Know When to Refinance an FHA Loan to a Conventional Loan

August 7, 2021

Many first-time homebuyers get approved for an FHA loan for their first mortgage, but when is it smart to refinance an FHA loan to a conventional mortgage? An FHA loan has strong advantages for first-time homebuyers like a low down payment, use of gifted funds, and flexible requirements to qualify. After a few years, though, you might be in a better financial situation with more options. Perhaps you have more home equity, a better credit score, higher income, or your career has taken off.

No matter the reason, if you have an FHA loan and you’re thinking about refinancing, this article is for you. So if you’re thinking about refinancing an FHA loan to a conventional loan, keep reading.

Advantages to Refinancing an FHA Loan to a Conventional Loan

If you have more than 20% equity in your home, stable income, and a good credit rating, refinancing to a conventional loan could save you a lot of money.

In short, conventional mortgages have more strict requirements to qualify, but they also have lower mortgage rates and more flexible loan terms. A conventional mortgage could help you eliminate mortgage insurance payments, secure a lower rate, and even pay off your loan faster. This could amount to thousands of dollars in savings for many homeowners today.

Learn the detailed benefits along with the pros and cons of conventional mortgage which we blogged about here.

Drawbacks to refinancing an FHA loan to a conventional mortgage

The two main disadvantages to refinancing an FHA loan are closing costs and private mortgage insurance. First, closing costs include substantial one-time fees that may eclipse any expected savings. Second, if you don’t have at least 20% equity in your home, private mortgage insurance (PMI) will still be required with a conventional mortgage.

FHA Streamline Refinance: Top Alternative for Refinancing an FHA Loan

For many homeowners, qualifying for a conventional loan might not be possible. In other cases, you might qualify for a conventional loan, but it might end up costing you more to make the switch. In this case, the FHA streamline refinance is a great option for homeowners with a higher mortgage rate than current market rates.

The FHA Streamline is just what it sounds like: a streamlined process to refinance your FHA loan. Loan approval criteria are less strict, and most homeowners are not required to verify income, credit, or submit a home appraisal. This is a huge relief for many homeowners, and it keeps the cost of the refinance down as well.

FHA streamline refinance requirements:

Current mortgage must be an FHA loan
Mortgage payments must be current and on-time for the past six months
There must be at least 210 days since your FHA loan initially closed
Refinancing must result in a “net tangible benefit” such as a lower monthly payment
FHA mortgage premiums will still be required

Worth noting, an FHA streamline refinance doesn’t allow homeowners to take cash out.

Working with a qualified mortgage advisor who understands your situation is the best decision you can make. An experienced mortgage advisor can recommend home loan refinancing options to save you money and keep the process stress-free.

Summary

Refinancing an FHA loan to a conventional loan can save you a lot of money, get rid of mortgage insurance, and even secure a lower mortgage rate. But it’s not the best solution for every homeowner. Pay attention to closing costs, the pros and cons of a conventional mortgage, and recommendations from a qualified mortgage advisor. Finally, make sure to check out the FHA streamline refinance, especially if you have less than 20% equity right now.

Next Steps

When you’re thinking about refinancing a mortgage, an experienced mortgage advisor can help you decide whether or not a conventional mortgage is the best option. Connect with a mortgage advisor to discuss your options and build a custom mortgage that saves you money. We’d love to help.

Refinance to a Fixed-Rate Mortgage and Lower Your Payment

June 15, 2022

mortgage blog, refinance, fixed-rate mortgage

With the pandemic still impacting loans and interest rates, now is an ideal time to consider refinancing from an adjustable-rate mortgage to a fixed-rate mortgage. Mortgage rates have been inching upwards since earlier this year. Slowly at first, but the jumps are increasingly hard to ignore. If you have an adjustable-rate mortgage (ARM), now is a good time to refinance to a fixed-rate mortgage.

Historically, mortgage rates rise with inflation. Investors watch the trends with caution, and often mortgage rates rise based solely on the anticipation of inflation. Add the fact that the Fed is also raising the federal funds rate, and it’s hard to ignore the potential long-term rise of mortgage rates.

The truth is, many homeowners can save a lot of money in interest and lower their mortgage payment by refinancing to a 15-year fixed-rate mortgage or a 30-year fixed-rate mortgage.

If you’re concerned about your mortgage payment and want the financial stability of a fixed-rate mortgage, we can help. Connect with a local mortgage advisor to discuss your goals.

How the Federal Funds Rate Affects Mortgage Rates

When the Fed decides to increase the federal funds rate, it directly impacts mortgage rates. For those homeowners who currently have an ARM or a HELOC, this means your rates could jump without much warning. The result could be a higher mortgage payment, higher equity loan payments, or more of your payment will go toward interest every month instead of principal.

Adjustable-Rate Mortgages

Adjustable-rate home loans have variable interest rates. This means that the rate will fluctuate, rising or falling based on the fed funds rate. If the fed funds rate goes up, your rate will go up, and your mortgage payment will go up. There are different caps for each loan, limiting how much your mortgage payment can increase. Talk with a local mortgage advisor to determine if refinancing your home loan can save you money and protect your mortgage payment.

HELOC (Home Equity Line of Credit) and Home Equity Loans

Most home equity loans and HELOCs are directly tied to the prime rate (which is typically 2-3 percentage points above the federal funds rate). Therefore, if the federal funds rate goes up, this causes the prime rate to increase, and interest rates for HELOCs and home equity loans will rise in tandem.

Similarly, HELOCs have a flexible rate that is impacted directly by the federal funds rate. This means your HELOC rate can rise at any point, and with a higher rate, you’ll have a higher payment.

As an aside, most home equity loans are fixed-rate loans, which means your payment won’t change. However, since home equity loans typically have a higher interest rate than a fixed-rate mortgage, it could be wise to refinance.

If you’re concerned about your mortgage payment, we can help.

How to Compare Offers and Get the Best Fixed-Rate Home Loan

Working with a qualified mortgage advisor can help you compare loan offers and get your best mortgage. What’s more, a mortgage advisor can explain refinancing options that you might not know about and get you a better home loan that can save you money.

We’ll guide you through these five steps toward a better mortgage:

Discuss your situation and share your homeownership goals.
We’ll analyze the market and lock in your best mortgage rate.
Review your new refinancing options together.
Gather the final documentation for underwriting.
Verify the value of your home with a home appraisal.

Final Step — Close on your new home loan with a low fixed-rate payment!

Are there closing costs to refinance to a fixed-rate mortgage?

