Dallas-Fort Worth Nesties
MortgageMike
member
Dear Community,
Our tech team has launched updates to The Nest today. As a result of these updates, members of the Nest Community will need to change their password in order to continue participating in the community. In addition, The Nest community member's avatars will be replaced with generic default avatars. If you wish to revert to your original avatar, you will need to re-upload it via The Nest.
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Note: This only affects The Nest's community members and will not affect members on The Bump or The Knot.
Our tech team has launched updates to The Nest today. As a result of these updates, members of the Nest Community will need to change their password in order to continue participating in the community. In addition, The Nest community member's avatars will be replaced with generic default avatars. If you wish to revert to your original avatar, you will need to re-upload it via The Nest.
If you have questions about this, please email help@theknot.com.
Thank you.
Note: This only affects The Nest's community members and will not affect members on The Bump or The Knot.
What The Heck is a Good Mortgage and Why Should I Care?
Hello Nesties! My name is Michael Jones and my wife is a fellow Nesty who was heavily dependent on this site when we were planning our wedding and even afterwards as we started a home together.
In the Dallas area, I'm typically known as Mortgage Mike and I wanted to take just a few minutes to give you a crash course in the mortgage process. A mortgage is one of the least understood, yet most important, part of purchasing/financing a home. Unfortunately, they don't teach you how to buy a home in school and so you are forced to trust another person whom you've likely had a limited relationship with. The next few paragraphs should give you some valuable information to start, along with the countless articles provided by The Nest on the site.
FHA vs. Conventional Mortgages
For many years, the FHA loan has been called the "first time home buyer loan". Traditionally, an FHA loan has been easier to qualify for because you can put less down (3.5% of the purchase price), have a lower credit score, a higher debt to income ratio, and a limited employment history. Now, you might say that this sounds like a risky loan, but most recent graduates and newly-weds typically fall into the categories I just mentioned.
A Conventional loan has typically been slightly harder to qualify for because more is required as a down payment (5%), credit scores must be higher, debt to income must be lower, and the interest rates are slightly higher. The beauty of a Conventional loan thought is the ability to avoid private mortgage insurance payments with 20% equity in the home.
Until recently, the mortgage insurance required on an FHA loan was significantly lower than what it is today. However, because of the market crash a few years ago and homeowners defaulting on their mortgage, the FHA loan program was losing billions of dollars. In order to fix this, the monthly insurance requirements were raised in an effort to stop the bleeding. That essentially means that an FHA mortgage is more expensive on a monthly basis than it used to be.
Which Loan Should I Choose?
For many years, the FHA loan has been called the "first time home buyer loan". Traditionally, an FHA loan has been easier to qualify for because you can put less down (3.5% of the purchase price), have a lower credit score, a higher debt to income ratio, and a limited employment history. Now, you might say that this sounds like a risky loan, but most recent graduates and newly-weds typically fall into the categories I just mentioned.
A Conventional loan has typically been slightly harder to qualify for because more is required as a down payment (5%), credit scores must be higher, debt to income must be lower, and the interest rates are slightly higher. The beauty of a Conventional loan thought is the ability to avoid private mortgage insurance payments with 20% equity in the home.
Until recently, the mortgage insurance required on an FHA loan was significantly lower than what it is today. However, because of the market crash a few years ago and homeowners defaulting on their mortgage, the FHA loan program was losing billions of dollars. In order to fix this, the monthly insurance requirements were raised in an effort to stop the bleeding. That essentially means that an FHA mortgage is more expensive on a monthly basis than it used to be.
Which Loan Should I Choose?
That will ultimately depend on your specific facts and circumstances and what you think the future holds. The most important thing to remember is that a home mortgage should not be seen as simply debt, but rather as a financial instrument. Yes, you are in debt. But, if the loan is structured properly and meets your financial objectives, then you can use the loan to your benefit rather than plugging money away to a mega bank each month.
If you have any questions, I'm happy to speak to you in more detail.
If you have any questions, I'm happy to speak to you in more detail.