The last step in securing a home mortgage, and ultimately buying a home, is getting an official loan commitment for a specific home and for a specific sales price. Once again, you'll undergo a credit check, so make sure you don't take out any loans or new credit cards right up to home closing date - that could impact your mortgage loan in a negative way. At this point, you don't want to raise any "red flags" to lenders, so keep your personal balance sheet clean during the mortgage loan approval process. Once you've cleared this hurdle, you'll get a loan approval letter for the specific home you want to buy.
PMI stands for private mortgage insurance. As part of qualifying for a conventional loan, you will have to get PMI if you put down less than 20%. Once your equity in your home reaches 20%, you can get the PMI removed (lowering your monthly mortgage payment). However, with an FHA loan, the insurance stays on the loan for the life of the loan, regardless of the equity in the loan. The private insurance on an FHA loan is called mortgage insurance premium (MIP). There is no way to avoid MIP on an FHA loan.

Fixed rate mortgages are just what they say they are -- mortgage loans that allow borrowers to "lock in" a fixed interest rate over the complete loan period (typically 15-to-30 years.) There are upsides and downsides to fixed-rate mortgages, depending on the direction of interest rates. If rates spiral downward, the loan borrower is stuck paying the higher interest rate stated on the mortgage loan contract. On the other hand, if interest rates climb, the borrower's fixed interest rate insulates them from paying the added costs linked to mortgage loans with soaring interest rates after the mortgage is signed.

Qualifying for a loan isn’t a guarantee your loan will eventually be funded: Underwriting guidelines shift, lender risk-analysis changes and investor markets can alter. “I have had clients who signed loan and escrow documents, and 24 to 48 hours before they were supposed to close were notified the lender froze funding on their loan program,” says Recchia. Having a second lender that has already qualified you for a mortgage gives you an alternate way to keep the process on, or close to, schedule


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