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Mortgage Terminology Explained - YouTube
Channel: Sean Uyehara
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are you looking to purchase or refinance
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a home and you're really not
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understanding all the mortgage lingo
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that gets thrown at you problem is being
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in the industry for so long sometimes we
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forget that we have to slow down and
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really explain all these terms to all of
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our clients and if this is the first
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time you're checking out my channel my
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name is shawn oihara i'm a sales manager
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with loandepot helping you finance your
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homes all across america i've got 60
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mortgage terms i'm going to go through
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this list as fast as possible so let's
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hop right in
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adjustable rate mortgage or arm
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these are loans that are fixed for a
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certain period of time and then after
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that fixed period is up it starts to
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adjust based on the index that it's tied
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to all cash transaction this means
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you're a cash buyer you need absolutely
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no financing you have the funds needed
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to purchase without a loan apr or annual
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percentage rate this is not the rate
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that is used to calculate your mortgage
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payment this is the actual yearly cost
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of the funds over the term of the loan
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appraisal this is an independent report
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that a lender uses to determine the
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estimated value of the property that
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you're purchasing or refinancing
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appreciation
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this is the increase in your home value
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over time the appreciation in your
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property creates equity which is then
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funds that you can use to either borrow
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against or when you sell your property
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it would be looked as proceeds back to
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you from the sale of the home assets
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this could be funds that are in your
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checking savings account we can use
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other property as assets or even your
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retirement accounts could also serve as
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assets during a transaction balloon loan
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this type of loan has a balloon payment
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hence the name at the end of its loan
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term you might have a 10-year term that
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whatever balance is owed at the end of
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that 10-year term is due in full at that
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time of the loan being matured cash to
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close this typically includes your down
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payment plus your closing costs and it's
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going to be the final number that you're
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going to have to wire to end up closing
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on your property certificate of
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eligibility this is a certificate issued
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by the federal government to certify a
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veteran's eligibility for a va loan coe
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or close of escrow this is an important
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date on your contract because this is
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the intended closing date to have
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everything done and the day you're going
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to become a new homeowner closing costs
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other fees that are associated with a
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purchase or refinance transaction other
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than the down payment that gets charged
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and due at the final closing closing
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disclosure it is a form that describes
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in detail the critical aspects and
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closing costs that are associated with
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your mortgage loan this includes your
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purchase price your loan amount closing
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costs and all other expenses affiliated
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with the transaction conventional loan
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this is a loan that is not backed by a
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government agency these loans are backed
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by fannie mae and freddie mac dti or
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debt to income ratio this is calculated
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by taking your monthly minimum debt
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that's on your credit report and
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dividing that by your gross monthly
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income indeed this is a document that
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legally transfers ownership from a
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seller to the buyer at the closing of
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the transaction discount points
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it is an additional fee that a borrower
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can pay up front
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to lower their interest rate more often
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than not it's going to be expressed in
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terms of percentage points
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one point is equal to one percent down
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payment this is the amount of money that
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you're going to be needing in order to
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purchase a home almost every single
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mortgage requires a down payment except
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for va and usda loans earnest money
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deposit this is a deposit that is
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required up front from the borrower when
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you are purchasing a home most often it
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is required within 24 hours of your
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offer being accepted by the seller and
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it is basically your good faith to show
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the seller that you are willing to
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purchase their home escrow this is a
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third party that helps manage the entire
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real estate transaction this is where
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your earnest money deposit gets held
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they disperse the funds at final closing
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from the lender they are basically an
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intermediary between
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the buyer and the seller and they work
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off the instructions that are based off
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of the purchase contract exceeding home
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value this is a great thing this happens
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when your appraisal comes back higher
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than what your contracted sales price is
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so for example you're in contract for a
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hundred thousand dollars to purchase a
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property and your appraisal comes back
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at 110 000
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that means you are walking to some
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instant equity in your property fha loan
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this is a loan that is insured by the
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federal housing administration many
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first-time home buyers take advantage of
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this loan because of its credit
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requirements as well as the lower down
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payments with an fha you can go as low
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as a 520 credit score and get financing
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and these loans typically only require a
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three and a half percent down payment
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fico score
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there are three different credit scores
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that every lender will look at
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qualifying a client for a home loan
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those credit bureaus are experian
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transunion and equifax fixed rate
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mortgage this is when you have an
