Mortgage Articles

Mortgage rates can be lowered by improving credit scores, buying discount points, shopping multiple lenders, using first-time buyer programs, and choosing shorter loan terms.

Homeowners can generate income through renting rooms, Airbnb, home businesses, storage rental, or hosting events. Local regulations may apply.

Ask 14 key questions at open houses: why the seller is moving, how long it's been listed, recent repairs, neighborhood issues, and utility costs to make informed decisions.

Discover 15 good luck plants to bring positive energy to your new home including money trees, jade plants, and lucky bamboo.

Neighbors can be met by hosting housewarming parties, joining community groups, attending local events, walking your dog, or volunteering. Simple introductions typically build relationships gradually.

Essential mortgage acronyms explained: DTI (debt-to-income), LTV (loan-to-value), PMI (private mortgage insurance), APR (annual percentage rate), and 32 more key terms.

Low down payment options: VA loans (0% down, military), USDA loans (0% down, rural), FHA loans (3.5% down, 580+ credit), conventional loans (3% down, 620+ credit).

First-time buyer loans include FHA (3.5% down, 580+ credit), VA (0% down, military), USDA (0% down, rural), conventional (3% down, 620+ credit), and state programs.

You need 7 things to buy a house: qualifying credit score (580+), proof of income, down payment (3-20%), realistic budget, loan program, pre-approval, and a real estate agent.

You can break a lease to buy a house by paying early termination fees (1-2 months rent), finding a replacement tenant, or negotiating with your landlord.

401k funds can be borrowed to buy a home, or withdrawn (with penalties). Loans must be repaid within 5 years and don't affect credit.

Houses can be purchased 2-4 years after bankruptcy depending on loan type. FHA requires 2 years, conventional 4 years. Credit rebuilding and down payment saving are typically important.

Buying in your early 20s is possible with 3-5% down payments, FHA loans, co-signers, and first-time buyer programs. Early credit building and saving are typically important factors.

Refinance when rates drop significantly below your current rate, you want to shorten your term, or need cash out. Costs typically 2-5% of loan amount.

Curb appeal can be boosted with fresh landscaping, clean exterior, updated front door, good lighting, and decluttered yard. These improvements can increase home value significantly.

The DASH Act (Downpayment Toward Equity Act) would provide up to $25,000 in down payment assistance for first-time home buyers. It's currently under consideration in Congress but not yet passed into law.

FHFA offers first-time buyers a rate discount on conventional loans. Must be first-time buyer, income under area median, and use conventional financing.

First-time buyers typically improve credit scores 6+ months before buying, save 3-20% for down payments, get pre-approved first, and avoid major purchases during the process.

Credit can be improved in 6 months by paying bills on time, keeping credit utilization under 30%, disputing errors, and avoiding new credit applications. Payment history is typically the most important factor.

HomeReady requires 3% down with 620+ credit and income limits. Home Possible requires 3% down with 660+ credit and income limits. Both offer reduced PMI costs.

Medical debt under a certain amount no longer affects credit scores (2022 change). Larger medical debts still impact scores but lenders may ignore them for mortgage approval.

Out-of-state home buying typically involves researching neighborhoods online, getting pre-approved, hiring a local agent, visiting before closing, and using virtual tours and inspections.

Houses can be purchased with credit scores as low as 500-580 using FHA or VA loans. Credit improvement, larger down payments, and co-signers are common strategies.

Make a strong offer by getting pre-approved, offering 1-3% earnest money, including contingencies, and negotiating based on market conditions and seller motivation.

Moving out successfully typically involves saving 3-6 months expenses, building credit, getting pre-approved for a mortgage, and finding affordable housing options.

A mortgage gift letter is a signed document from donors stating down payment funds are gifts (not loans). Required by lenders to verify gift funds don't need repayment.

LLPAs are risk-based fees that adjust mortgage rates based on credit score, down payment, and loan type. Higher risk borrowers pay higher rates through these adjustments.

Home buying stress can be managed by setting realistic expectations, working with experienced professionals, staying organized, and focusing on the long-term benefits of homeownership.

Mortgage brokers shop multiple lenders for you, banks offer their own products, and direct lenders provide loans directly. Brokers often find better rates.

Nurses can qualify for all loan types (conventional, FHA, VA, USDA) with stable income. Overtime, shift differentials, and bonuses are typically documented for higher qualification amounts.

Move-in ready homes need no immediate repairs or updates. They typically have updated kitchens/baths, working HVAC, good flooring, fresh paint, and functioning appliances.

A mortgage pre-approval is a lender's verification of your finances that tells you how much home you can typically afford and shows sellers you're a serious buyer.

Comprehensive glossary of 200+ real estate and mortgage terms with simple definitions. Covers everything from APR to underwriting to help first-time buyers understand the process.

