A balloon mortgage is a unique type of non-qualified (non-QM) home loan that offers lower monthly payments upfront but requires a large lump sum—known as a balloon payment—at the end of the loan term. Typically structured for five, seven, or ten years, balloon mortgages are appealing for those looking for short-term affordability. However, they also come with risks, including higher interest rates and the potential for financial strain if the borrower cannot afford the final payment. Since these loans don’t conform to the Consumer Financial Protection Bureau’s standards for a qualified mortgage, they are less common and often come with more flexible application requirements.

How Does a Balloon Mortgage Work?
Unlike traditional mortgages, balloon loans can have different payment structures depending on the lender. Some loans require both principal and interest payments calculated over a 15- or 30-year period, with the remaining balance due at the end of the term. Others may be interest-only, where borrowers make smaller monthly payments covering just the interest, leaving the full principal to be paid as the final lump sum. In rare cases, some balloon mortgages require no payments at all during the loan term, meaning the borrower must pay the entire principal and interest in one large final payment. Because of this structure, these loans are best suited for those with a clear financial plan to cover the final payment.

Managing a Balloon Mortgage Payment
When the balloon payment is due, borrowers generally have three options. The most straightforward is to pay the lump sum in full, but this requires significant financial resources. Another option is to refinance the mortgage, replacing it with a new loan—though approval for refinancing depends on factors like home equity and credit standing. Lastly, some borrowers choose to sell the home before the balloon payment is due, using the proceeds to cover the remaining balance. However, selling isn’t always a guaranteed solution, as market conditions can impact home values and the ability to find a buyer in time.

Is a Balloon Mortgage Right for You?
Balloon mortgages aren’t for everyone, but they can be beneficial for real estate investors, house flippers, or buyers who plan to sell or refinance before the balloon payment is due. Some sellers also offer balloon mortgages as owner financing for buyers who may not qualify for a traditional loan. While these loans provide flexibility and lower initial payments, they carry substantial risk if a borrower cannot secure funds for the final payment. If you are thinking about a balloon mortgage schedule a consultation on our website and we can see if its right for you!

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No-doc loans (short for “no documentation” loans) can sound like a dream come true for borrowers who want to avoid the usual hassle of paperwork. Unlike traditional mortgages, which require reams of income and asset statements, pay stubs, and tax returns, no-doc loans promise a more streamlined process. But as easy as they might sound, these types of mortgages come with unique requirements, higher risks, and often steeper interest rates.

In a typical mortgage application, lenders scrutinize everything from your credit score to your debt-to-income ratio (DTI) and employment history. With a no-doc loan, the name says it all: You’re not asked to provide detailed paperwork to prove your income. Instead, you generally just state what you earn — though be aware, lenders still run credit checks and require some form of verification to reduce their risk. Because the lender is taking on more uncertainty, you can expect higher credit score thresholds and larger down payment demands in many cases.

These loans are popular among certain self-employed individuals, entrepreneurs, or those who might have complex finances that are difficult to document. If you have funds coming from multiple sources — or if you’ve gone through events like a bankruptcy in the recent past and your financial statements don’t paint the whole picture — a no-doc loan could be an option. However, it’s crucial to understand that just because you don’t supply the usual paperwork doesn’t mean you’re free of the usual mortgage obligations. You’ll still need to meet monthly payments, and if your lender perceives you as a bigger risk, you may pay a premium via a higher interest rate.

Before deciding on a no-doc loan, weigh the pros and cons. On the plus side, you skip the typical documentation hurdles and may be able to close more quickly. On the downside, you’ll likely need a hefty down payment, solid credit, and a willingness to pay a higher interest rate. Of course check with us to see if a no doc loan is the best prescription for you.

If you’ve been dreaming of a luxurious home or a property in a high-priced neighborhood, a regular mortgage might not cut it. In cases where the price tag climbs above standard loan limits — typically over $806,500 in most of the U.S. for 2025 — you’ll need what’s known as a “jumbo loan”. These mortgages are designed to finance homes with higher price points, whether it’s a sprawling mansion or simply a modest home in a more expensive market.

Jumbo loans share much in common with “regular” mortgages: You can opt for fixed or adjustable rates, choose from various term lengths, and use the loan for primary residences, vacation homes, or even investment properties. However, there are some key differences. Jumbo loans generally have stricter qualification guidelines because they aren’t backed by government-sponsored enterprises like Fannie Mae or Freddie Mac. Lenders often require higher credit scores, lower debt-to-income ratios (DTI), larger down payments, and ample cash reserves to ensure you can comfortably handle a super-sized mortgage.

