Understanding Mortgage Basics for Smart Home Buying
Buying a home is one of the biggest financial decisions you'll make. Understanding mortgage fundamentals helps you navigate the process confidently and secure the best possible terms for your situation.
A mortgage is a loan specifically designed for purchasing real estate, where the property serves as collateral. Most mortgages require a down payment, typically ranging from 3% to 20% of the home's purchase price. Your monthly payment includes principal, interest, taxes, and insurance (PITI).
Key factors that affect your mortgage approval:
- Credit score and payment history
- Debt-to-income ratio (DTI)
- Employment history and income stability
- Down payment amount
- Property appraisal value
Popular mortgage types:
- Fixed-rate mortgages: Consistent payments throughout the loan term
- Adjustable-rate mortgages (ARMs): Lower initial rates that adjust over time
- FHA loans: Government-backed loans with lower down payment requirements
- VA loans: Special benefits for qualified veterans and service members
Common Mortgage Questions
Get answers to frequently asked questions about mortgages, home buying, and financing options.Most conventional mortgages require a credit score of 620 or higher. FHA loans may accept scores as low as 580 with a 3.5% down payment, or 500-579 with 10% down payment.
Your DTI is your monthly debt payments divided by your gross monthly income. Most lenders prefer a DTI of 36% or lower, though some programs accept ratios up to 43-50%.
Fixed-rate mortgages offer payment stability, while ARMs start with lower rates that adjust over time. Choose based on your risk tolerance and how long you plan to stay in the home.
The typical mortgage process takes 30-45 days from application to closing. Getting pre-approved beforehand can speed up your timeline once you find a home.
Down payments typically range from 3% to 20%. While 20% down avoids private mortgage insurance (PMI), many programs allow lower down payments to help buyers get started.
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Your Questions Answered: Sunmark’s HomeFlex No Closing Costs Line of Credit
6/30/21
Are you looking for a new home? We're ready to help you make it happen. Recently, Sunmark added more mortgage products to our line-up to help you do more with your money. Our Sunmark experts provide the answers to our FAQ's about these new offerings.
Sunmark’s HomeFlex No Closing Costs Line of Credit:
What is a HomeFlex No Closing Cost line of credit?
It is a home equity line of credit that offers a low introductory interest rate and no closing costs due at closing.
Who is the ideal candidate for a HomeFlex No Closing Cost line of credit?
Ideal candidates are established homeowners who have equity in their home and are looking to borrow between $2,000 and $250,000 to finance other needs such as home repairs, debt consolidation or college tuition.
What requirements need to be met to be eligible for a HomeFlex No Closing Cost line of credit?
To be eligible for a HomeFlex No Closing Cost line of credit, the loan-to-value must be 85 percent or less and the homeowner must occupy the residence. Additionally, borrowers must have a credit score of 680 or above, and borrower debt ratio must be 45 percent or less.
If I didn’t meet the requirements, are there other options I could consider?
Yes! Sunmark Credit Union has other great options for consolidating debt, including our HomeFlex or Fixed Home Equity line of credit products. Learn more here.
What are the pros and cons of a No Closing Cost Home Flex loan?
There are many benefits to a HomeFlex No Closing Cost line of credit. First, the loan has a low introductory interest rate for the first year, which is attractive to many borrowers. There are also no closing costs! If you keep the line of credit open for a three-year period, you will not pay any closing costs on the loan. The loan also has a renewable five-year period to access the line of credit.
Please note, that after the first year, the rate for this loan will adjust according to Prime – and then annually on the first of the month following the anniversary date.
How does the loan work/what happens once approved?
After submitting an application, it will be reviewed by underwriting for eligibility and an evaluation of the member’s home will be completed to determine the loan to value. If the member meets the 85 percent or less loan to value requirement (and all other eligibility requirements), a closing will then be scheduled at one of our branches where the member will sign the required documentation and receive their funds.
What sets this product apart from other options?
There are no closing costs! This is a great feature that allows our members to take advantage of equity in their home - without having to pay those additional fees and therefore maximizing their borrowing potential. Additionally, the low introductory rate is a valuable feature of this product, providing borrowers the opportunity to borrow for less. We also offer evaluation options for the home, based on loan factors, that will reduce the time between the member’s application and closing.
Sunmark’s HomeFlex No Closing Costs Line of Credit:
What is a HomeFlex No Closing Cost line of credit?
It is a home equity line of credit that offers a low introductory interest rate and no closing costs due at closing.
Who is the ideal candidate for a HomeFlex No Closing Cost line of credit?
Ideal candidates are established homeowners who have equity in their home and are looking to borrow between $2,000 and $250,000 to finance other needs such as home repairs, debt consolidation or college tuition.
What requirements need to be met to be eligible for a HomeFlex No Closing Cost line of credit?
To be eligible for a HomeFlex No Closing Cost line of credit, the loan-to-value must be 85 percent or less and the homeowner must occupy the residence. Additionally, borrowers must have a credit score of 680 or above, and borrower debt ratio must be 45 percent or less.
If I didn’t meet the requirements, are there other options I could consider?
Yes! Sunmark Credit Union has other great options for consolidating debt, including our HomeFlex or Fixed Home Equity line of credit products. Learn more here.
What are the pros and cons of a No Closing Cost Home Flex loan?
There are many benefits to a HomeFlex No Closing Cost line of credit. First, the loan has a low introductory interest rate for the first year, which is attractive to many borrowers. There are also no closing costs! If you keep the line of credit open for a three-year period, you will not pay any closing costs on the loan. The loan also has a renewable five-year period to access the line of credit.
Please note, that after the first year, the rate for this loan will adjust according to Prime – and then annually on the first of the month following the anniversary date.
How does the loan work/what happens once approved?
After submitting an application, it will be reviewed by underwriting for eligibility and an evaluation of the member’s home will be completed to determine the loan to value. If the member meets the 85 percent or less loan to value requirement (and all other eligibility requirements), a closing will then be scheduled at one of our branches where the member will sign the required documentation and receive their funds.
What sets this product apart from other options?
There are no closing costs! This is a great feature that allows our members to take advantage of equity in their home - without having to pay those additional fees and therefore maximizing their borrowing potential. Additionally, the low introductory rate is a valuable feature of this product, providing borrowers the opportunity to borrow for less. We also offer evaluation options for the home, based on loan factors, that will reduce the time between the member’s application and closing.