Refinancing to a fixed-rate mortgage will incur closing costs, just like most home loans, which we blogged about here. That said, you can save thousands of dollars over the life of your loan by securing a fixed-rate loan that isn’t subject to the volatility of market rates.

Typically, it takes 5-7 years to recoup non-recurring closing costs after a mortgage refinance. In general, it’s a good move to refinance to a fixed-rate mortgage if adjustable rates are rising and you want the security of a fixed payment for the life of the loan.

Be sure to connect with your local mortgage advisor about your best loan options and lock in a preferred rate.

Summary

If you have a mortgage with an adjustable rate, a home equity loan, or a home equity line of credit, now is the time to refinance your home loan and secure a fixed-rate mortgage.

Refinancing to a fixed-rate mortgage secures a fixed monthly payment for the life of your loan, no matter how the market shifts. You’ll have a steady mortgage with a predictable monthly payment you can afford, regardless of inflation or future volatility in the market.

Next Steps

If you’re wondering how to afford your ARM mortgage with rising rates, refinancing now can help establish financial stability. When you’re ready to refinance to a fixed-rate mortgage, a local mortgage advisor can help you get approved, lock in the lowest mortgage rate, and secure the right home loan. Connect with a mortgage advisor to discuss your options and make a plan that can help you save money on your mortgage. We’d love to help.

How to Pay Closing Costs Without Going Broke

March 30, 2022

mortgage blog, how to pay closing costs, preferred rate

Closing costs can be an unwelcome surprise to every homebuyer, even if you aren’t a first-time homebuyer. The truth is, every home loan includes closing costs as part of the transaction—new home loans, home renovation loans, investment properties, condos, and refinancing. If you’re getting approved for a new mortgage, deciding how to pay for closing costs is important.

The good news is that homebuyers have several options for paying closing costs.

An experienced mortgage advisor can help explain the different ways to cover closing costs and the best programs to help you meet your financial goals. This article offers a few top highlights.

HOW TO PAY FOR CLOSING COSTS: KNOW YOUR OPTIONS

Many homebuyers choose to pay closing costs upfront once the purchase or refinance is complete.

However, paying a large sum of money out-of-pocket sometimes isn’t the best financial option.

Closing costs are one-time expenses due at closing—typically 2-5% of the home loan amount. Line items covered by closing costs often include loan origination fees, appraisal fees, title insurance, property taxes, and more. You can find a more extensive list here.

Top 5 Ways to Pay Closing Costs

If you’re looking for a way to lower your out-of-pocket expenses at closing, these are the most popular options:

Pay closing costs upfront when you sign the new loan
Roll the closing costs into your loan
Agree to have the lender pay closing costs in exchange for a higher rate
Negotiate with the seller to cover some fees
Apply for HUD-approved grants to help pay for closing costs

1. Pay for closing costs upfront.

This is a common approach to paying closing costs. When you get ready to sign the final papers and close on your new mortgage, there will be a final balance due. You can pay this in full (typically with a cashier’s check) right then and there.

For homebuyers short on cash, this can be costly. Especially since you want to have enough savings to cover new home expenses or unexpected repairs that might come up.

2. Roll the closing costs directly into the mortgage.

Adding closing costs to a home loan is another option that helps homebuyers lower out-of-pocket expenses. When you decide to roll the closing costs into your mortgage, the lender simply adds the amount of the closing costs to your original loan amount.

For example, if your purchase price is $400,000 with a down payment of $40,000 (10%), your home loan would be $360,000. Let’s assume closing costs for your new mortgage are $10,800 (3%). The mortgage lender would add that amount to the loan, putting your new mortgage at $370,800.

This can be an attractive solution for new homeowners who can afford a slightly higher mortgage payment and don’t want to pay closing costs upfront.

3. Ask your mortgage lender about a no-cost or zero-cost loan to cover closing costs.

Some mortgage lenders offer what’s called a no-cost mortgage. In this case, the mortgage lender will pay all (or most) of your closing costs upfront and increase the mortgage rate in exchange.

This is a profitable option for the lender since the lender will have a higher return over the life of the loan, and closing costs are a fixed amount.

For first-time homebuyers, lowering out-of-pocket expenses could help you become a homeowner sooner.

4. Negotiate with the seller to decide who pays for closing costs.

It’s common for a seller and buyer to negotiate who pays for some of the closing costs as part of the final contract. Often the seller will offer to cover some of the closing costs, but if the property is in a high-demand area, the buyer will cover the closing costs in full.

5. Apply for housing grants that help pay for closing costs.

Sometimes, rolling the closing costs into the mortgage isn’t affordable. Often, it can cause the home loan amount to jump beyond your approved loan amount, or the new mortgage payment isn’t affordable.

Many first-time homebuyers and borrowers with low-to-moderate income can apply to HUD-approved housing agencies for help. These agencies offer grants to help with closing costs. If you think you might qualify, give us a call. We can connect you with some information that might help.

How to Apply for a No-Cost or Zero-Cost Mortgage

Connect with a local mortgage advisor to discuss your options.

Closing costs are to be expected when you apply for a mortgage, whether you pay them out-of-pocket or roll them into a home loan.

Mortgage financing is never one-size-fits-all, and we understand it can be overwhelming to understand all the options available to you. We’re committed to helping you secure the best mortgage at a competitive rate so you can save money on your mortgage.

Connect with a local mortgage advisor and find out which option helps you meet your financial objectives.

Taking Action

Don’t let closing costs keep you from your best mortgage.

If you’re considering buying a house or refinancing in 2022, connect with a local mortgage advisor to discuss your options. We can guide you through the process and help you decide which path meets your financial goals. We’d love to help.

How to Cover Closing Costs: You’ve Got Options

November 2, 2022

mortgage blog, closing costs, preferred rate

Mortgage rates are beginning to steady but higher rates could be coming down the road. If you’re thinking about buying a home or refinancing, you can save a lot of money when it comes to closing costs. Closing costs can be an unwelcome surprise, even if you aren’t a first-time homebuyer. But closing costs don’t have to break the bank. Every home loan includes closing costs as part of the transaction—new home loans, home renovation loans, investment properties, condos, and refinancing. If you’re getting approved for a new mortgage then deciding how to pay the closing costs is an important part of the bigger financial picture.

The good news is that homebuyers have several options when it comes to paying closing costs. What’s more, you can save a lot of money on your next mortgage, and understanding how to pay closing costs is a big part of the puzzle.

An experienced mortgage advisor can help explain your best options and help you meet your financial goals. Keep reading for the top highlights.