Another difference you’ll notice is the interest rate. Jumbo mortgages historically have come with higher rates than conforming loans — although at times, this gap has been narrow. As of early 2025, jumbo loans are often just a tad pricier than the standard 30-year fixed mortgages, which is partly due to evolving fees and regulations for conforming loans. Still, since jumbo loans represent a greater risk for lenders, expect to provide more evidence of your ability to repay, including robust financial documentation of your income, assets, and credit history.

Qualifying for a jumbo loan takes a bit more homework. Most lenders want to see a credit score of **700 or higher**, and a DTI ratio that doesn’t exceed roughly 43 percent (some lenders are even stricter). You’ll also likely need a **down payment of 10 to 20 percent**. If you can check all those boxes, though, a jumbo loan can be a fantastic way to break into a higher-end property. Whether you’re considering a custom-built dream home or an upscale condo in a competitive market, schedule a consultation on our website to see whether a jumbo loan is right for you — and make sure your financial ducks are in a row before you dive in.

Securing a mortgage doesn’t hinge on meeting a single, magic income threshold. Instead, lenders look at a variety of factors, including your debt-to-income (DTI) ratio, credit score, and even your employment history, to determine if you’re able to afford your monthly payments. While certain programs like HomeReady and Home Possible do impose maximum income limits, most conventional or government-backed mortgages simply require that your income supports your monthly debts and prospective mortgage payment. So, don’t be deterred if you think your salary isn’t high enough — there’s likely a loan program that fits your financial situation.

When you apply, one of the first things your lender will calculate is your DTI ratio. They’ll add up your monthly debt obligations (like credit card payments, car loans, and student loans), plus your potential mortgage payment, and compare that total to your gross monthly income. While many conventional loans cap DTI at around 36 percent (though some allow up to 50 percent with compensating factors), government programs like FHA, VA, and USDA have slightly different limits — some as high as 43 or 41 percent, respectively. This means your income isn’t the sole deciding factor; it’s how all your financial pieces fit together.

Another common misconception is that only a standard paycheck counts as income. In reality, lenders can consider everything from Social Security and retirement disbursements to rental income and even trust or alimony payments. As long as you can document it and demonstrate steady or predictable cash flow, most lenders will factor it in. That’s why it’s a good idea to gather your pay stubs, tax returns, and bank statements ahead of time — the more thorough your paperwork, the smoother your application process will go.

Finally, it’s worth knowing that certain loan programs are specifically geared toward buyers who earn less than the area’s median income. HomeReady and Home Possible, for instance, allow for a down payment as low as 3 percent but have income thresholds you’ll need to stay under. Other options, like FHA, VA, and USDA loans, have more flexible credit requirements, low or no down payment requirements, and can help you get approved even if your income isn’t sky-high. So, whether you earn an entry-level salary or are closer to retirement, there’s a mortgage out there that can help you on the path to homeownership. The key is understanding how your finances measure up – of course we recommend scheduling a consultation to see what best fits your needs.

For years, private mortgage insurance (PMI) had a bad reputation among homebuyers, often seen as an unnecessary expense to avoid at all costs. PMI is typically required for conventional mortgage borrowers who put down less than 20% on a home, and many buyers viewed it as just another financial burden. However, recent changes in the industry have made PMI more affordable and, for some, an appealing option that can actually help unlock homeownership sooner.
What Is PMI and How Does It Work?
PMI is a type of insurance that protects the lender if the borrower defaults on their mortgage. Although the borrower pays the premium, it’s the lender who benefits. PMI is required when your down payment is less than 20% of the home’s purchase price, but it’s not a permanent expense. By law, lenders must cancel PMI once your loan balance reaches 78% of the home’s original value or at the halfway point of your loan term. Borrowers can also request early cancellation when their loan balance hits 80%, provided they cover the cost of an appraisal to confirm the home’s value.
For many years, buyers went to great lengths to avoid PMI, including taking out secondary loans to sidestep the requirement. However, these “piggyback loans” often came with higher interest rates and additional costs. With today’s more competitive PMI pricing, paying this insurance upfront may actually make more financial sense for many buyers.
Why PMI Costs Have Dropped
In recent years, the cost of PMI has decreased significantly. Today, the average PMI premium is around 0.4% of the loan amount annually, compared to 0.5% or higher in the past. This means that for a $400,000 loan, you’d pay roughly $1,600 per year, or about $133 per month—far less than what borrowers might have faced just a few years ago.
This shift is largely due to private mortgage insurers adopting more sophisticated pricing models. These models now take into account individual factors such as credit score, debt-to-income ratio, and local housing market conditions. The result is a more personalized premium that better reflects each borrower’s unique risk profile. For example, a buyer with excellent credit and a 10% down payment might pay far less than someone with a smaller down payment and lower credit score.
Is PMI Right for You?
With home prices at record highs, saving up for a 20% down payment can feel impossible for many first-time buyers. PMI offers a way to purchase a home with as little as 3-5% down, helping buyers get into the market sooner without exhausting their savings.
For buyers with financial flexibility, the decision often comes down to what else you can do with your money. Instead of using $100,000 for a 20% down payment on a $500,000 home, you could put down 10% and invest the remaining $50,000 elsewhere. While this increases your monthly payment slightly, including PMI costs, it gives you more liquidity for other financial goals.
Ultimately, there’s no one-size-fits-all answer. PMI might be an added expense, but with today’s reduced rates, it’s worth reconsidering its role in your homebuying strategy. Instead of avoiding it entirely, think of PMI as a tool that can make your path to homeownership more accessible and financially strategic. If you are looking to fund your home and not sure about PMI of course schedule a consultation with us on our website today!