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interest rate that is fixed throughout
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the lifetime of the loan the most
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commonly used fixed rate mortgage is a
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30-year fixed loan forbearance this is
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when your mortgage servicer or lender
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allows you to pause your mortgage
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payments for a designated period of time
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foreclosure this is the legal process of
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the bank being able to take back the
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property or the asset that was used for
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a home loan this typically happens when
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the borrower who's been living in the
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house has stopped making their mortgage
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payments and is now in default funding
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fee this is a fee that is affiliated
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with the va loan this fee helps to
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reduce the cost to u.s taxpayers since
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the va loan has no down payment and no
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mortgage insurance hoa dues or
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homeowners association dues these fees
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are usually associated when you live in
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a master plan community and the fees
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usually help maintain all the common
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area maintenance that's associated
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either with the building or in the
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community that you live in home
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inspection this is one of the most
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important inspections that you will do
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when purchasing a home you will
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typically have a third party go out and
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perform the home inspection they will go
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through everything in the property from
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plumbing electrical to the roof if you
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can think of it they will probably
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inspect it and give you a report once
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they've completed their job homeowners
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insurance this is a policy that insures
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your property and protects it from fire
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or natural disasters if you are
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financing your home purchase your lender
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will require that you have homeowners
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insurance at the time of closing
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interest rate this is the rate that a
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lender will use to calculate your
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mortgage payment
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this is what's usually advertised online
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and how many people shop for their home
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loan interest only mortgage this is the
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type of mortgage that was used during
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the subprime market
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many people chose this option because it
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had a much lower payment because you're
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only paying interest on your loan
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today's loans include principal and
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interest so traditionally the payments
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will be typically a little higher than
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paying just interest on your mortgage
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investment property this is the property
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that's purchased to then rent out and
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earn passive income jumbo loan this loan
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exceeds the conforming loan limit which
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is set by the fhfa which is the federal
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housing finance agency they typically
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set the conforming loan limit every
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single year so make sure you check with
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your lender to find out what that limit
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is and whether or not you will be
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purchasing a home that is considered a
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jumbo loan or under the conforming limit
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lender this can be a bank credit union
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or a lender like us at loan depot that
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help people purchase homes that do not
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have the cash to purchase the home
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outright you will use a lender to obtain
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financing to help you become a homeowner
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loan modification this usually comes up
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when a borrower who's already been
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living in their home is having a
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difficult time making their mortgage
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payment they typically reach out to
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their lender or their servicer whoever
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they're making their mortgage payments
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to and ask for some type of relief the
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lender will typically modify the loan
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terms whether it be the interest rate
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the monthly payment or the amortization
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period this could be done on a temporary
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basis or they could make it permanent
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for the life of the loan locked in
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interest rates
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this is when a borrower communicates
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with their lender letting them know that
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they'd like to lock in a rate so they
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can close on their mortgage
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traditionally the shorter the locking
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period is the cheaper the cost of the
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rate is some lenders can extend all the
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way up to a full year locked in periods
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this is a period where a borrower
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communicates to their loan officer that
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they'd like to lock in their interest
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rate so they can close on their mortgage
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this period can range anywhere from 30
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days to a full year make sure to check
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with your lender because the longer the
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lock period the more expensive the cost
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typically is to do so market value this
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is typically determined by an appraisal
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the appraiser will go out and they will
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look at recent sold properties that are
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comparable to the subject property
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that's being purchased if they have a
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formula that they use to determine what
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the estimated market value is for you to
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purchase your property mortgage
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application fee this is a fee that some
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lenders will charge to take your
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application upfront mortgage broker this
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is a third-party company that borrowers
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will seek out to help with their home
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financing mortgage brokers don't work
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for a specific lender
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they are affiliated with numerous
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lenders and they shop your mortgage
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around looking for the best deal
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possible for you mortgage credit report
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fee this is a fee that a lender may
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charge
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in order to pull your credit for the
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application mortgage insurance this is
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an additional cost that is typically
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assessed when you are putting less than
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20 down on a home loan
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given there are ways that you can
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eliminate your mortgage insurance but
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this is the most common example of when
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mortgage insurance is charged on a
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transaction loan to value or ltb in
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order to calculate your ltv you are
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simply dividing your loan amount by the
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property value origination fee this is
