The #1 Factor in your Mortgage

No matter what mortgage type you end up with, this factor will always be the most important component of your mortgage:

Your interest rate!

We can’t stress this enough—your mortgage interest rate can make or break your finances. If you rush into a mortgage with a high-interest rate, you could end up emptying your bank account into the lender’s pocket.

The longer your mortgage term, the more you’ll pay in interest. So, understanding how you can structure your mortgage deal goes hand in hand with your mortgage type.

Let’s say you take out a 30-year, $250,000 loan with a fixed 3.5% interest rate. Your loan principal is $250,000 but because of interest, you’ll pay a whopping $154,140 extra.

That’s a total of $404,140 over 30 years!

So, it’s vital to focus on your interest rate, but first, you’ll need to figure out what type of loan you need…

The #1 Factor in your Mortgage

Conventional mortgages are loans not insured by the government. As the name suggests, this type of mortgage is the most common amongst U.S. homeowners.

They’re pretty straightforward, but there are a few things you need to be aware of.

First of all, you’ll need to be sure your loan amount doesn’t exceed the annual limit set by the Federal Housing Finance Agency (FHFA).

In 2021, the limit for a conforming (conventional) loan is $548,250. If your loan amount exceeds this number, you’ll have to apply for a non-conforming loan.

And that’s not all.

Of course, you’ll need a lender to get your conventional loan, and that lender will typically want you to have…

• • A credit score of 620 or higher (often higher, depending on your lender)
• • A minimum down payment of 20% to avoid paying private mortgage insurance
• • A debt-to-income ratio less than 43%
• • Income/employment verification, and a strong financial history

Government-Insured Loans

Government-insured loans make owning a home possible for buyers who might not qualify for a conventional loan. Three governmental institutions back loans: the U.S. Department of Agriculture (USDA), the Department of Veterans Affairs (VA), and the Federal Housing Association (FHA).

USDA Loans: USDA loans are a good option for homebuyers in rural areas. If you qualify as a low-income borrower, you could receive a loan with a much lower interest rate than a conventional loan, and you might not even need a down payment.

VA Loans: If you’re an active duty member or a veteran of our armed forces, you could qualify for a VA loan. With a VA loan, you won’t need a down payment or private mortgage insurance (PMI). Plus, VA mortgage interest rates are low, and closing costs are typically limited.

FHA Loans: If you can’t afford a large down payment and your credit score isn’t ideal, you may qualify for an FHA loan. You’ll need a minimum credit score of 580 to qualify with a 3.5% down payment and a minimum credit score of 500 with a 10% to qualify. Unlike USDA and VA loans, you’ll typically have to pay a yearly insurance fee on your FHA mortgage.

The best part about government-insured loans is that they allow you to own a home even if your financial history isn’t great. Your down payment and interest rates will generally be much lower with a government loan.

The drawback is, government-insured loans take more time than conventional loans. You’ll probably have to provide more documentation to prove your eligibility, and you’ll have to limit your home buying budget.

15 - 30 years from now…

You don’t know what the next few decades of your life will look like—you just know that you want to buy a home.

Finding the right mortgage type for your needs is important, but planning for the future to the best of your ability is equally important.

We emphasize the importance of interest so often because, unlike many things in life, you can plan for it!

Or, at the very least, you’ll know how much you’re going to pay in interest after 15 or 30 years.

The trouble is, the number you end up with isn’t very pretty. We don’t blame you if it makes you feel nauseous.

Hundreds of thousands of your hard-earned dollars going straight to the lender’s pocket, on top of the loan amount you already paid.

How about 7 - 10 Years?

If paying interest for 15 - 30 years seems unnecessary, it’s because it is.

Fortunately, there’s a better way to pay for your home (and any other debts) without giving up so much of your cash.

It’s called the Money Max Account, and it really can help you pay off every single debt you have in as little as 7 - 10 years.

That means your money won’t be burning a hole in your lender’s pocket!

By tracking all of the debts, expenses, and payments you have each month, Money Max can calculate the fastest route out of debt for you and your family.

It creates a personalized plan for you to follow, so you can pay only what you need every month.

And it’s made to work for you. You always decide where your money goes and how you use it with the Money Max Account.

It’s only there as a tool… a tool to get you out of debt and into your dream lifestyle as soon as possible.

The Money Max Account is tailor-made to work for you and your financial needs. So, go out, find the home of your dreams, and finance it—just don’t forget about Money Max when it’s all said and done.

More for the things that matter, that’s what Money Max is all about. You’ll be enjoying a completely debt-free lifestyle before you know it, with the Money Max Account!

For more information, visit our homepage or call now. Our representatives are standing by to help you get on the path to financial freedom.