HOW TO PAY CLOSING COSTS: KNOW YOUR OPTIONS

Many homebuyers choose to pay closing costs upfront once the purchase or refinance is complete.

However, paying a large sum of money out-of-pocket sometimes isn’t the best financial strategy.

Closing costs are a one-time expense due at closing—typically 2-5% of the home loan amount. Line items covered by closing costs often include loan origination fees, appraisal fees, title insurance, property taxes, and more. You can find a more extensive list here.

5 Popular Strategies to Pay Closing Costs

If you’re looking for a way to lower your out-of-pocket expenses at closing, these are the most popular options:

Pay closing costs up front when you sign the new loan
Roll the closing costs into your loan
Agree to have the lender pay closing costs in exchange for a higher rate
Negotiate with the seller to cover some fees
Apply for HUD-approved grants to help pay for closing costs

1. Pay for closing costs upfront.

This is a common approach to paying closing costs. When you get ready to sign the final papers and close on your new mortgage, there will be a final balance due. You can pay this in full (typically with a cashier’s check) right then and there.

For homebuyers short on cash, this can be costly. Especially since you want to have enough savings to cover new home expenses or unexpected repairs that might come up.

2. Roll the closing costs directly into the mortgage.

Adding closing costs to a home loan is another option that helps homebuyers lower out-of-pocket expenses. When you decide to roll the closing costs into your mortgage, the lender simply adds the amount of the closing costs to your original loan amount.

For example, if your purchase price is $400,000 with a down payment of $40,000 (10%), your home loan would be $360,000. Let’s assume closing costs for your new mortgage are $10,800 (3%). The mortgage lender would add that amount to the loan, putting your new mortgage at $370,800.

This can be an attractive solution for new homeowners who can afford a slightly higher mortgage payment and don’t want to pay the closing costs upfront.

3. Ask your mortgage lender about a no-cost or zero-cost loan to cover closing costs.

Some mortgage lenders offer what’s called a no-cost mortgage. In this case, the mortgage lender will pay all (or most) of your closing costs upfront and increase the mortgage rate in exchange.

This is a profitable option for the lender since the lender will have a higher return over the life of the loan, and closing costs are a fixed amount.

For first-time homebuyers, lowering out-of-pocket expenses could help you become a homeowner sooner.

4. Negotiate with the seller to decide who pays for closing costs.

It’s common for a seller and buyer to negotiate who pays for some of the closing costs as part of the final contract. Often the seller will offer to cover some of the closing costs, but if the property is in a high-demand location, the buyer typically covers the closing costs in full.

5. Apply for housing grants that help pay for closing costs.

Sometimes, rolling the closing costs into the mortgage isn’t affordable since it often results in a higher mortgage payment or a bigger home loan. Sometimes, it can cause the home loan amount to jump beyond your approved loan amount, or the new mortgage payment isn’t affordable.

A good alternative might be a HUD-approved grant. Many first-time homebuyers and borrowers with low-to-moderate income can apply to HUD-approved housing agencies for help. These agencies offer grants to help with closing costs and down payments. If you think you might qualify, give us a call. We can connect you with some information that might help.

How to Apply for a No-Cost or Zero-Cost Mortgage

Connect with a local mortgage advisor to discuss your options.

Closing costs are to be expected when you apply for a mortgage, whether you pay them out-of-pocket or roll them into a home loan. And understanding your options ahead of time can help you save money and move toward financial stability.

Mortgage financing is never one-size-fits-all, and we understand it can be overwhelming to understand all the options available to you. We’re committed to helping you secure the best mortgage at a competitive rate so you can save money on your next mortgage.

Connect with a local mortgage advisor and find out which option will help you meet your financial objectives.

Taking Action

Don’t let closing costs keep you from your best mortgage.

If you’re considering buying a house or refinancing your mortgage, connect with a mortgage advisor in your area to discuss your best options. We can guide you through the process and help you decide which path meets your financial goals. We’d love to help you finance your next dream home today.

When is it Smart to Buy Mortgage Points?

May 18, 2022

mortgage blog, mortgage points, preferred rate

As mortgage rates rise and housing inventory is beginning to stall, many homebuyers ask whether they should buy mortgage points to secure a lower interest rate. Buying mortgage points is one way to lower your mortgage rate, but the decision can be difficult for many homebuyers. For new borrowers getting ready to buy a home and for homeowners who want to refinance, buying mortgage points is one option to reduce your rate and bring down a mortgage payment. But it’s not always the best option.

Keep reading to learn the pros and cons of buying mortgage points.

If getting the lowest interest rate is your primary goal, then choosing to buy mortgage points or “discount” points can make a lot of sense. But paying mortgage points at closing isn’t always the best financial decision when it comes to saving money on your mortgage. It all depends on your financial goals.

The truth is there are a lot of factors: the terms of the loan, closing costs, how much money you want to use for a down payment, and how long you plan to stay in your home. An experienced mortgage advisor can help explain your best loan options to help you meet your financial goals.

Are mortgage points and discount points the same thing?

There are two types of mortgage points: Discount points and rebate points. When people talk about paying mortgage points or buying mortgage points, they are typically referring to discount points. Mortgage points, or discount points, allow you to reduce your interest rate by paying your mortgage interest upfront.

Mortgage points typically cost 1% of your total loan amount. For example, for a $400,000 mortgage, 1 point would cost $4,000 (2 points would cost $8,000, etc.) In exchange, you’ll typically receive a reduced interest rate of 0.25% for each point.

Buying mortgage points can reduce your interest rate and monthly payment (how it works).

Sample loan for a fixed-rate 30-year home loan for $450,000:

Loan amount: $450,000
Loan term: 30-year fixed rate
Interest rate: 6.00%
Monthly payment: $2,698

Sample scenario if you decide to pay 2 mortgage points:

Loan amount: $450,000
Loan term: 30-year fixed rate
Mortgage points: 2
Reduced interest rate: 5.50%
Lower monthly payment: $2,555
Monthly savings: $143/mo
Break-even period: 63 months
Cost at closing: $9,000

In short, this means that paying 2 mortgage points (0.25% discount per point) would cost $9,000 (2% of the loan amount). Paying 2 mortgage points would reduce your mortgage payment by $143/mo and take 63 months to “break-even” or recover that cost. On month 64, you’d start the real benefits of a lower monthly payment.

The example above offers a framework to evaluate if paying points might be a smart decision.

Is it always worth it to pay points on a mortgage?

