Private mortgage insurance (PMI) is required by most lenders on a conventional purchase or refinance loan if the down payment or home equity is less than 20%. PMI is generally removed once your loan payments accumulate to satisfy the 20% requirement. There are loan programs and payment options for some borrowers to avoid PMI. Contact us to learn more.
Your mortgage payment will include the loan payment (loan principal+interest) and mortgage insurance if you put down less than 20%.
You can typically lock a rate after the initial loan approval.
A rate lock freezes the loan’s interest rate until the closing as long as there are no changes to the application and the loan closes within the specified time frame. Rate locks are usually offered on a loan for 30, 45, or 60 days. Many borrowers like rate locks because mortgage interest rates can change frequently, and a lock creates certainty. If your rate is not locked, the interest rate and your loan payment can change at any time while the loan is in process. There can be some cons to a rate lock. It may be expensive to extend your rate lock if your transaction needs more time. And, a rate lock may keep you out of lower loan payments if rates fall during processing. Unsure what to do? Contact us to review the pros and cons of rate locks to determine which direction is best for you.
There is no one answer for this question – it depends on your financial history, type of loan, and loan terms. There are some government-backed programs that require as little as 3% on a residential purchase, but generally, lenders are looking for a 10%-20% downpayment.