VA Limits by VALoans.com
Tuesday
FHA
The Federal Housing Administration (“FHA”) provides mortgage insurance on loans which have been made by FHA approved lenders. This insurance provides lenders with protection against losses as the result of homeowners defaulting on their mortgage loans. Loans must meet certain requirements established by the FHA to qualify for insurance. The FHA is the world's largest mortgage insurer.
Saturday
Discount Points and Origination Points
Discount points refer to an amount of money paid to a lender to buy down the interest rate. The cost of each point generally equals 1% of the total principal amount of the loan. For instance, if a loan is for $100,000, one discount point equals $1,000. Each point purchased typically reduces the interest rate by 1/8% (0.125).
Borrowers who purchase discount points gain the benefit of lowered interest payments only if the mortgage is kept long enough to save money from the decreased interest payments. If the purchaser does not plan to stay in the home for a period long enough to recover the cost of buying the discount points, it may not be worth buying the points.
Discount points are paid at closing and may be paid either by the buyer or the seller.
Discount points paid for residential real estate are tax deductible in the year they are paid and are itemized on Form 1040, Schedule A.
Origination points are a type of fee often charged to borrowers to cover the costs of issuing the loan. Depending on the lender these fees may be negotiable. Each origination point generally represents 1% of the mortgage loan.
Origination points are paid at closing.
Friday
Pre-qualification vs. Pre-approval
Pre-qualification is an estimate of how much money you can afford in a mortgage payment and how much money a lender would be willing to loan you. You provide the lender with basic personal financial information – income, assets, debts, and a potential down payment amount. The lender will run the data through a formula and will then provide an estimate of the amount of money you can qualify to borrow for a mortgage. The best time to get a pre-qualification is at the beginning of your home buying process, before you begin looking at properties. There is no cost involved and there is no commitment on either side. This is just a helpful estimate in helping you determine if buying a home is a viable option, and if so, what your price range would probably be.
Pre-approval is a more formal process and is a firmer commitment on behalf of the mortgage company. It involves a credit check, employment verification, and actual documentation will be required regarding your income, assets, and debts. An application fee may be required for running the credit check and verifying employment and financial information. Once approved the lender will issue you a letter stating the amount the bank would be willing to loan, and at what interest rate, for a home purchase. Lenders will usually lock in the interest rate for 30, 45, or 60 days.
However, neither a pre-approval nor a pre-qualification means you are guaranteed a mortgage. The lender will need to look at the property appraisal, verify information, perform a title search and in many cases, re-check credit before agreeing to make a loan.
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