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Conventional vs. FHA vs. VA Loan - Compare [Home Loans] Mortgage [VA] - YouTube
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hey this is Chris the mortgage pro in
this video with comparing conventional
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loans to FHA loans to VA loans which
one's the best one which one's right for
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you
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you know so many consumers are curious
which loan is best for me we really
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don't know the average consumer doesn't
know cuz there's so many variables but
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today I want to help you figure out
which one is gonna benefit you and your
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family the most for you a short-term
and/or long-term goals because it's
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different for everybody now there are
advantages to each one of these loans so
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some have lower interest rates some have
lower fees there's all kinds of
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different things to think about so
really you need an experienced and
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licensed loan officer to help you
evaluate this in many cases this is
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gonna be really clear it's gonna be so
obvious and in some cases you know it's
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not going to be so clear gonna have to
ask you a couple of questions you're
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gonna have to be thinking about a few
different things what's my future look
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like how long is a big and important
factor on how long am I gonna keep this
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house now most people have a tendency to
just look at one thing the payment which
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is cheaper well it's understandable when
you're buying a house you say hey which
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which payment is cheaper but again how
long are you gonna be in that house is
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there PMI will the PMI disappear when
will it disappear if the PMI is going to
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disappear in five years but I'm gonna be
here in 20 years maybe this other loan
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is better a long term so we have to look
at these things as a whole now people
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ask you all the time what's today's
interest rate it's impossible to answer
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that question because your finances and
every person's finances are as different
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as fingerprints you may have an 800 FICO
score your next-door neighbor who wants
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to use the same type alone may have a
600 FICO score obviously the interest
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rates gonna be different you may have
$50,000 saved I know some of you saying
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yeah I'm fighting $50,000 well you may
have $50,000 and your next-door neighbor
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may have $10,000 very different
situations you may be a commissioned
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person he may be a salaried person
somebody else might be an hourly plus
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overtime
person all of these things are different
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is this a rental is this a second home
or you're gonna live in the house these
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things all affect the interest rate and
all affect what programs we need to go
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with remember everybody's situation is
as different as a fingerprint when we
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look at the whole situation you have to
understand that all these items
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represent different risks to the lender
and the higher the risk the higher the
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interest rate the lower the risk for
example if you put a lot more money down
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obviously a lower risk right or if you
have a higher FICO score lower risk
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right well we have to look at these
things as a whole to help you determine
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what interest rate you're gonna get and
that also helps determine which program
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is right for you okay now it's time
we're gonna get into the nitty-gritty
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we're gonna get into the comparison
number one conventional loan a
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conventional loan has a minimum of a 625
Coase for credit score if you're not
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sure what a FICO score is that is your
mortgage credit score now on an FHA loan
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some lenders go as low as a 500 my
company goes down to a 550 the truth is
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nobody gets approved at 500 anyway and
on a VA loan we're also looking at the
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same thing many lenders go to 500 our
company goes to 550 okay
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PMI mortgage insurance and on FHA it's
called MIP mortgage insurance premium
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now on a conventional loan what happens
is it is very very dependent on what is
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your credit score somebody with a very
high credit score might have a very low
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mortgage insurance payment but if you
have a 625 go score your mortgage
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insurance payment could be way high now
on FHA FHA has pretty much standardized
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here is your MIP rate remember they're
the same thing they just called them
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something else
here's your MIP rate it doesn't matter
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if you have a 620 a five eighty of 550
or 800 FICO score makes no difference
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you're gonna pay the same rate on a VA
loan great news no PMI no MIP
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got that one okay we're almost halfway
through the video so hit the subscribe
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button and hit the like button I
appreciate that
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now if you'd like to comment I will
answer every single question personally
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and of course you're welcome to share
this with anybody you think it's
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valuable for okay debt ratio a debt
ratio is the percentage of your gross
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gross income as before they take taxes
out a percentage of your gross income to
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your debt now on a conventional loan
with a high FICO score they're gonna
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allow you or a 50% that includes your
car payment your credit cards student
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loans alimony child support all those
kind of things plus the new house
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payment that should be no more than 50%
now if you have a lower FICO score it's
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probably gonna be 45% that's how
conventional works now let's take a look
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at FHA with a 585 go score or above
here's what's basically gonna happen
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you're gonna probably be approved to a
fifty six point nine nine let's call it
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fifty seven percent again that includes
all your debts plus the house payment as
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a payment lastly we have a VA loan now a
VA loan works very very different it
