MORTGAGES
FIRST & SECOND MORTGAGES
Borrowers can avoid the payment of Private Mortgage Insurance by paying at least 20% down. However, that 20% does not have to be cash. It may be paid in part by a second mortgage, purchased at the same time that the first mortgage is done.Example:
For a purchase price of $200,000, a down payment of $10,000 (5%)
First mortgage Second mortgage $160,000 (80%) $30,000 (15%) For a purchase price of $200,000, a down payment of $20,000 (10%)
First mortgage Second mortgage $160,000 (80%) $20,000 (10%) Interest rates for the second mortgages are slightly higher than the first mortgage, however, the interest is deductible and these loans avoid the necessity of PMI.
Our real estate agents are familiar with many varieties of loans and will help you select a lender with the best loan for you.
QUALIFYING/PRE-APPROVAL
Lenders use government established guidelines, FHA, VA, Fannie Mae, with which to qualify buyers. One of the guidelines is the amount of your before tax income you can devote to housing. That just means what percentage of your annual gross income will you spend for your mortgage payment. Lenders permit the following percentage of your income for mortgage payments, including real estate taxes, hazard insurance, mortgage insurance and association fees, if any.
FHA 29% Conventional 28% VA 41% The other guideline they use is how much of your gross annual income will be needed to pay all of the following:
- Monthly mortgage payment
- Monthly credit card payments
- Monthly student loan payments
- Monthly automobile payments
- Monthly payments to any installment debt.
NOTE: For qualifying purposes, debt does not include items such as car insurance, life insurance, utilities, food or any items that are not considered consumer debt.
Lenders permit the following percentage of your income for ALL debt.
FHA 41% Conventional 36% VA 41% The percentages above are only guidelines. You may be able to devote more of your income to housing if your other debt payments are low.
Equal Housing Opportunity
