research your financing options so that you can decide which loan term best suits your need. The Mortgage Bankers Association reported that 85 percent of purchase home loans in June 2012 were 30-year fixed-rate mortgages, popular among both first-time and repeat homebuyers. But before you jump on the 30-year bandwagon, you should understand all the loan-term options available to ensure you're getting the best home loan to suit both your lifestyle and financial needs. Fixed-rate home loans Fixed-rate home loans are available in a variety of terms, including 30, 20 and 15 years. Some lenders even offer less-popular 7, 10, 17 or 25-year loan terms. Thirty-year fixed-rate mortgages are really the d...

How long does it take to close on a purchase?  Lately, the number of days is shrinking.  As mortgage rates climbed this summer, refinance mortgage demand waned, freeing up lenders to close on purchase home loans more quickly. Data from mortgage software firm Ellie Mae shows that lenders needed 42 days, on average, to close an August purchase.  It's a noteworthy reading for today's home buyers. Rate locks of 45 days or fewer  incur fewer costs than locks of even one day more. How To Get Your Purchase Approved More Quickly For buyers wanting to close quickly, some of the loan factors will be beyond your control. For example, you cannot control how fast an appraisal is performed because the appraisal requires the cooperation of the seller; or how fast a title search is performed by a title company. However, there are steps you can take to make sure your loan gets approved as fast as humanly possible. Step one is to be prepared. Know Your Paperwork Requi...