Yes and no. In the example above, you can see how paying mortgage points upfront can save you money on your mortgage over the long term. But if you end up selling your house or refinancing in the short-term, paying mortgage points could end up costing money upfront at closing that you won’t recover.

Similarly, if you need the additional cash for emergency funds, home repairs, or other needs, it’s probably not wise to become cash-poor just to save 0.25% on your mortgage interest rate.

Today, with mortgage rates inching up and inflation rising, it can be a smart move to buy mortgage points and get a lower mortgage rate. Especially if you plan on staying in your home for more than 6 years, you could save thousands on interest over the life of the loan.

Is it smarter to make a bigger down payment instead of buying mortgage points?

Let’s say you have $9,000 in additional funds that you want to put toward your new home loan, and you’re not sure if you should buy mortgage points or put it toward your down payment.

Going back to the example above, you could put the $9,000 toward your down payment, reducing your home loan to $441,000. While this might not seem like a substantial difference, it would lower your monthly payment since your loan amount is lower.

What’s more, by increasing your down payment, you can improve your loan-to-value (LTV) ratio. A better LTV can translate into a lower interest rate or better terms. If your down payment crosses the 20% threshold, you’ll save even more.

The truth is, talking with a local mortgage advisor can help. Several factors affect every mortgage application, such as your credit score, debt-to-income ratio, and income verification. Custom loan options can create the best terms for your financial situation. Together, these factors impact the overall terms of your loan offer. Paying mortgage points is one element in a much bigger picture.

Are mortgage points tax deductible?

Mortgage points are tax-deductible in most circumstances. Mortgage discount points are prepaid interest on your mortgage and are treated the same as mortgage interest on your tax return. Note that the Tax Cuts and Jobs Act of 2017 puts a limit on the amount of mortgage interest you can deduct, so it’s best to check with your tax accountant for current limits and tax laws.

Finally, a few questions to consider:

Do you plan on staying in your home for at least 5 years (or longer than the break-even period)?

If you plan to move or refinance in less than 5 years, paying points might not be beneficial. But if this is going to be your forever home, it might benefit you to pay points for a reduced interest rate.

Do you have enough cash to make a substantial down payment and also pay points?

If not, it might be better to focus on your down payment. By making a larger down payment, you’ll have a smaller loan amount and a lower mortgage payment.

Is there a better way to invest your money instead of buying mortgage points?

In the example above, you’d pay $9,000 in points when your loan closes. Consider whether or not there may be an alternative way to invest that $9,000 which could yield better returns.

Check out a mortgage calculator to see what you can afford and if paying points will help meet your homeownership goals.

Takeaway

Paying mortgage points is a clear path to getting a lower interest rate and saving money if you plan to stay in your home long-term. That said, paying discount points in addition to a down payment and other closing costs can be financially demanding.

Before you deplete your savings, talk with a local mortgage advisor to find out how much you’ll save each month and how long it will take before you break even. Finally, if you have the extra cash, consider making a larger down payment which might generate better loan terms and save you more money than buying mortgage points.

Connect with a local mortgage advisor and discover which options will help you meet your financial goals.

Next Steps

Working with a local mortgage advisor can help you compare your best mortgage options, lock in the lowest mortgage rate, and secure the best home loan that fits your life goals. Once you know your home loan options, you can decide whether or not buying mortgage points is a smart path. Connect with a local mortgage advisor to discuss your options and save money on your mortgage. We’d love to help.

Pros and Cons of a Conventional Mortgage

August 3, 2022

mortgage blog, conventional mortgage, home loan

A conventional mortgage is one of the most popular mortgages among homeowners, offering lower costs and better mortgage rates than most other loan products. In short, conventional mortgages are backed by lenders such as banks, credit unions, and mortgage companies instead of backed by the government.

Since conventional mortgages aren’t government-backed, lenders have more freedom to meet the custom needs of individual homebuyers. Conventional mortgages offer lower rates, greater flexibility, and better loan terms for qualified borrowers buying a home or refinancing a mortgage.

We’ve been hearing some common questions lately: Is it hard to get approved for a conventional loan? What are the pros and cons of a conventional loan? What are the requirements and how do I apply for a conventional loan?

This article can help.

How does a conventional mortgage work?

On the surface, conventional mortgages work like most home loans. They offer popular terms (fixed-rate, adjustable-rate, 30-year, etc.) and competitive mortgage rates. Your property is collateral for your mortgage, and there is a payment schedule for the life of your loan.

Conventional mortgages are available through private lenders such as banks, credit unions, and mortgage companies. However, conventional loans are not government-backed mortgages, and there are different requirements to get approved depending on the lender.

Government-backed mortgages, such as FHA loans, VA loans and USDA loans, typically offer less strict criteria to qualify and require smaller down payments. These mortgages are typically easier for homebuyers to get approved, but the costs and fees to service the mortgage may be higher than a conventional loan.

Conventional mortgages, on the other hand, often have stricter requirements to qualify but lower costs overall. Conventional mortgages are ideal for primary residences, jumbo loans, second properties, vacation homes, and investment properties.

If you have verifiable income, a high credit score, and cash reserves, then a conventional mortgage might be your best choice.

Conventional loans fall into two categories: conforming and non-conforming.

Conforming loans in 2022 require a mortgage at or below $647,200 in most of the U.S. for a single-family property. In areas where the cost of living is higher, the conforming limit is $970,800. The FHFA sets the loan limits, which meet the requirements for Fannie Mae and Freddie Mac in 2022.

Fannie Mae and Freddie Mac then purchase and guarantee the loans, then sell them on the secondary market. This process frees up mortgage lenders so they can recover capital quickly and continue to originate, underwrite and fund home loans for homebuyers.

A non-conforming loan is any mortgage that surpasses the mortgage limit set by Fannie Mae and Freddie Mac ($647,200 – $970,800 depending on the area). A jumbo loan is a common example of a non-conforming conventional loan.

To find out the limits in your area, connect with a local mortgage advisor. An experienced mortgage advisor can discuss your home loan options and recommend a customized home loan. Together, you can meet your financial goals and save money on your mortgage.

What are the pros and cons of a conventional loan?

Depending on your situation, a conventional mortgage could save you money on your mortgage. These pros and cons can help you make an informed decision.

Benefits of a Conventional Mortgage

Available for all types of properties

Conventional mortgages can be used for a vacation home, a rental property, investment property, or your primary residence. By contrast, most government-backed loans are only available for your primary residence.

Competitive interest rates

Conventional mortgage rates are very competitive and typically lower than FHA loans. Qualified borrowers typically have verifiable income, cash reserves, and good credit history.