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the fee that a mortgage lender will
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charge in order to complete a mortgage
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piti
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this is one of the most commonly used
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acronyms in the mortgage industry
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p-i-t-i stands for principal interest
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taxes and insurance those four items
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make up your mortgage payment points if
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you remember we also discussed discount
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points
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these two are used synonymously
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throughout the mortgage industry and
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they're the same thing basically you as
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the borrower you are paying your lender
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additional costs or fees associated to
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buy down your interest rate and get a
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lower rate upfront pre-approval this is
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when a lender will pull your credit and
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verify your income assets and everything
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associated with your loan application
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upfront to make sure that you can
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purchase a home pre-qualification this
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is when a lender typically does a verbal
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application over the phone they're not
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verifying your income or assets or
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anything you're basically giving them
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information and they can give you a
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ballpark as to what you can qualify for
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property taxes these are fees that are
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included into your mortgage payment as
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part of your piti payment
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that go to your local county and it is
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based on the assessed value of your
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property purchase price this is the
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agreed upon price that you and the
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seller have negotiated and come to an
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agreement with so you can purchase your
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property real estate agent this is the
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person that helps you either purchase or
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list your property and represent you in
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a real estate transaction real estate
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broker this is typically the owner of
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the real estate company
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the agents report to the broker and the
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brokers in charge of overseeing the
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office
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refinance this applies to current
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homeowners this is where you look to
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modify your home loan whether you're
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looking to lower your interest rate
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shorten your term or you could look at
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tapping into some home equity and
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pulling out some of that equity to then
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pay off credit cards purchase other
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investments or treat yourself to a
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vacation a renovation loan these loans
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are used to help finance the cost of the
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renovation into your mortgage there are
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two popular renovation loans out there
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fha has a program called fha 203k and
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through conventional financing you can
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use fannie mae's home style renovation
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program these programs help minimize
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out-of-pocket expenses to the buyer so
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that way again they can finance the cost
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of the renovations into their home
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mortgage when they either purchase or
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refinance seasoned funds in the mortgage
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industry we determine that funds are
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seasoned to your account if they've been
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in there for at least 60 days second
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home this is typically called a second
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home or vacation home you can actually
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be a current renter and still purchase a
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second home we would look at it like a
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vacation property for example let's say
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you live here in las vegas
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and you love the beach you could look at
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purchasing a home in let's say florida
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as a vacation property where you and
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your family love to visit in your off
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time seller concessions this is when a
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seller has agreed to provide some sort
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of credit in order for you to purchase
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their home short appraisal this happens
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when the appraisal on your property has
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come in less than what you've agreed to
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pay the seller for the property for
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example if you're in contract for a
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hundred thousand dollars and the
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appraisal came back at 95 000. this
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would give us a short appraisal you
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would have to then negotiate with the
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seller
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to move forward with the transaction if
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you are using financing to purchase your
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property because as a lender we won't
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finance anything more than what the
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house appraises for so your options
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could either be the seller can reduce
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the price
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you folks can split the difference
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you as the buyer can pay the entire
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difference or you'd have to walk away
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from the transaction
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due to the deficiency between the sales
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price and the appraised value total cost
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analysis or tca this is something that
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my team utilizes on a daily basis we go
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over a tca with all of our clients so
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that you can understand how your
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mortgage works both short term and long
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term this gives you a side by side
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comparison of how interest rates work
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and how the cost will impact you whether
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you're looking to purchase or refinance
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upfront mortgage insurance premium or uf
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mip
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this is also an acronym that's
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associated with fha financing the
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upfront mortgage insurance is financed
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into the loan and it helps lower the
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overall down payment in order to
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purchase a home fha financing only
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requires three and a half percent down
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va loan this loan is eligible to active
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duty service members as well as eligible
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veterans that have served in the
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military the va guarantees this loan and
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the best part about it is that there is
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no required down payment and you also
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have no mortgage insurance and check out
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this playlist where i'm going to give
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you my key tips on how to get your
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mortgage right my name is sean owie har
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i'm here to help you get your financing
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all across america whether you're a
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first time home buyer move up buyer
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looking to refinance purchase an
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investment property or even refinance
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we've got you covered i'll see you on
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the next video
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