Frequently Asked Questions (FAQ’s)
What is a mortgage?
A mortgage is a type of loan used to finance the purchase of a property, typically a home or a piece of real estate. In a mortgage, the borrower (i.e., the person or entity buying the property) receives a lump sum of money from a lender (such as a bank or other financial institution) in exchange for a promise to repay the loan over a set period of time, usually with interest.
What is a FHA loan?
An FHA loan is a mortgage that is insured by the FHA and is designed to help homebuyers who may not qualify for a conventional loan. FHA loans have several benefits, including lower down payment requirements and more flexible credit score requirements. They are popular among first-time homebuyers, as well as those who have less-than-perfect credit or limited funds for a down payment.
What is a Reverse Mortgage Loan?
A reverse mortgage loan is a type of home loan that allows homeowners who are aged 62 or older to convert a portion of their home’s equity into cash. Unlike traditional mortgages, where the homeowner makes monthly payments to the lender, with a reverse mortgage, the lender pays the borrower.
What is a Jumbo Loan?
A Jumbo loan is a type of mortgage loan that exceeds the limits set by Fannie Mae and Freddie Mac. These loan limits vary by county and are adjusted annually to account for changes in home prices. In 2022, the limit for most counties is $647,200 for a single-family home. Jumbo loans are generally used to purchase high-priced homes, such as luxury properties or homes in expensive neighborhoods, and typically have higher interest rates and stricter underwriting requirements than conforming loans.
What is a VA Home Loan?
A VA Home Loan is a mortgage loan program offered by the United States Department of Veterans Affairs (VA) to help active-duty military personnel, veterans, and eligible surviving spouses purchase or refinance a home. o be eligible for a VA home loan, you must have served at least 90 consecutive days of active duty during wartime or 181 days of active duty during peacetime, or have served at least six years in the National Guard or Reserves.
What is a DSCR loan?
DSCR stands for Debt Service Coverage Ratio, which is a measure used by lenders to assess the ability of a borrower to repay a loan. A DSCR loan is a type of loan that is structured to ensure that the borrower has enough cash flow to cover their debt payments.
What is a USDA loan?
A USDA loan is designed to help low- and moderate-income households purchase homes in eligible rural areas. To be eligible for a USDA loan, borrowers must meet certain income and property eligibility requirements. The property must be located in an eligible rural area, as defined by the USDA, and the borrower’s household income must not exceed certain limits, which vary by location and family size.
What is a Conventional Home Loan?
A conventional home loan is a type of mortgage that is not backed by any government agency. It is offered by private lenders, such as banks, credit unions, and mortgage companies.
Conventional loans typically require higher credit scores and larger down payments compared to government-backed loans. This is because conventional loans are considered to be riskier for lenders since they are not guaranteed by the government.