Low down payment requirements

Many conventional loans offer the best terms with a 20% down payment, but you can also apply for the Conventional 97 which only requires 3% down. This is a great option if you have high cash reserves but want to invest your money elsewhere.

Flexible loan terms

A conventional mortgage is available for purchase mortgages, refinancing, renovations and investment properties. Mortgage options include fixed-rate loans, adjustable-rate loans, 15-year and 30-year terms, as well as specialty loan products.

Higher purchase limits

Conventional loans are ideal for jumbo loans and unique properties that exceed limitations set by other loan products.

Financial freedom

Conventional loans can be customized alongside specialty loan programs to help you reach financial freedom.

*If you’re looking to save money on closing costs, check out our recent article on a no-closing-cost loan, which we blogged about here.

Drawbacks of a Conventional Mortgage

PMI might be required

Private mortgage insurance (PMI) will be required until you hold at least 78% equity in your home. You can bypass this requirement by providing a 20% down payment.

Strict DTI criteria

Mortgage lenders typically require borrowers to have a maximum debt-to-income ratio between 36%-43% to get approved for a conventional loan. Some lenders will go as high as 50% DTI, though this is less common.

Higher credit score requirements

A credit score of at least 620 is typically required for a conventional loan. However, aim for a 700+ credit score to get a conventional mortgage with the lowest mortgage rate and the best loan terms.

Zero-Down Payment options are not available

If you’re looking for a no-money-down mortgage, check out government-backed mortgages like the VA loan or a USDA loan.

* Conventional mortgages are often a top choice for homebuyers who are buying a home as an investment property, a second home, or want to buy a home with a purchase price above conforming limits.

How to Apply for a Conventional Mortgage

Step 1. Estimate how much you can afford [click here]

Step 2. Start your free custom mortgage application [click here]

Step 3. Gather your documentation (e.g., identification, income, assets, employment)

Step 4. Connect with a mortgage advisor to discuss your options [click here]

Step 5. Close on on your new mortgage and start saving money!

If you’re self-employed or plan to qualify using non-standard income, read this recent article we blogged about here…

Is it difficult to get approved for a conventional loan?

Homebuyers with established credit and solid financial positioning will typically qualify for a conventional mortgage with the best terms: the higher your credit score, the better your interest rate.

Mortgage lenders will compete for your business if you have a high credit rating, a low debt-to-income ratio, consistent income, and high cash reserves.

On the other hand, homebuyers with a short credit history or more debt than usual, might not get approved for a conventional loan. Side note, if you’ve got student loan debt and want to get approved for a mortgage, we blogged about that here.

A few criteria that might keep you from getting approved for a conventional loan:

bankruptcy or foreclosure in the past 7 years
credit score below 650
debt-to-income ratio above 45%
down payment less than 10%

What are the minimum requirements to qualify for a conventional mortgage?

credit score 620+
debt-to-income ratio less than 43%
proof of employment
verification of income
down payment of at least 3%

Worth noting, borrowers who have a DTI of 36% or less, a 700+ credit score, and high cash reserves will be able to get the most competitive loans.

Best Alternatives for First-time Homebuyers

If you’re a first-time homebuyer, check out the top five mortgages for first-time homebuyers, which we blogged about here. Even if you don’t fit the profile for a conventional loan, there are several advantages available to first-time homebuyers.

The FHA loan is another great option for homebuyers. The FHA loan has flexible approval requirements and offers low rates and a low down payment.

If you’re an active member of the military, the VA loan is a great option with several benefits, including low rates and a 0% down payment requirement. Find out more on our recent article posted here.

Working with a qualified mortgage advisor who understands your situation is the best decision you can make. An experienced mortgage advisor can recommend custom loan options and help you get approved for a preferred mortgage.

Next Steps

When you’re ready to apply for a mortgage or refinance, an experienced mortgage advisor can help you decide whether or not a conventional mortgage is the best loan for you. We offer homebuyers specialty loan products, conventional loans, government-backed mortgages and more. Connect with a mortgage advisor to discuss your options and make a plan that can help you save money on your mortgage. We’d love to help.

Conventional Mortgages: Pros and Cons and Getting Approved

July 24, 2021

A conventional mortgage is one of the most popular mortgage products in the U.S. today, offering lower costs and better mortgage rates than most other loan products. In short, conventional mortgages are backed by private lenders such as banks, credit unions, and mortgage companies instead of backed by the government.

Since conventional mortgages aren’t government-backed, lenders have more freedom to meet the custom needs of individual homebuyers. Conventional mortgages offer lower rates, greater flexibility, and better loan terms for qualified borrowers buying a home or refinancing a mortgage.

We’ve been hearing some common questions lately: Is it hard to get approved for a conventional loan? What are the pros and cons of a conventional loan? What are the requirements and how do I apply for a conventional loan?

This article can help.

How does a conventional mortgage work?

On the surface, conventional mortgages work like most home loans. They offer popular terms (fixed-rate, adjustable-rate, 30-year, etc.) and competitive mortgage rates. Your property is collateral for your mortgage, and there is a payment schedule for the life of your loan.

Conventional mortgages are available through private lenders such as banks, credit unions, and mortgage companies. However, conventional loans are not government-backed mortgages, and there are different requirements to get approved depending on the lender.

Government-backed mortgages, such as FHA loans, VA loans and USDA loans, typically offer less strict criteria to qualify and require smaller down payments. These mortgages are typically easier for homebuyers to get approved, but the costs and fees to service the mortgage may be higher than a conventional loan.

Conventional mortgages, on the other hand, often have stricter requirements to qualify but lower costs overall. Conventional mortgages are ideal for primary residences, jumbo loans, second properties, vacation homes, and investment properties.

If you have verifiable income, a high credit score, and cash reserves, then a conventional mortgage might be your best choice.

Conventional loans fall into two categories: conforming and non-conforming.

Conforming loans require a mortgage at or below $548,250 in most of the U.S. for a single-family property. In areas where the cost of living is higher, the conforming limit is $822,275. The FHFA sets the loan limits, which meet the requirements for Fannie Mae and Freddie Mac.

Fannie Mae and Freddie Mac then purchase and guarantee the loans, then sell them on the secondary market. This process frees up mortgage lenders so they can recover capital quickly and continue to originate, underwrite and fund home loans for homebuyers.

A non-conforming loan is any mortgage that surpasses the mortgage limit set by Fannie Mae and Freddie Mac ($548,250 – $822,275 depending on the area). A jumbo loan is a common example of a non-conforming conventional loan.