USDA loans require 0% down payment but only work in rural areas. The USDA eligibility map shows if your address qualifies for this no-down-payment loan program.

Closing costs are fees paid at home purchase closing, typically 2-5% of the loan amount. They include lender fees, title insurance, appraisal, and prepaid items.

Discount points are upfront fees (1% of loan amount each) that lower your interest rate. Pay for them if you plan to stay in the home 5+ years.

Lender overlays are stricter requirements than minimum guidelines (higher credit scores, larger down payments). Different lenders have different overlays, so shop around for the best fit.

Mortgage guidelines are lender rules for loan approval covering credit scores, down payments, income, and employment. They vary by loan type and lender.

Prepaid expenses are upfront costs paid at closing (property taxes, insurance, interest). They're calculated per diem and can't be rolled into your loan.

Title companies handle closing paperwork, conduct title searches, provide title insurance, and ensure clear property ownership. They protect buyers from ownership disputes and liens.

Balloon mortgages have low payments for 5-7 years, then require a large lump sum payment. Risky for buyers who may not be able to refinance or pay the balloon payment when due.

A basis point equals 0.01% (1/100th of a percent). Mortgage rates are often quoted in basis points - 25 basis points = 0.25% rate change. Used for precise rate discussions.

Chattel loans finance movable property like manufactured homes, boats, or RVs. Higher rates than mortgages but easier qualification. Used when traditional mortgages aren't available.

A condominium is a unit you own in a multi-unit building with shared common areas. You own your unit but share costs for maintenance, insurance, and amenities through HOA fees.

Contingency clauses protect buyers by allowing them to back out if certain conditions aren't met. Common contingencies include inspection, financing, appraisal, and home sale contingencies.

Credit bureaus (Experian, Equifax, TransUnion) collect financial data and create credit reports. Lenders use these reports to determine mortgage approval and interest rates.

A credit score is a number between 300-850 that lenders use to determine mortgage approval. Most loans require 580-620+ scores, with higher scores getting better rates.

A deductible is the amount you pay before insurance covers damage. Higher deductibles lower premiums but cost more out-of-pocket when you file a claim.

A deed is the legal document that transfers property ownership from seller to buyer. It must be signed, notarized, and recorded with the county to complete the sale.

Due-on-sale clauses require full loan repayment when property ownership changes. They prevent loan assumptions without lender approval and protect lenders from unauthorized transfers.

High-cost areas have higher loan limits for conventional loans. Defined by FHFA based on local home prices, allowing larger loans in expensive markets.

A home inspection is a professional evaluation of a home's condition that takes 2-6 hours and costs several hundred dollars. It protects buyers from hidden problems and provides negotiation leverage.

HOAs are community organizations that enforce rules and maintain common areas. Monthly fees vary widely, and violations can result in fines or liens.

A letter of explanation (LOE) explains credit issues, employment gaps, or unusual transactions to lenders. Required when underwriters need clarification on your application.

A lien is a legal claim against your property for unpaid debts. Common liens include mortgages, tax liens, and contractor liens. They must be paid before selling.

Manufactured homes are factory-built houses delivered to sites. Financing depends on land ownership - easier if you own the land, harder if you lease it.

Master condo policy covers building structure and common areas, paid by HOA fees. Unit owners typically need HO-6 insurance for their unit's interior, personal belongings, and liability coverage.

A mortgage cosigner signs your loan and is equally responsible for payments. They help with approval but get no ownership rights and assume full financial liability.

Rate locks protect you from rate increases for 15-60 days. Free locks last 15-30 days, longer locks cost additional fees. Lock when you're confident in your timeline and rate.

Multi-unit homes (duplexes, triplexes, fourplexes) require 15-25% down payments and higher credit scores. Owners can live in one unit and rent the others for income.

A non-occupant co-borrower co-signs your mortgage but doesn't live in the home. They help with approval but are legally responsible for payments if you default.

Prepayment penalties are fees for paying off your mortgage early (rare in modern loans). They're typically 1-5% of remaining balance and only found in portfolio loans.

Soft credit checks don't affect your credit score and are used for pre-qualifications and rate quotes. Hard pulls are used for actual loan applications and do impact your score.

A starter home is a smaller, affordable house (below county median price) that helps first-time buyers enter homeownership and build equity before upgrading to larger homes.

Warrantable condos meet lender requirements: 70%+ owner occupancy, low investor ownership, adequate reserves, and proper insurance. These qualify for conventional, FHA, VA, and USDA loans.

Amortization is how mortgage payments are split between principal and interest. Early payments are mostly interest; later payments go more toward principal.

Arms-length transactions are between unrelated parties at fair market value. Lenders require them to ensure accurate appraisals and prevent inflated prices that could lead to loan defaults.

Assumable mortgages let buyers take over the seller's existing loan with its current rate. VA, FHA, and USDA loans are assumable; conventional loans usually aren't. Beneficial when rates are higher than the existing loan.

