Refinancing a mortgage is a golden opportunity to lock in today's low interest rate for the next 15 or 30 years. While interest rates now are still low, there's a good chance they will be heading up in the coming months.
Do you plan to buy a home in Portland, Oregon in 2018? If so, you probably have questions about the mortgage industry, rates, and related topics. Below, we have addressed three of the most common questions relating to Portland mortgage loans and lending in 2018.
1. What’s needed to qualify for a mortgage in Portland?
Different home loan programs have different requirements. But most of these requirements overlap in certain key areas. For instance, many of the Portland mortgage loan programs available today require a debt-to-income ratio no greater than 50% (see question #2 below).
Credit scores are another important factor for home buyers seeking a mortgage loan in Portland. But the rules here aren’t necessarily written in stone. Generally speaking, a score of 600 or higher will put a person in a good position to qualify for mortgage financing. A higher score is even better, as it could help the borrower qualify for a lower rate. The FHA loan program requires a score of 580 or higher, for borrowers who wish to take advantage of the 3.5% down payment.
Speaking of down payments, that’s another thing you might need to qualify for a mortgage loan in Portland. The VA program for military members and veterans offers 100% financing. But most other mortgage programs require some kind of investment from the borrower.
Minimum down payment requirements can vary depending on the type of loan you use. For a conventional mortgage loan in Portland, the minimum investment might be as low as 3%. Some borrowers choose to put down 20% or more in order to avoid paying mortgage insurance, but this isn’t always necessary.
2. How much can I borrow to buy a house?
The maximum amount you’re able to borrow will largely depend on your current income and debt situation. Mortgage lenders use debt ratios, and other qualification criteria, to ensure borrowers are not taking on too much debt.
Different home loan programs have different requirements, for the maximum amount a person can borrow. In 2018, most of the mortgage loans available in Portland will have a debt-to-income (DTI) ratio limit somewhere between 43% and 50%. So if you fall at or below this range, you’re probably in good shape.
The best way to determine how much of a home loan you can borrow in Portland, OR is to get pre-approved. And that’s where we come in. We can review your current income and debt situation to determine how much you might be able to borrow.
3. What’s the best type of home loan for me?
Choosing a mortgage loan in is not a “one-size-fits-all” situation. Home buyers and borrowers have different priorities, budgets, and financial situations. As a result, the ideal mortgage loan can vary from one person to the next.
For starters, you might want to take a look at our guide to Oregon mortgage loan options. It explains some of the common financing strategies in use today, as well as their pros and cons.
One of your primary choices is whether you want to use a fixed-rate mortgage to buy a house in Portland, or a loan with an adjustable interest rate that can change over time.
The 30-year fixed-rate mortgage is by far the most popular option among home buyers across Oregon. It’s a good choice for people who plan to stay in a home for a long time, because it gives you more payment stability than an adjustable mortgage. On the other hand, an ARM loan could allow you to secure a lower mortgage rate for the first few years.
These are some of the most common questions among Portland home buyers and mortgage shoppers. If you have a financing-related question that was not answered above, please contact our staff for help.