The journey to homeownership is often symbolized by the quest for the perfect mortgage rate, but the financial responsibility extends far beyond that ...
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A balloon mortgage can appear as an attractive, low-cost entry into homeownership, but it carries a unique set of financial risks that borrowers must ...
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The journey to homeownership culminates in two critical final steps: the final walkthrough and the review of the Closing Disclosure. While they occur ...
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Navigating the world of home financing begins with a fundamental understanding of mortgage types and terms. A mortgage is more than just a loan; it is...
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Private Mortgage Insurance, commonly referred to as PMI, is a crucial financial product that enables millions of Americans to achieve the dream of hom...
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For most homeowners, their monthly mortgage payment encompasses more than just the principal and interest on their loan. A significant portion often g...
Read MoreYes, you can. “Clear to close” is not a legally binding commitment from you; it means the lender is ready to finalize the loan. You can still switch, but the risks of delay and complications are at their highest at this stage.
Understanding the lender’s average timeline from application to closing is vital for coordinating your move. Ask about potential bottlenecks and what you can do to help keep the process on track for a timely closing.
If you need to relocate or sell your home quickly, having a large home equity loan against it can complicate the sale. You might be forced to sell for less than you hoped or even bring cash to the closing table to pay off the loan balance if the sale price doesn’t cover what you owe.
Lenders use two key metrics to determine your borrowing capacity: your Debt-to-Income ratio (DTI) and your Loan-to-Value ratio (LTV). Your DTI compares your total monthly debt payments to your gross monthly income, and most lenders prefer a DTI below 43%. The LTV ratio compares the loan amount to the appraised value of the home.
Lenders typically require you to have at least 15-20% equity in your home after both the first and second mortgages are combined. Most lenders will allow you to borrow up to 80-85% of your home’s appraised value, minus the balance on your first mortgage. For example, if your home is worth $400,000 and you owe $250,000 on your first mortgage, you might qualify for a second mortgage of up to $70,000 (using an 80% combined loan-to-value ratio).