APR is the true cost of your loan including interest rate plus fees. It's higher than your interest rate and helps compare loans from different lenders.

Debt-to-income ratio compares your monthly debts to income. Most loans require DTI under 43-50%. Lower DTI means better approval chances and rates.

Down payment assistance provides cash grants, low-interest loans, and tax credits to help cover your down payment and closing costs. Programs vary by location and income.

Dual agency occurs when one agent represents both buyer and seller. It's legal in most states but creates conflicts of interest. Some buyers prefer separate representation.

Earnest money is a deposit (typically 1-3% of home price) that shows you're serious about buying. It's refundable if the deal falls through due to contingencies.

Home equity is your ownership stake (home value minus mortgage balance). It builds as you pay down your loan and home values increase, and can be borrowed against.

Escrow is when your lender collects money monthly to pay property taxes and insurance. It's required for low down payments and simplifies bill payments.

Existing home inventory is the number of homes for sale. Low inventory (under 4 months supply) drives up prices, while high inventory (over 6 months) creates buyer opportunities.

Existing home sales track monthly sales of previously owned homes. Higher sales indicate strong demand and rising prices, while lower sales suggest market cooling.

Flood insurance covers water damage from storms and flooding. Required in high-risk flood zones, costs several hundred to several thousand annually, and not covered by standard homeowners insurance.

FSBO means the seller isn't using a real estate agent. Buyers can save on agent fees but need to handle negotiations, inspections, and paperwork themselves.

Free-and-clear means owning your home without any mortgage or liens. You have complete ownership and no monthly payments, but lose mortgage interest tax deductions.

HO-6 insurance covers your condo unit's interior, personal belongings, and liability. Required by lenders, costs several hundred annually, and complements the HOA's master policy.

HomePath sells Fannie Mae foreclosed homes with special financing. Buyers can get low down payment loans, closing cost credits, and closing cost assistance through Ready Buyer program.

Household income is the total income of all people living in your home. Lenders use this to calculate your debt-to-income ratio and determine how much home you can typically afford.

Listing price is the seller's asking price, not necessarily market value. Use comparable sales to determine fair value and negotiate based on market conditions and property condition.

Loan term is how long you have to repay (15, 20, or 30 years). Shorter terms have higher payments but lower rates and save thousands in interest.

LTV compares your loan amount to home value. Higher LTV means higher rates and PMI. Most loans allow up to 95-97% LTV for conventional loans.

Mortgage default occurs when payments are 90+ days late. It can lead to foreclosure, but lenders offer forbearance, loan modifications, and repayment plans to help homeowners avoid foreclosure.

New home sales track monthly sales of newly constructed homes. Higher sales indicate strong demand and builder confidence, while lower sales suggest market weakness.

Payment shock occurs when your mortgage payment is 150%+ higher than your current rent. Lenders consider this in approval and may require reserves or higher income.

PCE measures consumer spending on goods and services. Higher PCE indicates economic growth and can lead to higher mortgage rates, while lower PCE suggests economic weakness.

Personal liability insurance covers legal responsibility for injuries or property damage to others on your property. It's included in homeowners insurance and pays for legal defense costs and settlements up to policy limits.

PITI is your total monthly payment: Principal, Interest, Taxes, and Insurance. This is what you'll actually pay each month, not just the loan payment.

Principal balance is the remaining amount you owe on your mortgage. It starts as your loan amount and decreases with each payment, affecting PMI removal timing.

PMI is insurance required when you put less than 20% down on a conventional loan. It costs a percentage annually and can be removed when you reach 20% equity.

Real estate taxes are annual property taxes (0.5-3% of home value) paid to local governments. They're included in your monthly mortgage payment via escrow.

Rent-to-own lets you rent a home with an option to buy later. You pay rent plus extra money toward the purchase, but you're not obligated to buy.

Retail sales measure consumer spending at stores nationwide. Higher sales indicate economic strength and can lead to higher mortgage rates, while lower sales suggest economic weakness.

Seasoning is when lenders require down payment funds to be in your account for 60+ days. This proves the money is yours and not borrowed for the down payment.

Seller concessions are when the seller pays your closing costs (up to 3-6% of loan amount). They reduce your upfront costs but may increase your offer price.

Good Neighbor Next Door offers 50% off HUD homes to teachers, firefighters, EMTs, and law enforcement. Must live in the home 3 years and work in the same area.

The House Price Index (HPI) tracks home price changes over time. It's used to set loan limits and determine high-cost areas where conventional loan limits increase significantly.

Title insurance protects against ownership disputes and costs several hundred to several thousand dollars. Lenders require it, and buyers typically get owner's coverage for full protection.

Underwriting is when lenders verify your income, assets, credit, and property to approve your loan. It takes 1-3 weeks and determines your final loan approval.