A lot of people don’t realize that it’s a good idea to watch your financial P’s and Q’s before closing your mortgage. Here are five common mistakes to watch out for to avoid any closing crises.

1. Making a big purchase, including furniture
If you’re about to close on a house, it’s not the best time to get a new car, boat or other expensive item. Even furniture or appliances — basically anything you might pay for in installments — is best to delay until after your mortgage is finalized.
Depending on your credit score and history, these transactions can lower your score, which can impact the interest rate and loan amount you receive. This could result in a higher interest rate for the next 15 or 30 years, or even having to come up with a larger down payment.
Bottom line: Wait to purchase a big-ticket item, because “this can ruin their chances of staying qualified for a loan,” says Patricia Martinez-Alvidrez, business development officer for Stewart Title in El Paso, Texas.
2. Opening a new line of credit
It’s not just big purchases that can alter your credit score. Opening a new credit card or closing an existing one can affect your standing, too. In the runup to your mortgage closing, lenders make an assessment of the credit risk they are taking on and go through several steps to assess that risk for each loan applicant.It’s especially important to protect your credit score if it’s low enough that you’re on the margins of qualifying for a mortgage at the start of the process. Any changes in that case can work against you and might make it impossible to finalize the loan.
3. Switching or quitting your job
Another major mistake to make when you’re about to close on a home purchase is changing jobs. This is because mortgage lenders examine your employment history for consistency, and providing additional documentation on employment to a lender can delay the closing.
If you have any control over your job situation, it’s best to stay put until after you close. A borrower who quits their current job might have to wait a couple of weeks before they can attempt to close again.
4. Disrupting the timeline
Closing on a mortgage is time-sensitive. Even if you’ve locked in your rate, that only guarantees things for so long. It’s important to keep on top of the schedule and make sure all of your paperwork is submitted on time. Otherwise, you risk losing the terms you agreed to and could have to start the process over again.
5. Taking out a personal loan
If you get a personal loan or co-sign a loan for someone else, you could also face hiccups before getting to the closing table. In some instances, the lender might turn you down for a loan altogether even if you were previously preapproved.
It depends on how your credit score and debt-to-income (DTI) ratio is impacted. A good DTI, in particular, is a critical factor in mortgage approvals. Lenders consider two types of DTIs:
Front-end DTI: Your monthly mortgage payment, including principal, interest, taxes, insurance and association fees divided by your monthly income
Back-end DTI: The sum of all your monthly debt payments divided by your monthly income
Depending on the amount of the loan payment, your back-end DTI could increase to a percentage that the lender is unwilling to accept. If your credit score is right above the minimum to qualify for a mortgage, a hard inquiry that results from applying for a personal loan could drop it to a point that makes you ineligible. Either way, there’s a chance you’ll be forced to walk away from the deal.

It’s not always smooth sailing when going from the mortgage application process to the closing table. However, there are actions you can steer clear of to minimize roadblocks and ensure your loan closes on time. You also should review your credit report, scores and identify ways to optimize your financial health to give yourself the best chance at securing a mortgage with competitive terms. And definitely give us a call if you’re in your closing and not sure 🙂

