Mortgage 101
Learn it before you sign it.
Short guides. The answer is in the first paragraph. Nothing here is a rate.
Mortgage 101
Loan-to-value, explained
Loan-to-value is the loan amount divided by the property value. A $400,000 loan on a $500,000 home is 80% LTV. Lower LTV usually means more options.
Mortgage 101
How much down payment do I need?
Eligible VA buyers can put $0 down. FHA is often 3.5%. Conventional can be 3% for some first-time buyers, 5% for many others, and 20% if you want to skip PMI.
Compare
PMI, FHA MIP, and the VA funding fee
All three protect the program or the lender when you put little down. They are not the same product, and only some of them go away.
Compare
Conventional, FHA, and VA
Conventional is the flexible middle. FHA is built for smaller down payments. VA is a benefit for eligible service members and Veterans, with no monthly mortgage insurance.
Costs
Closing costs, without the fog
Closing costs are the fees and prepaids due to finish the loan. On many purchases they land around 2% to 5% of the price, separate from the down payment.
Credit
Credit scores and mortgages
Lenders use a mortgage credit score, often the middle of three bureaus. A higher score opens more programs. It does not, by itself, approve the loan.
Capacity
Debt-to-income ratio
Debt-to-income is your monthly debt payments divided by gross monthly income. The housing payment is part of the debts. There is no single cutoff we advertise.
Letters
Pre-qualification versus pre-approval
A pre-qualification is an estimate from what you tell us. A pre-approval reviews documents and, when needed, credit, and produces a letter a seller can rely on.
Pricing
Rate, APR, and points
The interest rate is used to calculate principal and interest. APR adds certain finance charges so loans can be compared. Points are prepaid interest you can choose to buy a lower rate.
Closing
What escrow means
Escrow is two ideas. An escrow account collects property taxes and insurance with your payment. Escrow, the closing process, is the neutral party that holds money and deeds until the sale is finished.
Glossary
Glossary
Plain definitions for the words on this site. None of them is a rate quote or a promise of approval.