To find out the limits in your area, connect with a local mortgage advisor. An experienced mortgage advisor can discuss your home loan options and recommend a customized home loan. Together, you can meet your financial goals and save money on your mortgage.

What are the pros and cons of a conventional loan?

Depending on your situation, a conventional mortgage could save you money on your mortgage. These pros and cons can help you make an informed decision.

Benefits of a Conventional Mortgage

Available for all types of properties

Conventional mortgages can be used for a vacation home, a rental property, investment property, or your primary residence. By contrast, most government-backed loans are only available for your primary residence.

Competitive interest rates

Conventional mortgage rates are very competitive and typically lower than FHA loans. Qualified borrowers typically have verifiable income, cash reserves, and good credit history.

Low down payment requirements

Many conventional loans offer the best terms with a 20% down payment, but you can also apply for the Conventional 97 which only requires 3% down. This is a great option if you have high cash reserves but want to invest your money elsewhere.

Flexible loan terms

A conventional mortgage is available for purchase mortgages, refinancing, renovations and investment properties. Mortgage options include fixed-rate loans, adjustable-rate loans, 15-year and 30-year terms, as well as specialty loan products.

Higher purchase limits

Conventional loans are ideal for jumbo loans and unique properties that exceed limitations set by other loan products.

Financial freedom

Conventional loans can be customized alongside specialty loan programs to help you reach financial freedom.

*If you’re looking to save money on closing costs, check out our recent article on a no-closing-cost loan, which we blogged about here.

Drawbacks of a Conventional Mortgage

PMI might be required

Private mortgage insurance (PMI) will be required until you hold at least 78% equity in your home. You can bypass this requirement by providing a 20% down payment.

Strict DTI criteria

Mortgage lenders typically require borrowers to have a maximum debt-to-income ratio between 36%-43% to get approved for a conventional loan. Some lenders will go as high as 50% DTI, though this is less common.

Higher credit score requirements

A credit score of at least 620 is typically required for a conventional loan. However, aim for a 700+ credit score to get a conventional mortgage with the lowest mortgage rate and the best loan terms.

Zero-Down Payment options are not available

If you’re looking for a no-money-down mortgage, check out government-backed mortgages like the VA loan or a USDA loan.

* Conventional mortgages are often a top choice for homebuyers who are buying a home as an investment property, a second home, or want to buy a home with a purchase price above conforming limits.

How to Apply for a Conventional Mortgage

Step 1. Estimate how much you can afford [click here]

Step 2. Start your free custom mortgage application [click here]

Step 3. Gather your documentation (e.g., identification, income, assets, employment)

Step 4. Connect with a mortgage advisor to discuss your options [click here]

Step 5. Close on on your new mortgage and start saving money!

If you’re self-employed or plan to qualify using non-standard income, read this recent article we blogged about here…

Is it hard to get approved for a conventional loan?

Homebuyers with established credit and solid financial positioning will typically qualify for a conventional mortgage with the best terms: the higher your credit score, the better your interest rate.

Mortgage lenders will compete for your business if you have a high credit rating, a low debt-to-income ratio, consistent income, and high cash reserves.

On the other hand, homebuyers with a short credit history or more debt than usual, might not get approved for a conventional loan. Side note, if you’ve got student loan debt and want to get approved for a mortgage, we blogged about that here.

A few criteria that might keep you from getting approved for a conventional loan:

bankruptcy or foreclosure in the past 7 years
credit score below 650
debt-to-income ratio above 45%
down payment less than 10%

What are the minimum requirements to qualify for a conventional mortgage?

credit score 620+
debt-to-income ratio less than 43%
proof of employment
verification of income
down payment of at least 3%

Worth noting, borrowers who have a DTI of 36% or less, a 700+ credit score, and high cash reserves will be able to get the most competitive loans.

Best Alternatives for First-time Homebuyers

If you’re a first-time homebuyer, check out the top five mortgages for first-time homebuyers, which we blogged about here. Even if you don’t fit the profile for a conventional loan, there are several advantages available to first-time homebuyers.

The FHA loan is another great option for homebuyers. The FHA loan has flexible approval requirements and offers low rates and a low down payment.

If you’re an active member of the military, the VA loan is a great option with several benefits, including low rates and a 0% down payment requirement. Find out more on our recent article posted here.

Working with a qualified mortgage advisor who understands your situation is the best decision you can make. An experienced mortgage advisor can recommend custom loan options and help you get approved for a preferred mortgage.

Next Steps

When you’re ready to apply for a mortgage or refinance, an experienced mortgage advisor can help you decide whether or not a conventional mortgage is the best loan for you. We offer homebuyers specialty loan products, conventional loans, government-backed mortgages and more. Connect with a mortgage advisor to discuss your options and make a plan that can help you save money on your mortgage. We’d love to help.

Home Appraisals: What to Expect and Who Pays the Cost

June 18, 2021

Waiting to find out the results of a home appraisal can be stressful for homeowners and buyers alike. As a homeowner, you might need your home to appraise at a specific value before you decide to sell or refinance. As a first-time homebuyer, the appraisal could impact whether or not you qualify for a mortgage. The truth is, home appraisals can have a significant impact on your mortgage, the final terms of your refinance, or even negotiations between a buyer and seller.

In short, a home appraisal determines the fair market value for a home. A licensed home appraiser evaluates the home as a neutral third party by researching similar neighborhood homes. After assessing the home, the appraiser submits a detailed report.

Sounds easy enough, depending on the outcome. But if a home appraisal reports a much higher or lower value than anticipated, it can cause added stress for everyone. For example, the buyer and seller could restart negotiations, a buyer could walk away, or the loan could fall through.

The good news is that the home appraisal process can be less stressful when you know what to expect.

Know What to Expect Before You Get an Appraisal

Let’s look at the appraisal process, how much it might cost, and how home appraisals work.

You might be surprised to find out that some refinance loans don’t require an appraisal at all. If you’d like to refinance without an appraisal, check out the FHA streamline and the VA IRRRL to see if you qualify.

How it Works: What is a Home Appraisal?

In basic terms, a home appraisal determines the fair market value for a home. This is helpful for the buyer, seller, and lender. For buyers, a home appraisal ensures they’re paying a fair price. For sellers, it verifies that their home is priced competitively. And for lenders, an appraisal offers proof that a home is adequately valued to approve a home loan.

Certified home appraisers serve as neutral parties, so they don’t represent the buyer, seller, realtor, or lender. Simply put, an appraiser will evaluate comparable homes in the area along with recent home sales and write up a detailed report to confirm their findings.

