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Read MoreClosing costs for an assumption are similar to a traditional purchase and can include: Lender assumption fee (often $500 - $1,500) Appraisal fee Title insurance and search fees Escrow fees Prepaid property taxes and homeowners insurance
Private Mortgage Insurance (PMI) is typically required on conventional loans with a down payment of less than 20%. It protects the lender if you default. You can request to cancel PMI once your loan-to-value ratio reaches 78% (based on the original value), and your lender must automatically cancel it at 78% if you are current on payments.
Lenders typically allow you to borrow up to 80-85% of your home’s value, minus what you still owe on your mortgage. This is known as your combined loan-to-value (CLTV) ratio. For a home valued at $500,000 with a $300,000 mortgage, you could potentially access up to $100,000-$125,000 (80-85% of $500,000 is $400,000-$425,000, minus your $300,000 mortgage).
Credit score requirements vary by loan type:
FHA 203(k) Loan: Often requires a minimum score of 580-620, depending on the lender.
HomeStyle Renovation Loan: Typically requires a score of 620-680 or higher.
VA Renovation Loan: While the VA doesn’t set a minimum, most lenders look for a score of 620+.
A higher score will always help you secure a better interest rate.
Yes, your credit score is a key factor in determining your PMI premium. Borrowers with higher credit scores will generally qualify for lower PMI rates, just as they do for lower mortgage interest rates.
