TPG Mortgage Frequently Asked Questions

If you have mortgage-related questions, then we have answers!

Qualifying for a Loan

Do I need a perfect credit score to qualify for a loan?

A credit score is a ‘snapshot’ in time of where you stand, credit-wise. Let’s see where you are now and how we might ‘change the picture’ to get you ready to qualify for a loan. There are home loan programs available for credit scores starting at 500.

Do you help people with credit repair?

We most certainly do! Not only do we offer FREE credit consultations, but we also work with ethical restoration companies that can support your home buying plan with affordable program options.

Do I need 20% down to qualify for a loan?

No, you don’t. We have loan options ranging from 3-19% down. Call us
for more information.

Fixed-Rate Mortgages

What are the benefits of a 30-Year Mortgage?

Advantages of a 30-Year Mortgage include:

Lower, more affordable monthly payments
Opportunities to free up cash for savings, retirement, other needs, and expenses
You can still qualify for higher loan amounts
You can pay extra each month (when possible) to pay down the principal balance thus reducing the effective term of the loan.

What are the disadvantages of a 30-Year Mortgage?

Disadvantages of a 30-Year Mortgage include:

Higher interest rates: Because lenders’ risk of not getting repaid is spread over a longer time, borrowers are charged higher interest rates.
You will pay more interest on your loan. Paying interest for 30 years adds up to a much higher total cost compared with a shorter-term loan.

What happens if I pay off a 30-Year Mortgage early?

Early in a 30-year loan, the bulk of the payment goes toward loan interest. But if the principal is lowered through extra early payments, the interest paid also is lowered. Paying down the principal, in the long run, will reduce the total interest paid on the loan.

How do I qualify for a 30-Year Fixed-Rate Mortgage?

To qualify for a 30-year fixed-rate mortgage you will need:

A minimum 3% down payment.
A minimum FICO Score of 620.
A debt-to-income ratio (DTI) of no more than 50%.
Money to cover closing costs, which are roughly 2% – 6% of the purchase price.

Is paying off a 30-year mortgage the same as paying off a 15-year mortgage?

A 15-year mortgage means your home will be paid off in 15 years rather than the full, 30-year mortgage as long as you make the required minimum monthly payments. However, the monthly payments will be higher on a 15-year mortgage because you are paying the principal off faster than on a 30-year mortgage.

Is it harder to qualify for a 15-year mortgage?

If you have a higher income that proves you can afford the higher payments associated with a short-term mortgage loan, then it’s easy to qualify. You will likely find interest rates are between .5 and 1% lower than they are for a 30-year mortgage.

Can I pay off a 15-year fixed-rate mortgage early?

Paying off your mortgage in fewer than 15 years has several advantages including paying less interest on your home and freeing up cash for your savings, retirement, other needs, or expenses.

What are the disadvantages of taking on a 15-year mortgage?

First-time homebuyers may lack the funds to qualify for a 15-year mortgage. Higher locked-in monthly payments leave little extra cash flow for other purchases. Also, having a higher debt-to-income ratio prevents qualification for other large loans.

How long does it take to pay off the interest on a 15-year mortgage?

A 15-year mortgage is designed to be paid off over 15 years. A 30-year mortgage is structured to be paid in full in 30 years. The interest rate is lower on a 15-year mortgage, and because the term is half as long, you’ll pay a lot less interest over the life of the loan.

Adjustable-Rate Mortgages (ARM)  

What are the two main disadvantages of an Adjustable-Rate Mortgage?

The first main disadvantage is both your interest rate and your payments can rise significantly over the life of the loan, and that can be a shock to your budget. Secondly, some annual caps will not apply to the initial loan adjustment, making it difficult to manage that first reset. Also, ARMs are more complex than their fixed-rate loan counterparts.

What factors directly affect an adjustable-rate mortgage?

Two factors that will affect your payment during the adjustable-rate period are (1) indexes and (2) caps.

Indexes are based on market changes and will determine the changes to the interest rate of your ARM loan. The lender decides which index your loan will use when you apply for the loan, and this choice generally won’t change after closing.

