Your Redfin agent wants the cash offer because it removes all uncertainty and he gets the deal closed much faster. The principal and interest payments come to $1,249 a month, and over the life of the loan, you'll pay nearly $200,000 in interest. This is a two edged sword - let's say the house doesn't appraise. Assuming I'm going to need to get a jumbo mortgage with 20% down (right? So you have a fixed rate for 5 years, then every 1 year after that they can change the rate. Mortgages Obviously I know I need buildings insurance but I'm not sure what I should be thinking about with regards to cover if I get sick or lose my job. There are literally thousands of different types of mortgages on the market, and choosing one can be daunting. Could someone please explain the key differences between the loan types available, and may explain why I should or should not look at ARMs? Your term. However, you may need to make a larger down payment. Read The Balance's editorial policies. Learn the Best Type of Mortgage for You. You want to get the mortgage upfront. However, the minimum credit score requirements vary. Here are some options: get a 30-year fixed. It depends on what would work out for your best interest. Otherwise just take the security of the 30yr fixed rate. If you want a lower rate look into a 15yr fixed rate mortgage. You get a $250,000 mortgage for 30 years at 4.38%. My question is at my beginning mortgage was A and years later it changed to B mortgage, I was with B mortgage only 6 months then I payoff my mortgage in 6 years ago. Do what? By saying "make a cash offer now" do you mean paying for the home in cash, and then getting a mortgage? Not sure I would use a Redfin agent for that size purchase. Looking to buy a place between 750K-1.5M in Illinois, Net worth is about $5 million, 90% invested in index funds. So your base FICO® scores may not be the same ones a mortgage lender sees if they request your mortgage-specific FICO® scores, for example. If a mortgage lender isn't willing to lend you the amount of money you need (you don't earn enough, or it thinks you'll be stretching your affordability too far), a guarantor mortgage could get you the loan amount you needed. Maybe this is a question for Personal Finance, but I don't know much about mortgages so I figured I'd start here. every month. Hi all, I am currently in the latter stages of buying a house and a bit confused about what sort of insurance product I should get if any. Since we think that in the future, rates are going to go up, this loan only makes sense if you plan on having this loan for a short time period - either because you're going to sell it, or you want to roll the dice and have to refinance later. There are two main types of mortgages: Fixed rate: The interest you’re charged stays the same for a number of years, typically between two to five years. Our redfin agent seemed to think we could get a lower price with a cash offer. Interest rates on cash-out loans are always higher conventionally vs an interest rate on a purchase primary residence loan. If you expect to move in 5-7 years, then the ARM may make sense. Here's how to figure out how much mortgage you can reasonably afford. Mortgage default insurance protects your lender if you can't repay your mortgage loan. A person who makes $50,000 a year might afford a house worth anywhere from $180,000 to nearly $300,000. We have about a 10% down payment saved. If you have great credit and qualify for a 4% interest rate, your monthly payment would be $1,371 (excluding property taxes, homeowners insurance and private mortgage insurance), and you'd pay a total of $243,560 in interest over the life of the loan. Oak Forest? Review the different mortgage options available to you and decide which is best for you. If you plan to stay there for 5 years (or plan to refi in 5 years) then you're fine. To give you advice on what you should pursue, we need more information from you: How long do you plan on living in this new house? Or are you looking to buy more in the gold coast, loop, river north, or west loop area? Although it seemed logical for me to get some kind of coverage to pay off my mortgage in the event of my death, mortgage protection insurance wasn’t that coverage. Looks like you're using new Reddit on an old browser. Looking to buy a place between 750K-1.5M in Illinois. Miriam Caldwell has been writing about budgeting and personal finance basics since 2005. I was told by a redfin agent it is advantageous to "make a cash offer" meaning that I will buy the house even if I am not approved for a mortgage. For example, a borrower with a high income and low debt amount might be able to get away with a slightly lower credit score than a borrower with a lower income and lots of debt. The ARM is a great tool if, say, you know that you're going to relocate (either for work , or because you view this as a "starter home" and will want to upgrade later for sure). Lending I think that's what I mean. 5/1 Arm? Terms can range from just a few months to 5 years or longer. ARMs have lower initial rates, but are only fixed for a shorter time - 3/1 ARM = 3 years, 5/1 ARM = 5 years, 7/1, 10/1, etc. Prospective home buyers should aim to have this credit score to qualify for the best interest rates on mortgages. My fiance and I are ready to buy a house (My second, his first). I always assumed I'd get a 30-year fixed or FHA 30-year fixed loan. How much are you planning to spend on a house? Most home buyers will need to put down at least 3 to 5 percent or more of the cost of the home to get a mortgage. Mortgage protection insurance is a decreasing term life insurance policy. Plus, if youre 90% invested, you're probably going to take a tax hit when you sell those funds. While shopping around I see that the rates of the 5/1 ARM, and other ARM loans, even at their high points, are lower that a 30-year fixed. So I would offer to buy with cash (if I dont get approved for a mortgage) but I would attempt to get a mortgage to pay anyways. 30 year? Any suggestions would be highly appreciated. But at the same time, I think I want to get a mortgage. Getting a fix and flip loan from a bank is going to be just like getting any other kind of mortgage loan.You’ll decide how long you want the loan term to be, put up the appropriate down payment and the bank hands over the cash. What type of mortgage should I get? ARMs are different as well. You need this insurance if you have a high-ratio mortgage, and it's typically added to your mortgage principal. Getting a mortgage after you have closed on the house is relatively straight forward and shouldn't be difficult.