If you’re getting ready to buy a home, you’ve probably already come across a few mortgage related acronyms that you aren’t familiar with. There are a lot of acronyms and abbreviations used in the mortgage industry, and it can be confusing if you don’t understand what they mean. We’ve created a cheat sheet to help you make sense of some of the most common mortgage acronyms.
FHA loans are popular options because they allow borrowers to purchase a home with a relatively small down payment, and they are typically easier to qualify for than other loan types. While there are many advantages to FHA financing, they’re not the best option for everyone. If you have a good credit score and are able to make a 20 percent down payment, then a conventional loan might be a better option. Before deciding if an FHA mortgage is right for you, it’s important to understand what an FHA loan is and the possible benefits and drawbacks to this type of financing.
What is an FHA Loan?
An FHA loan is a mortgage that is insured by the Federal Housing Administration. The actual loan is funded by a traditional mortgage lender, but FHA backing means the lender is protected if the borrower defaults on mortgage payments. FHA-insured loans are less risky for lenders, allowing them to offer more lenient qualification standards. Because FHA loan programs offer easier qualifying guidelines than many other loan types, they can be a good option for borrowers who have poor credit or who may not have the funds to make a large down payment. Let’s take a look at some of the advantages and disadvantages of FHA loans.
Advantages of an FHA loan :
- Easier to qualify – An FHA loan have more lenient qualifying requirements than a conventional loan and is typically one of the easiest types of mortgage loans to qualify for.
- Low down payment – An FHA loan only requires a 3.5% down payment, while a larger down payment is required for most conventional loans.
- Less challenging credit requirements– The FHA insures loans for people with low credits scores. If you have less than perfect credit or have had financial […]
When applying for a home loan, your credit score has a big impact. It’s important to understand what your credit score is, how your actions can positively and negatively impact your score, and the steps you can take to improve it. Not only does it affect if you will qualify for a mortgage, your credit score is also one of the main factors lenders look at to determine your interest rate and payment terms. The higher your credit score, the better interest rate you can get.
So, if you are thinking about buying a home in the near future, before you start house hunting or get pre-approved for a loan, it’s a good idea to check your credit report and find out what your credit score is. You are entitled to a free credit report once a year from each of the three credit bureaus – Equifax, TransUnion, and Experian, which you can access at www.annualcreditreport.com.
Whether your credit score is already in good standing or your score could use some help, here are a few things you can do to strengthen or improve your score before applying for a mortgage loan:
Check For Errors – A mistake on your credit score can cost you when trying to secure a home loan. If there are mistakes on your credit report that make you look less appealing to lenders, it can prevent you from getting the best rate possible. This means you could be paying much more than you should on your mortgage each month. Mistakes do happen, so review your credit report closely to ensure everything is correct and dispute any errors you might find with the appropriate credit bureau. Credit reporting companies are legally obligated to clear up […]
Are you considering refinancing your mortgage?
While mortgage rates are expected to rise a little this year, they are still historically low compared to the trend over the last few decades. So, if you are thinking about refinancing, you can still get a great deal!
There are several reasons why refinancing might be right for you. Usually, people refinance their home for one or more of the following reasons:
Does refinancing make sense for you? Use our refinance calculator to analyze your situation.