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looks at how much money is left over
after paying all this stuff and it's
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called residual income and everybody
depending on what area of the country
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you live in and how many people in your
family there's a certain formula for now
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if you have 20% more than that just to
give you an example if it was a thousand
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dollars but you have 20% more $1,200 and
a high FICO score you may even go up to
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60 or 65% debt ratio which is
unbelievable and its highest in the
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whole industry interest rate on a
conventional loan you're often going to
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hear Fannie Mae Freddie Mac those are
conventional loans on a conventional
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loan you are gonna have a higher
interest rate than either FHA or VA on
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an FHA loan it's lower than conventional
and right about the same as VA they have
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virtually the same interest rates down
pay
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on a conventional loan you're usually
looking at a 3% down payment
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people ask me about a conventional loan
Fannie Mae Freddie Mac yes those are
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conventional laws now if we look at an
FHA loan an FHA loan is gonna require a
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three and a half percent down payment as
long as your FICO score is 580 or above
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if it's 579 or below it requires a 10%
down payment and of course for our
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veterans who honorably served we thank
you you get a zero percent down payment
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loan okay so we talked about PMI MIP
mortgage insurance whatever you want to
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call it but there's also something
called upfront mortgage insurance now on
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a conventional loan there is no upfront
mortgage insurance but those of you with
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a high FICO score might want to pay some
and they eliminate the monthly PMI
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payments forever so that's a big deal
and that's only available on a
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conventional loan and it doesn't make
sense unless you have a really good FICO
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score on an FHA loan we take the loan
amount and multiply it by 1.75 percent
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we have to add that to the loan amount
simple example if you have a hundred
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thousand dollar loan 1.75 percent is
$1,750 we're gonna add that so you'd
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actually be borrowing a hundred one
thousand seven hundred and fifty dollars
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upfront mortgage insurance on a VA loan
there's a couple of different scenarios
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here the first time use of a VA loan
it's two point one five percent so on
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the same hundred thousand dollars it's
two thousand one hundred and fifty
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dollars added on on a second time use
it's three point three percent so that's
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three thousand three hundred dollars now
it doesn't sound like the end of the
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world but if you're taking a four
hundred thousand dollar loan and it's
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this second va loan that's three point
three percent that is thirteen thousand
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two hundred dollars that may make you
say mmm this other loan might be better
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now though lastly if you're a veteran
who happens to be disabled ten percent
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or more there is no upfront
mortgage fee that there is no VA funding
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fee it doesn't exist for you okay
seasoning for a bankruptcy many
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Americans through the last few years
they've had a hard time and they did
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file a bankruptcy on a conventional loan
four years must have elapsed from the
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discharge not from when you started but
from when it was finished before you're
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allowed to apply for a conventional loan
on an FHA loan it's only two years and
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on a VA loan it's only two years short
sale seasoning well a lot of people ask
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what's a short sale well at a time when
people owed more than the house was
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worth they often went to the bank and
said hey my house is worth 300 I owe 400
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and the bank accepted three hundred
thousand dollars that was called a short
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sale well if you have a conventional
loan if you want to apply for a
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conventional loan it would be four years
after a short sale for an FHA loan it's
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three years must have elapsed from the
time of the short sale and for a VA loan
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it's only two years again that's when
they earned it a foreclosure well yeah
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some people when it's a really hard
times on a conventional loan we are
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looking at seven years before you can
buy a home again on an FHA loan it's
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only three years and for the vets two
years from a foreclosure okay time back
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to work after an extended absence well
on a conventional loan there is actually
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no real time frame but the lender will
take a look they just want to make sure
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it's reasonable and everything is
considered as a make sense situation you
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can be back to work for one month after
or six months or a year off on an FHA
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loan FHA guidelines require six months
back to work with pay stubs proof
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they've been back to work for six months
before they'll accept that income on a
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VA loan it varies per lender some
lenders will accept right back to work
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some might want six months or three
months a lot of them will require just
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get past the probationary period on the
job and you're good to go
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occupancy on
conventional loan you can buy for a
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rental you could buy for a second home
if maybe you want to live in the
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mountains or down by the beach on the
weekends or obviously for an
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owner-occupied property for a FHA and VA
loan it is owner occupied only hopefully
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this video will help you need a decision
making process which loan is right for
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you but if you still stuck reach out to
me call me text me email me and if you
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want this information for free go to
fire your landlord that info click on
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the tips page we have a download button
right for you and of course I want to
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help you fire your landlord
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