Since the purpose of an appraisal is to set the fair market value of a home, both the buyer and seller have a unique interest in the outcome. Sometimes when an appraisal comes in much higher or lower than anticipated, the buyer or seller might request a new appraisal by appeal. But this is not common in practice.

Once the appraisal report is received, all interested parties take the appraisal as the current fair market value of the home.

Common Questions About Home Appraisals

Q1: Are appraisals required for every home purchase?

No. A home appraisal is necessary in most cases, but not always.

For example, if you’re buying a home with an all-cash offer in a competitive housing market, you can skip the appraisal as long as the seller is willing to do the same.

However, if you need a mortgage to buy a home, the lender will require an appraisal. The home appraisal will verify that the home’s value is comparable to similar homes in the area. In addition, since your home is the collateral for a mortgage, lenders look to the home appraisal to confirm its fair market value.

If you’re refinancing, you might be eligible for a no-appraisal refinance, saving time and money. Talk to a mortgage advisor to find it if you qualify.

Q2: Is an appraisal contingency a good idea?

Sometimes. If you’re the buyer, it can be a good idea to include an appraisal contingency in the offer. An appraisal contingency lets you walk away from the home purchase if the appraisal comes in too low.

However, if there are multiple offers and low housing inventory, a seller may choose a buyer who has fewer contingencies. In this case, an appraisal contingency might protect you as the buyer, but you could lose the house in negotiations.

Q3: Is there a difference between home inspections and home appraisals?

Yes. A home inspection provides an in-depth evaluation of the current condition of a home.

A home inspector will do a detailed walk-thru and look for problems that might need repair or uncover areas that might need attention. For example, they’ll check the roof and the home’s foundation; they may test the furnace and outlets, along with the plumbing system, and see if the water heater is installed correctly. Often, the results of a home inspection lead to further negotiations between the buyer and seller. Especially if there are costly repairs needed.

An appraiser provides a final report to determine the fair market value by comparing similar homes, but they don’t check the home’s condition in detail. For example, an appraiser will note visible structural problems (for example, a falling roof or lack of plumbing), but not minor details. Instead, appraisers research comparable homes nearby that have sold recently using standard criteria. For example, they’ll compare homes with a similar number of bedrooms, bathrooms, square footage, acreage, and other major elements such as a backyard pool or ADU.

Q4: How much does it cost to get a home appraisal?

In general, a home appraisal for a single-family home will cost $300-$500. Most lenders require an appraisal before the loan closes, and typically the buyer pays. However, if the housing market leans in favor of the buyer, sometimes the seller will pay this fee.

Worth noting, the appraisal cost can vary widely depending on a few factors: the size of the property, location, and total acreage. For example, properties located in rural areas with additional acreage can cost more since the appraiser will need to survey the property’s boundary lines.

Final Takeaway

The home appraisal process can be a lot less stressful when you know what to expect.

In short, a home appraisal determines the fair market value of your home. For this reason, a home appraisal can have a significant impact on your mortgage, the final terms of your refinance, and negotiations between a buyer and seller. Of course, you can always appeal the appraisal, though this isn’t common practice.

The good news is that even when a home appraisal comes in different than expected, both the buyer and seller have options. As the buyer, you could walk away, bring more money to the table, or renegotiate with the seller. As the seller, talk with your realtor, see what they recommend, and decide if you’re willing to renegotiate the sales price.

Next Steps

Research comparable homes in your area and talk with your realtor about what to expect. If you’re thinking about buying a home or refinancing, we’d love to partner with you in the process. Connecting with a mortgage expert can reduce stress and save you money in the long run. We’re here to help.

Refinance Your Mortgage and Lock in the Best Rate (How To)

June 12, 2021

The recent dip in 10-year Treasury bonds is good news for homeowners ready to refinance a mortgage and first-time homebuyers. Whether you want to refinance your mortgage for a lower payment, apply for a cash-out refinance, or refinance your mortgage for a lower rate, now’s the time to take action.

Historically, a dip in Treasury yields translates to lower mortgage rates. Still, the economy is opening up, and rates have been near historic lows for months. Despite the downshift, mortgage experts predict rates to begin an upward rise soon.

Connect with a mortgage advisor to start the process early and lock in a low mortgage rate before they start to rise again.

How to Refinance Your Mortgage and Save Money in 5 Steps

Every borrower wants the best rate possible, and lenders will compete for your business if you’ve got a good financial track record. Borrowers with a good credit score and a low debt-to-income ratio will have leverage when deciding to shop around. But even if you’re financial picture isn’t where you’d like it to be right now, these tips will help you prepare.

When you apply for a mortgage refinance, the top three factors that will impact your mortgage application are your credit score, debt-to-income ratio, and home equity (loan-to-value ratio).

Take note of these five steps to leverage your knowledge and approach lenders with confidence.

Step 1: Protect your credit score.

Download a free copy of your credit report so you can resolve any errors or misinformation. If you have high consumer debt or multiple loans, pay down the balances to improve your credit score.

Keep making your payments on time and don’t take on any new debt or apply for new credit lines. Now’s not the time to open a new credit card or apply for a car loan. Keep your credit report as clean and consistent as possible when you’re ready to refinance.

Step 2: Shop around for the best mortgage refinance lender.

Just because rates are low doesn’t mean lenders will give you the best mortgage rate. Shopping for the best rate is a common strategy for most homeowners, but it’s smarter to shop around for the best mortgage advisor.

Yes, mortgage rates are one of the main factors borrowers consider when refinancing a mortgage. But the best loan terms are part of an overall package that goes beyond your interest rate. Fees, closing costs, points, and mortgage insurance are a few costs that can overshadow a low mortgage rate.

You don’t want to end up with a mortgage refinance that ends up costing you more and keeps you from meeting your long-term financial goals.

We recommend shopping around for the best mortgage advisor. Read reviews, check in with colleagues, follow up directly when you find a low rate.

A great mortgage advisor will talk with you about your financial and homeownership goals. Together, you can refinance your mortgage with a custom solution that checks all the boxes. You should be able to refinance your mortgage with a low-interest rate, a better mortgage payment, and loan terms that meet your financial goals.

Do they deliver exceptional customer service?
Do they offer the refinance product you want (fixed, adjustable, streamline, cash-out, etc.)?
Do they understand your financial goals?
Do they have great customer reviews?

Step 3: Compare mortgage refinance offers to find the best loan.

Advertised rates are helpful metrics to find out where the market is trending, but refinancing a mortgage can end up costing you a lot of money if you’re not careful.

