For a conventional loan, what is the PMI?
December 10, 2009 by JoelC2009 · 6 Comments
The private mortgage insurance (PMI) conforming loan factor varies based on credit score and loan to value. This discusses PMI at different credit scores. For people with FICO scores from 640-719, this is a good example of a FHA vs Conventional comparison.
In general, the past few years of the credit crunch have caused two large changes for PMI rates:
- PMI is available to less borrowers
- PMI is more expensive
Years ago, PMI was readily available down to a 620 FICO score. Many PMI companies will only accept 680+ FICO.
PMI is also 20% more expensive for even good borrowers these days. However, where a 720 FICO used to see roughly the same PMI rate as a 680 FICO, now there is a gap. For example, at a 95% loan, the rates look like this:
- 700 FICO: 0.94% or roughly $78 per month per $100,000 in loan amount
- 699 FICO: 1.20% or roughly $100 per month per $100,000 in loan amount
On a conventional loan, that single FICO point could mean an additional .375% loan level price adjustment fee. That’s $375 plus an extra $260 for mortgage insurance. One point can easily cost $50/month on a loan of only $100,000.
If your credit score is over 740, the conventional loan is typically your best option. As the credit scores go down, the FHA vs Conventional comparisions start to tip towards FHA. Take a peek at FHA Interest Rates before making any decisions. Each individual loan is different and it worth the extra few minutes to explore all options.
The Home Mortgage Process: Facts You Need To Be Aware Of
October 31, 2009 by JoelC2009 · 5 Comments
What is a mortgage? The following will help to explain how a home mortgage process works.
To put it simply, the mortgage represents a document in which a lender holds a lien on a piece of property until the sum of the money loaned for the purchase of that property is returned.
This means that there is the document, which is called the mortgage and there is the loan, which is used to purchase the property. Once you have decided on a property to buy, you apply to a lender for the money to purchase it through a home mortgage. Commonly referred to as a home mortgage loan. The mortgage lender will investigate your past and current loan obligations, looks at your employment history, considers your present income and determines your ability to meet the mortgage obligation.
There is a fee to the lender for home mortgages. An interest rate is charged with various in accordance with the buyers credit rating.
There are buyers who would like to know how much they can borrow before shopping with a real estate agent for a home to purchase. This will affect the price that can be handled by the buyer. Pre approval and pre qualification are the two processes through which borrowers can know ahead of time who much they will qualify for.
Pre qualification allows the buyer to know how much he can borrow based on what he can afford. This is a decision made by the lender using information on debt history that is available by the borrower.
On the other hand, when a buyer has pre approval, he has been given a solid figure by which he can proceed to search for a home mortgage. Everything is finalized beforehand except for the actual title search.
Neither of these two processes actually guarantee you a home mortgage loan. Certain documents are still necessary for approval. Documents schools as tax returns, W2s, pay stubs, information on child support or alimony, bank statements and a copy of your credit report. You should have all of these documents available ahead of time before applying for a home mortgage.
Usually a down payment is required but this depends on the lender and the type of mortgage loan you are applying for. The difference between the selling price of the home and the down payment is the amount of the loan.
PMI or private mortgage insurance is required whichever the down payment represents less than 20 percent of the selling price of the home. This is a form of insurance that is designed to protect the lender against default on the part of the buyer which means that he or she is not able to make the loan payments. Once you have achieved equity in the house of twenty percent or more it is allowed to cancel the private mortgage insurance.
About this article
Mark Linder, a Dallas, Plano and McKinney Texas Realtor recommends using a Real Estate professional anytime you search for a new home. Your local Realtor has a wealth of knowledge to aide you in your search for a mortgage or the perfect home.
Federal Housing Administration and Reverse Mortgages
April 9, 2009 by JoelC2009 · 10 Comments
FHA insured reverse mortgages are federally-insured private loans. A reverse mortgage is a home loan available to seniors that allows the homeowner to change their equity into readily available cash. FHA insured reverse mortgages offer a safe plan for greater financial security. Within the United Sates, reverse mortgages are becoming more popular. Many older Americans use reverse mortgages to supplement social security, meet unexpected medical expenses, make home improvements, and more. Even if you didn’t buy your current house with FHA mortgage insurance, your new reverse mortgage can still be FHA insured.
In order to be eligible for a FHA insured senior reverse mortgage, you need to be a homeowner, 62 years or older, own your home outright, have a low mortgage balance that can be paid off at the closing with proceeds from the reverse loan, and actually live in the home. You must also receive consumer information from a Housing Counseling Clearinghouse approved housing counseling agency before obtaining the loan.
There are also additional requirements as well. Your home must be a single family dwelling or a two to four unit property that you own and occupy. Townhouses, detached homes, units in condominiums, and some manufactured homes are all eligible. Condominiums must be FHA-approved. If they are not approved, then do not be discouraged. Simply ask your lender about the Spot Loan program. Do not sign any papers until you are certain that your project meets FHA requirements.
Norman Williams was born in Austin, Texas and grew up in Fort Worth. He received his Bachelors Degree in Psychology / Business Administration from the University of North Texas in 1972. He empowers senior citizens with the knowledge to prepare their estates to avoid unnecessary costs associated with probate and long-term care, such as nursing home, home healthcare, and assisted care living. Norman is a Registered Financial Consultant, Paralegal in the fields of Estate Planning, Licensed Group Legal Reserve Life Insurance, Licensed Notary, Licensed Real Estate Broker, Licensed Mortgage Broker, Certified Senior Adviser, Certified Annuity Adviser, and Registered Financial Consultant. If you are interested in a reverse mortgage in Texas, then please contact him at (817) 686-4900.