The down payment stands as one of the most significant initial hurdles in the journey to homeownership. While the allure of a 20% down payment is ofte...
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Before you embark on the journey of applying for a mortgage, there is one crucial number you must know: your debt-to-income ratio, or DTI. This single...
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A cash-out refinance is a powerful financial tool that allows homeowners to access the wealth they have built in their property. Unlike a traditional ...
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The journey to homeownership is filled with critical decisions, and one of the most fundamental is choosing between a fixed-rate mortgage and an adjus...
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Embarking on the journey to homeownership is an exciting venture, but it can also feel overwhelming. Amidst the excitement of browsing online listings...
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Embarking on the journey to secure a mortgage is a significant financial undertaking, and the lender you choose becomes a critical partner in the proc...
Read MoreThe most common types are: FHA 203(k) Loan: Government-backed, popular for major rehabilitations, and allows for a lower down payment. HomeStyle® Renovation Loan (by Fannie Mae): A conventional loan option for a wide variety of projects, often with competitive interest rates. CHOICERenovation® Loan (by Freddie Mac): Similar to the HomeStyle loan, offering flexibility for both purchase and refinance scenarios. VA Renovation Loan: For eligible veterans, active-duty service members, and spouses, allowing them to include renovation costs in their VA mortgage. Construction-to-Permanent Loan: A single-close loan that finances the land purchase, construction, and then converts to a standard mortgage once the home is built.
Strong employment data (e.g., low unemployment, high job growth) suggests a healthy economy with higher consumer spending power. This can lead to increased demand for homes, potentially pushing prices up. However, a very strong labor market can also fuel inflation concerns, prompting the Fed to consider raising interest rates, which in turn can cause mortgage rates to rise.
You can expect to pay many of the same fees as a first mortgage, including an application fee, home appraisal fee, origination fees, legal fees, and potential closing costs. Some lenders may also charge points (a percentage of the loan amount) to originate the loan.
While requirements vary by lender, a good credit score (typically 680 or higher) will help you secure the most favorable interest rates. Some lenders may offer products for scores in the mid-600s, but you will likely face higher rates and stricter eligibility criteria.
The amount you save can be substantial. For example, on a 30-year, $300,000 mortgage at a 4% interest rate, making one extra payment per year could save you over $30,000 in interest and allow you to pay off the loan nearly 5 years early. Use an online mortgage acceleration calculator to see the exact savings for your loan.