So, shopping for the lowest rate won’t always get you the best mortgage refinance. Instead, compare your refinance offers side-by-side using the loan estimates provided by your lender.

The truth is, mortgage rates vary based on the borrower’s information, the loan product, and the lender. Certain lenders might advertise super low rates, but they might offer you higher rates than other lenders based on your credit score. The same goes for your debt-to-income ratio and your home equity.

When you apply for a mortgage refinance, you’ll receive a quote, also called a loan estimate. Your loan estimate will offer a line-by-line breakdown that shows the terms of your home loan.

Prepare ahead of time and review this sample Loan Estimate. All lenders use the same format, so this will make it easier to compare refinance offers.

Step 4: Estimate the closing costs for a mortgage refinance.

Refinancing your mortgage is about saving money for most borrowers. So if your mortgage refinance has a lower rate but high closing costs, it might not be a great solution.

Check out your Loan Estimate again to verify closing costs and any other fees that might be negotiable. Closing costs will be written in a different section and cover one-time expenses.

When you refinance a mortgage, many borrowers have the option to pay closing costs up front, roll them into the loan, or get a lender credit in exchange for a higher rate.

To find out which fees are negotiable, check out this sample Loan Estimate.

Closing costs typically include:

Origination Fee
Appraisal Fee
Credit Report Fee
Prepaid Homeowner’s Insurance
Prepaid Interest
Property Taxes
Mortgage Insurance

Remember these are one-time fees that you wouldn’t incur without refinancing your mortgage. One way to know whether refinancing your mortgage will save you money is to calculate your closing costs.

Step 5: Lock your rate when you apply for refinancing.

Lenders vary in how and when they offer mortgage rate locks, so be sure to ask your mortgage advisor about the terms. Often, borrowers have the option to lock in a mortgage rate early in the application process.

A float-down option often allows rate flexibility that protects the borrower: if market rates drop, the borrower’s rate “floats down” with the market; but if rates rise, the quoted rate stays secure. Mortgage lenders typically offer rate locks for 30 to 60 days.

Ask your mortgage lender about locking your rate and what happens if mortgage rates shift. If the refinance process takes longer than anticipated, you don’t want the uncertainty of a fluctuating mortgage rate in the mix.

Final Takeaway

Refinancing a mortgage can help you reach your financial goals faster. Take a minute to clarify your goals to make an informed decision once you get a loan estimate from your lender. Keep your credit report in check, take a close look at closing costs, and lock your rate if possible. Most importantly, shop around for the right mortgage lender and make sure you’re comparing apples to apples when you evaluate the terms of your refinance.

Next Steps

To get the best refinance rates and loan terms, work with a local mortgage expert who understands your financial situation. We’d love to discuss your financial goals and build a custom mortgage refinance that saves you money.

Tag Archive for: refinancing

Advantages to Refinancing an FHA Loan to a Conventional Loan

Top Questions on Converting an FHA Loan to a Conventional Loan

Should I refinance my FHA loan to a conventional loan? What are the benefits?

Thinking about refinancing?

Can you refinance an FHA loan to get rid of PMI?

Are there closing costs to refinance an FHA loan to a conventional loan?

What documentation do I need to change my FHA loan to a conventional loan?

Start your application in less than 5 minutes.

Drawbacks to refinancing an FHA loan to a conventional mortgage

FHA Streamline Refinance: Top Alternative for Refinancing an FHA Loan

Helpful advice from friendly mortgage experts.

Summary

Next Steps

Ready to refinance your mortgage?

How the Federal Funds Rate Affects Mortgage Rates

Adjustable-Rate Mortgages

HELOC (Home Equity Line of Credit) and Home Equity Loans

Take the first step toward your best mortgage.

How to Compare Offers and Get the Best Fixed-Rate Home Loan

Start your application in less than 5 minutes.

Are there closing costs to refinance to a fixed-rate mortgage?

Helpful advice from friendly mortgage experts.

Summary

Next Steps

Helpful advice from friendly mortgage experts.

HOW TO PAY FOR CLOSING COSTS: KNOW YOUR OPTIONS

Top 5 Ways to Pay Closing Costs

Find out how much you can afford (it’s free).

1. Pay for closing costs upfront.

2. Roll the closing costs directly into the mortgage.

3. Ask your mortgage lender about a no-cost or zero-cost loan to cover closing costs.

Thinking about refinancing?

4. Negotiate with the seller to decide who pays for closing costs.

5. Apply for housing grants that help pay for closing costs.

Start your application in less than 5 minutes.

How to Apply for a No-Cost or Zero-Cost Mortgage

Taking Action

Helpful advice from friendly mortgage experts.

HOW TO PAY CLOSING COSTS: KNOW YOUR OPTIONS

5 Popular Strategies to Pay Closing Costs

Find out how much you can afford (it’s free).

1. Pay for closing costs upfront.

2. Roll the closing costs directly into the mortgage.

3. Ask your mortgage lender about a no-cost or zero-cost loan to cover closing costs.

Thinking about refinancing?

4. Negotiate with the seller to decide who pays for closing costs.

5. Apply for housing grants that help pay for closing costs.

Start your application in less than 5 minutes.

How to Apply for a No-Cost or Zero-Cost Mortgage

Taking Action

Take the first step toward your best mortgage.

Are mortgage points and discount points the same thing?

Buying mortgage points can reduce your interest rate and monthly payment (how it works).

Find out how much you can afford (it’s free).

Is it always worth it to pay points on a mortgage?

Is it smarter to make a bigger down payment instead of buying mortgage points?

Are mortgage points tax deductible?

Thinking about refinancing?

Finally, a few questions to consider:

Do you plan on staying in your home for at least 5 years (or longer than the break-even period)?

Do you have enough cash to make a substantial down payment and also pay points?

Is there a better way to invest your money instead of buying mortgage points?

Takeaway

Start your application in less than 5 minutes.

Next Steps

How does a conventional mortgage work?

Take the first step toward your best mortgage.

Conventional loans fall into two categories: conforming and non-conforming.

Helpful advice from friendly mortgage experts.

What are the pros and cons of a conventional loan?

Benefits of a Conventional Mortgage

Find out how much you can afford (it's free).

Drawbacks of a Conventional Mortgage

How to Apply for a Conventional Mortgage

Start your application in less than 5 minutes.

Is it difficult to get approved for a conventional loan?

What are the minimum requirements to qualify for a conventional mortgage?

Best Alternatives for First-time Homebuyers

Custom home loans are just the beginning.