Adjustable-rate caps control how your interest rate can adjust:

Hybrid – An adjustable-rate mortgage with a fixed interest rate for a specified period after which the interest rate can change at specified intervals.
Interest-only – After the introductory period ends, the interest rate will adjust once a year, based on a benchmark interest rate margin determined by the lender. The benchmark rate will change as the market changes, but the margin is predetermined at the time you take out the loan.
Payment- Option – If you make less than the interest-only payment you may defer paying interest. Your outstanding loan balance grows and eventually, it must be paid back in full.
FHA ARM Loans– This is a HUD (Housing and Urban Development) mortgage that is designed for low and moderate-income families who are seeking home ownership. This program, along with other FHA programs, can help keep initial interest rates and mortgage payments to a minimum.

Is an adjustable-rate mortgage a bad idea?

Even though an adjustable-rate mortgage may carry a lower initial rate, it’s almost certain that the rate will rise at some point in the future. It is important to understand the risks that are associated with taking out an adjustable-rate loan.

Do you pay the principal on an ARM?

You could choose to make traditional principal and interest payments, or interest-only payments. You can also make limited payments that may be less than the interest due that month. The unpaid interest and principal will be added to the amount you owe on the loan—it will not be subtracted.

Down Payment Assistance

Can you tell me if I qualify for any down payment assistance programs?

Down Payment Assistance (DPA) programs have different qualification requirements depending on your area, the income limits, and the amount of assistance needed. During the Pre-Approval process, we match you to the DPA programs that you will likely qualify for. We’ll go over the details and requirements during your loan consultation.

How can I raise money for a down payment?

Down Payment Assistance Programs can help, such as the Federal Housing Administration (FHA), which offers mortgage loans through FHA-approved banks. To get started:

Look for down payment assistance (DPA) programs
Tap into “Benefits for First-Time Buyers”
Consider supplementing your income with a part-time job
Sell some of your belongings
Downsize your lifestyle
Reach out to us for assistance!

What credit score is needed to buy a house with no money down?

No-down-payment lenders usually set 620 as the lowest credit score for buying a house. Down payments are not required for VA, USDA, and other DPA program loans.

How do people cover down payment requirements without money?

People have met their down payment requirements using the following methods:

Appling for a zero-down VA loan or USDA loan
Using down payment assistance to cover their down payment
Asking for a down payment gift from a family member
Getting the lender to pay your closing costs (“lender credits”)

FHA Loans

What will disqualify me from qualifying for an FHA loan?

The following reasons tend to lead to FHA loan disqualification:

Bad credit is the most common reason (the minimum required score will vary between lenders).
Failing to have down payment funds of at least 3.5% on the purchase price of the home.
A debt-to-income ratio (DTI) that is considered too high.
Not having money in the bank or from a legitimate source to cover the closing costs for buying a home.
If the property appraises for lower than the asking price/requested amount of loan.
Not having at least one year since filing for bankruptcy or a foreclosure event.
A final consideration may be a combination of any two or more factors. In some instances, exceptions or workarounds may be possible to achieve FHA loan approval.

What should I ask my FHA lender?

Mortgage questions to ask your lender

What types of home loans do you offer?
Which type of mortgage is best for me?
What will my interest and annual percentage rate be?
What is the loan estimate?
Do you handle underwriting in-house?
What is your average loan processing time?

What are the disadvantages of an FHA loan?

Disadvantages of an FHA loan are:

They require mortgage insurance premiums upfront and annually.
They often come with higher interest rates.
They cannot be used for investment properties.
Homes must meet stringent property requirements.

Is it harder to get approved for an FHA loan?

To qualify for an FHA loan, you need a 3.5% down payment, at least a 580 credit score, and a 43% DTI ratio. An FHA loan is easier to get than a conventional mortgage. The FHA offers several types of home loans, including loans for home improvements.

VA Loans

What are the qualifications for a VA loan?

If you have served 24 continuous months or at least 181 days of active service during peacetime, or, if you served at least 181 days before being discharged for a hardship or reduction in force. You can also qualify if you’ve served less than 191 and were discharged for a service-connected disability. You qualify if you have 6 years of service in the National Guard or Reserves. You may also qualify if you are the spouse of a service member who has died in the line of duty or as a result of a service-related disability and you have not remarried.

What will fail a VA loan appraisal?

In general, any property with visible health or safety concerns will pose an issue on a VA appraisal report. You won’t be able to close on a home until any identified issues are resolved. In some cases, sellers may be willing to cover the cost of essential repairs rather than lose the sale.

Why would an underwriter deny a VA loan?

