Everything You Need to Know About "Loans"

As you navigate the home buying process, there are many moving pieces that can be very intimidating. The loan process is often one of them.

Loan Application

First things first, you’ll need to apply with a mortgage lender. They’ll want your income and debt information. They’ll also want to pull your credit and ensure your score is high enough for their loan products, which varies lender to lender. If you are borrowing with another person all parties must include their information in the loan application. Income can be in the form of wages, 1099 income, child support, and alimony. Debt is typically loans. Car insurance, cell phone, and rent are not included in debt.

Loan Type

  • FHA : An FHA loan is a mortgage issued by an FHA-approved lender and insured by the Federal Housing Administration (FHA). Designed for low-to-moderate-income borrowers, FHA loans require a lower minimum down payments (3.5%) and credit scores (580 minimum) than many conventional loans.

    • Upfront MIP is equal to 1.75% of the base loan amount 

    • You make Annual MIP payments every month. The payments range from 0.45% to 1.05% of the base loan amount, depending on the loan amount, length of the loan, and the original loan-to-value ratio (LTV). The typical MIP cost is usually 0.85% of the loan amount.

    • MIP remains for the life of the loan, meaning you’ll have to pay it until you sell, refinance, or pay off home.

    • You can receive 100% of downpayment funds in the form of a gift.

  • FHA (203K)

  • Conventional

  • ARM

  • Hard-Money

  • Owner-Financing or Rent-to-own

Closing Costs

  • Cash to close

  • Down payment

  • Closing costs

Appraisal

Early Payment Penalties

Interest Rates

  • Points

Kasondra McConnell