You may have noticed more people moving to new areas lately – sometimes across the country, sometimes across town, either way here are ten things to look for when considering a new neighborhood.
1. Property Taxes – you should look at property taxes and also how much they’ve increased in the last five years and if any increases are planned. It’s a good idea to build this into your budget too.
2. Amenities – check what’s nearby based on your interests, restaurants, groceries stores, houses of worship etc.
3. Future development – it’s a good idea to check and see what future development is planned – it might be a good or bad thing but either way its worth checking.
4. Crime rates – you can check local crime rates online or even contact the local police department to get a better feel.
5. See the area for yourself – its best to hang around the area especially at different times of the day to get a feel for what its really like.
6. Commute times – you probably already thought about this but make sure to check the times during rush hour too.
7. Schools – if you have kids, you already thought about this. But good schools can also be a good sign of a well-kept neighborhood.
8. Housing Values – check the current values and compare them with five and 10 years ago.
9. Walkability and activities – depending on your tastes see what activities are nearby.
10. Personal Fit – everyone has different tastes so try to match the neighborhood with yours – new or old, tight-knit or independent, quiet or bustle, these are individual fits but finding the right one will help you enjoy your home that much more! And of course reach out to us with questions and if you haven’t gotten pre-qualified yet make sure you do 🙂

If you are thinking about buying your first house, you probably have a lot of questions. Common ones are: how much can I afford, can I get approved, etc. It’s also a good idea to organize and try to optimize your finances. However, even if you’re starting with modest resources, you can still set yourself up for mortgage success. Here are some tips on where to start.
Recognizing Mortgage Readiness
Before diving into homeownership, it’s essential to know if you’re genuinely prepared for this commitment. According to a Freddie Mac study, the following signs indicate you might be in the right financial position:
• A credit score of 661 or above.
• A debt-to-income ratio (DTI) under 25 percent, focusing on mortgage debt. Including other obligations like student loans, the percentage can be a tad higher.
• A clean financial history without any bankruptcies or foreclosures in the last seven years.
• No overdue debt payments surpassing 90 days.
Your credit score plays a pivotal role. Landing in the 661 and above range boosts your creditworthiness. However, scores between 600-660 signify you’re on the brink, while anything below 599 indicates you might need to reassess your financial readiness.
Although deviations from these benchmarks don’t disqualify you from getting a mortgage, they might mean you’re overextending yourself or jeopardizing other financial aspirations.
Boosting Your Financial Standing
When considering you for a mortgage, lenders dissect your financial landscape — from credit scores to employment history. To enhance your mortgage approval chances, consider the following:
Monitor Your Credit: Begin by accessing your free credit reports from all three bureaus – Equifax, Experian, and TransUnion. They are available weekly on AnnualCreditReport.com until the close of 2023. Rectify any discrepancies and understand the areas demanding improvement. Remember, most mortgages necessitate a minimum 620 score, but achieving a 740 or higher ensures the best interest rates.
Manage Your Debt: Ensuring on-time payments is crucial. If this has been a challenge, now is the moment to negotiate with creditors for a feasible solution. Lessen your debt through strategies like the debt avalanche, debt snowball, or consider debt consolidation. An optimal DTI ratio is often below 45 percent, although the specific percentage can vary by lender. Also, be wary of new loans which might spike your debt or adversely affect your credit score.
Prioritize Savings: Set aside funds not only for the down payment and closing costs but also for additional expenses like furniture or repairs. On average, the down payment in the first quarter of 2023 was $26,250. Although first-time buyers often deposit 6-7 percent of the purchase price, some loans only demand 3 percent down. Closing costs, too, can vary based on the location. Regardless of the exact amount, start saving with steps like automating your savings or reducing discretionary expenses. And fill out our online analyzer or schedule a meeting on our website and we can develop a customized plan for you. https://annualcreditreport.com

This week we saw the release of Consumer Price Index (CPI) for June 2023, which recorded a rise of 0.2 percent, a slight increase from May’s 0.1 percent, according to the U.S. Bureau of Labor Statistics. Year-over-year, the all-items index experienced a 3.0 percent hike, a decrease from May’s 4.0 percent, indicating a sustained deceleration in inflation for the past 12 months. With the inflation rate now standing just one percentage point above the Federal Open Market Committee’s 2 percent goal, the inflation scenario, particularly its impact on the housing market, demands a closer look.
The slowing of inflation, however, does not translate equally into the housing sector. The Bureau’s data highlight the ‘shelter’ category, encompassing housing costs, as the most significant contributor to the CPI’s all-items increase. However, he also hints at potential stabilization in rents and home prices, a necessary step in addressing the critical issue of housing affordability in the nation.
Encouraging data from CoreLogic suggest a slowdown in the home price growth rate, while Fannie Mae’s Home Purchase Sentiment Index shows a meager increase, pointing to a potentially less heated market. However, with current high mortgage rates, potential home buyers might still hesitate. Lawrence Yun, Chief Economist at the National Association of Realtors, offers some optimism, “Low inflation means low mortgage rates. Therefore, decelerating consumer prices could steadily lift home sales and increase home production in a few months.”
If you are considering making a move, schedule a consultation with us on our website and we can recommend options based on your unique needs.