Part 2 of 4. Financing Your Home Purchase with a Conventional Mortgage Loan Product

Part 2. Conventional Mortgage Loans for First Time Home Buyers – How to Finance Your Home Purchase In 2022.

Part two financing your home purchase everything you need to know about conventional loan another blessed day in south florida i’m getting sherry founder of home snatch realty and i thank you for your continued support and if this is your first visit to this channel i welcome you and i thank you for watching please do not forget to subscribe and click on the

Bell to be notified when i post new videos also share comment and yes crush the like button now i’ve received several questions concerning financing particularly fha so i decided to make a series of videos that address each particular program and give you as much detail as possible within a short limited period of time and that is my intent with these videos in

The united states for example over 90 percent of all real estate transactions require some form of financing to finance your home purchase you can use the fha insured mortgage loan program the veteran affairs also known as the va guaranteed loan programs you can use the usda world housing loan program and of course you can use the conventional loan different loan

Products that lenders offer this is part two of a four-part series where i discuss everything you need to know about financing your real estate transaction my focus with these videos is to provide you with detailed information about each financing program in part one for example i discuss everything you need to know about financing your purchase your home purchase

With an fha insured mortgage loan program in this video i will discuss everything you need to know about financing your home with a conventional loan product when you thought about buying your home you probably thought the bank or a particular bank or lender will give you a mortgage as i discussed in part one that may be a bit inaccurate that is inaccurate af

Basically the process goes this way after the bank or your lender the lender qualifies you as well as the home that you intend to purchase the bank or lender if they determine that you are an acceptable financial risk for the bank the bank or lender will make a mortgage loan to you that process is referred to as the underwriting process in a previous video i

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Explained the four basic steps to a mortgage loan on the underwriting process also known as the four c’s of underwriting please watch that video for details about the mortgage loan programs in their qualification requirements after the underwriting process the bank or lender makes the loan to you as i stated to purchase your home in other words the bank or the

Lender makes the mortgage loan to you however you give the bank a mortgage on the home meaning you pledge your home as collateral to securitize the lender’s interest their loan the money that they’ll own you you’re giving them collateral that’s you giving them a mortgage so what is oh i should say what are conventional loan mortgage products conventional loans

Are basically provided by private lenders and those loans are not guaranteed or insured by a government program such as the fha or the va so the veteran the va guaranteed loan program the fha insured mortgage loan program and as well you have the usda which is the united states department of agriculture also known as the usda housing world loan housing program

Okay usda world housing loan program now when you think of a mortgage loan you probably were thinking of conventional loans generally conventional loans are considered standard loans standard mortgage loans as a borrower you do not have to meet any special eligibility requirement now since conventional loans are not put they’re not insured or guaranteed by the

Government lenders require you to purchase insurance which is again pmi private mortgage insurance on all conventional loans that exceeds 80 of the loan to value ratio also referred to as ltv meaning your lender will require pmi insurance also referred to mi if you make less than 20 down payment so if you make less than put 20 down so let’s say a person puts

15 down payment so therefore your loan to value ratio will be 85 so therefore you would need that insurance you will need mi or pmi insurance in the united states there are about there are eight private mortgage insurance companies that’s that service the real estate mortgage insurance market generally pmi premium is the same for all eight firms the mortgage

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Lender who originate your loan selects the insurance company the cost is typically added to your mortgage interest rate however you may elect to pay the pmi premium as an upfront fee with your closing cost or in the form of a slightly higher interest rate your situation is unique and i recommend that you analyze the numbers to determine the option that is best

For you and also communicate with your mortgage loan professional your lender must remove the pmi requirement once your ltv reaches 78 meaning you have more you have 22 or more equity you can ask the lender to remove it but by law the lender must remove the requirement for the insurance again once you reach 22 equity therefore you do not have to refinance to

Remove the mortgage insurance your down payment requirements for conventional loans again in recent decades yeah recent decades lender lenders required 20 or more down payment to qualify for a conventional loan nowadays lenders require as little as five percent down payment so you can basically purchase a home using the conventional loan product with only five

Percent down payment most conventional loan products have more flexibility now nowadays the increased flexibility and of course the corresponding risks are due to many factors such as greater sophistication they have automatic mortgage processing they have you have the private and you have the government-sponsored mortgage program and of course the increased

Competition for you as a customer those are the reasoning for the flexibility the reduced and the reduced requirement therefore these changes increase many opportunities for first-time home buyers who are looking to finance their first home as of the time of this video it may even be possible to purchase the home if you qualified with a mortgage with a

Conventional loan program with as little as three percent down payment depending on your circumstances in the type of loan product or the type of home you are buying however if you are not a first-time homebuyer or your gross annual income is less than 80 of the medium income in your area your lender is likely to require you to pay five to put five percent down

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Payment if you elect an adjustable rate mortgage your lender is likely to require a five percent minimum down payment if you buying a second single family home a single family home as a second home your lender is likely to require to put 10 percent down if you are purchasing a property that is that is more than a single family home such as a duplex a triplex

A quad and you intend to occupied one of those units your lender is likely to require you to make 15 down payment however if you do not intend to occupy one of those units your lender is likely to require you to put 25 percent down payment because now they would consider that as an investment property minimum credit score for conventional loans when you are

Applying for your mortgage loan the lender will check your credit history to determine if you are a good credit risk if you are an unacceptable credit risk the lender is unlikely to approve your loan most lenders require a middle credit score of 620 to qualify for a conventional mortgage loan lenders can set their own requirements in rates for conventional loan

Product provided they are within the confirming loan and limits set by fenime and freddie mac the conforming conventional loan limit changes annually the maximum mortgage loan limit varied based on your geographical area but the limit tend to be higher in some high cost areas however borrowers with better credentials for example borrowers with 20 down payment

And 740 credit scores or higher will qualify for a lower interest rate and therefore a lower monthly payment nonetheless i recommend that you shop around and get personalized quotes from at least three different lenders please stay tuned for part three where i discuss everything you need to know about financing your home with the va mortgage loan program as

Always i greatly appreciate you and thank you for your continued support and i thank you for watching please don’t forget to subscribe like comment and share yes crush the like button have a blessed and productive day take care

Transcribed from video
Part 2 of 4. Financing Your Home Purchase with a Conventional Mortgage Loan Product By HomeSnatch Realty – Let’s Talk Real Estate