An FHA loan is a type of mortgage loan that is insured by the Federal Housing Administration (FHA). FHA loans requirements are less strict than conventional loans. Borrowers can qualify for an FHA loan with a down payment as little as 3.5% and a credit score of 580 or higher.
FICO credit scores (one type of credit scores) are used by lenders to assess credit risk and determine whether to extend credit. They are reported by one of the three agencies, Transunion, Equifax, and Experian. A score of 720 and above is usually considered excellent, although varies by agency.
Mortgage underwriting is the process a lender uses to evaluate the risks on a mortgage loan, in order to determine whether or not to approve a borrower. In layman's terms, it's a way to of saying whether you can be approved a loan or not.
Mortgage Interest Rate
The mortgage interest rate is what is charged by a mortgage lender. Different lenders offer different rates. The 30 year conventional loan mortgage rate usually follows the 10 year treasury bond. As a rule of thumb, you can add 1.7 percentage points to the 10 years bond rate to get a ballpark for the 30 year mortgage rate in the current market.
A Conventional loan is a loan that is not insured or guaranteed by a government agency such as HUD/FHA, VA, or the Farmers Home Administration. it follows guidelines from Fannie Mae and Freddie Mac. Usually, a conventional mortgage is a 30-year fixed rate loan. That means it has a fixed interest rate for the 30 year term of the mortgage. Conventional mortgages also typically require at least a 20 percent down payment, although now it may be as low as 5% in 2017.
The Westside (Los Angeles)
It is a debatable term. Here it refers to the neighborhoods west of the 405, South of the 101.
Single Family Home
A single-family home is a free-standing residential building. It is different from town homes, condos as a single family home typically has a yard and it does not have an HOA fee.
Anyone born between 1981 and 1997 (according to Pew Research). Common, but somewhat mis-perceived traits are narcissistic, experience-driven, and tech-savvy.
The down payment is the cash amount you need to provide. It is different from the mortgage amount because that's what the lender provides on your behalf.
Closing costs includes a laundry list of costs, which typically runs 3% to 5% of your purchase price. Some typical costs include appraisal fee, inspection fee, reserves , and many more.
Fannie Mae/ Freddie Mac
They are not people! They are government sponsored enterprises. They set up guidelines for mortgage lenders. In return, lenders can sell mortgages that are conformed to the guidelines to Fannie and Freddie for risk diversification.
Conforming Loan Limit
Conforming Loan Limit is the limit on the size of a mortgage which Fannie Mae and Freddie Mac will purchase and/or guarantee. It varies by county.
Upfront MIP (FHA)
Anyone who takes out an FHA loan is required to pay this. The current upfront MIP fee is 1.75% of the borrowed amount. My take. It's just extra costs that provides you, the mortgage borrower, absolutely no value.
Monthly MIP (FHA)
Mortgage Insurance Premium (MIP) is the insurance premium you need to pay only for an FHA loan, in exchange to pay a small amount of cash to close a loan. There is no way to avoid MIP on FHA loans because the minimum down payment is only 3.5%. The function of MIP is identical to the PMI on a conventional loan.
Private Mortgage Insurance (PMI)
Private Mortgage Insurance (MIP) is the insurance premium you need to pay on a conventional loan, in exchange to pay less than a 20% down payment to close a loan. Unlike the MIP on an FHA loan, you can get it removed after your reach 20% equity in your house.
Refinancing is the process of obtaining a new mortgage in an effort to reduce monthly payments, lower your interest rates, take cash out of your home for large purchases, or change mortgage companies.
Consumption smoothing is the economic concept used to express the desire of people to have a stable path of consumption. In other words, people would rather make $5,000 a month every month, instead of a making $60,000 a year at a random time once a year.