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When it comes to mortgages, less is more. Less interest. Less hassle. More savings.
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Includes your minimum monthly payments on credit cards, student loans and car payments. Does not include mortgage/rent or living expenses.
The amount of time you have to pay back the loan – either 10, 15 or 30 years.
The band your credit score falls into and one indicator of whether or not you will qualify for a mortgage loan.
Private Mortgage Insurance (PMI) is designed to protect the lender in case of default. The premium amount varies based on the loan amount, the amount of the down payment, the term of the loan, whether the loan is a fixed rate or an adjustable rate mortgage and your credit score. If PMI is required, your regular monthly mortgage payments will include a PMI premium.
The portion of your monthly income that goes toward housing plus your monthly minimum obligations.
The portion of your monthly income that goes toward housing expenses.
A preapproval is a free process that prequalifies income and credit for a specific loan amount. You'll know up front how much house you can afford and can show sellers and agents that you're a serious buyer, enabling you to negotiate better deals.
At Third Federal, we believe that you shouldn’t feel rushed to the find perfect home. That’s why we lock your rate at preapproval, before you sign a purchase contract or even find a new home! No other lender can offer a rate lock so early in the home buying process, protecting you from rising rates. Even more, Third Federal provides an full underwritten preapproval, not just a prequalification. We ask for more information upfront - such as income documentation and pull your credit - and a more detailed application, so when we say you're preapproved for a loan, you're really approved for that loan.
A housing ratio is the portion of your monthly income that goes toward housing expenses. This includes principal, interest, real estate taxes, insurance and any HOA or condo fees.
The debt to income ratio, also known as DTI, is the portion of your monthly income that goes toward housing plus the minimum payment on credit cards, student loans, auto loans, personal loans, child support and alimony.
Both of these factors are used to determine home loan approval.
Private Mortgage Insurance (PMI) is provided by and paid to a third party insurance company and is designed to protect the lender in case of loan default. The premium amount varies based on the loan amount, the amount of the down payment, the term of the loan, whether the loan is a fixed rate or an adjustable rate mortgage and your credit score. If PMI is required, your regular monthly mortgage payment will include a PMI premium, typically ranging from $80 to $150.
Most banks require borrowers to purchase PMI if their down payment is less than 20% of the purchase price of the home. At Third Federal, you are only required to put 15% down to avoid PMI. PMI can be removed from your mortgage loan once you reach 22% equity (78% loan-to-value (LTV)) in your home.
The main advantage of paying off your mortgage faster is paying less total interest over the life of your loan. You can pay off your mortgage faster by making additional principal payments to your loan – you can do this one time, or paying extra towards the principal each month.
Another way to pay off your mortgage faster is to refinance at a lower interest rate, but continue to pay your old, higher payment; or refinance to a loan with a shorter term.
When applying for a mortgage, you will be asked to verify your income. Income comes from a variety of sources including, but not limited to, federal taxable wages, tips, self-employment income, military income, unemployment compensation, social security, social security disability income, retirement or pension income, alimony, child support, capital gains, investment income, rent and royalty income, and foreign income.
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