In the overwhelming majority of cases, an inexperienced loan officer or strict overlays are the reason for being denied a VA loan. Most veterans will qualify for a loan quickly.

If your loan is not approved don’t take no for answer. Contact your lender. The problem might be an error in the application. You might be denied the loan if your employment status changes or there is a change to your credit score. Low credit scores do not automatically prevent you from qualifying for a VA home loan but it can be an issue for some lenders so it is important to find out why your application was denied and what you can do to get approval.

Are there income limitations for VA Loans?

No, the VA does not limit income for qualifying VA loan borrowers. Other government-guaranteed mortgage programs can set a maximum income amount to qualify for specific loan programs but the VA has no such requirement.

USDA Loans

What is a USDA loan?

A USDA loan is a loan provided by the United States Department of Agriculture to help expand rural development. The program assists low-income individuals and families in purchasing a home in qualifying rural areas. This type of loan usually offers better interest rates than a conventional mortgage and no down payment is required if you qualify.

What are the qualifications for a USDA loan?

USDA loans are available to families seeking to purchase homes in rural areas and who demonstrate economic need. To qualify, your adjusted gross income can’t be more than 115% of the median income within your desired area. It is important to find out if your income is eligible in the same place where you are planning on buying a home.

Jumbo Loans

What is considered a Jumbo Mortgage?

A Jumbo Mortgage is a loan that costs more than the maximum amount of cash a homebuyer can borrow using a conventional loan. Stated another way jumbo mortgages exceed conforming loan limits. The amount of the limits varies between different counties and states.

Is a Jumbo Loan a bad Idea?

Also called non-conforming conventional mortgages, jumbo loans are considered riskier for lenders because these loans aren’t guaranteed by Fannie Mae and Freddie Mac, meaning the lender is not protected from losses if a borrower defaults.

Do jumbo loans require private mortgage insurance (PMI)?

You will not have to pay PMI on jumbo loans, as they usually require a higher down payment. PMI is designed for home buyers who make low-down payments. However, since the down payment requirement will vary between lenders, it is possible that your lender will require PMI in exchange for a lower down payment.

Are jumbo mortgages more expensive?

Jumbo loans don’t usually have higher interest rates; keep in mind that the rates vary. Because SoCal has higher-priced homes, Jumbo clients can still usually find a deal.

What are the disadvantages of a jumbo loan?

Drawbacks of a jumbo mortgage:

There are stricter guidelines on jumbo loans.
It is harder to qualify for a jumbo loan because each lender has its own requirements.

Renovation Loans

What is the difference between an FHA 203(k) loan and a HomeStyle Renovation Loan?

FHA 203(k) loans are mortgages insured by the Federal Housing Administration while HomeStyle loans are mortgages guaranteed by Fannie Mae.

Can I do the renovation work myself with a 203(K) or a HomeStyle loan?

Although FHA and Fannie Mae guidelines may allow you to do your own work, most Lenders DO NOT and will require a Licensed Professional to do the renovations.

What are the disadvantages of a 203(K) loan?

The cons of a 203(K) loan are:

They are only eligible for primary residences.
Mortgage Insurance Premium (MIP) required. MIP can be rolled into the loan.
Do-it-yourself work is not allowed unless you are qualified.
More paperwork is involved as compared to other loan options.

What properties qualify for a 203(k) loan?

Qualifying homes for an FHA 203(k) loan include:

A one-to-four-family home that has been completed for a least a year.
A home that has been torn down, provided that some of the original foundation remains in place.
A home that you want to move to a new location.
The home cannot be a co-op, but some condos are eligible.

What are the disadvantages of a HomeStyle loan?

The cons of a HomeStyle loan

With any type of construction loan, including Homestyle loans, there are a lot of extra steps that are required of you and your contractor, which often creates a long process and delays.
HomeStyle loans usually come with higher fees and closing costs.
If you’re using a HomeStyle loan to renovate your current home, you will need to refinance your existing mortgage. This means you might end up refinancing at a higher rate, which will increase your monthly payment.
HomeStyle loans are more complex than traditional home equity loans. These loans don’t give you the funds right away. They involve a complicated draw process and give the funds to your contractor in installments.

What properties qualify for a HomeStyle loan?

You can use a HomeStyle loan to buy and renovate pretty much any type of property including multifamily homes, second homes, and investment properties.