What Is Joint Tenancy With Right of Survivorship? Examples

Owning a home — or another type of property — with another person comes with all sorts of complications attached. Along with figuring out who’s responsible for the dishes or how to agree on what color to paint the bathroom, you also have to discern who owns what.

That’s where joint tenancy comes in. Joint tenancy means that both (or all) parties have 100% ownership in a home (or other kind property, like a bank account), rather than each owning a 50% share. Right of survivorship means that, if one of the owners passes away, the other(s) will automatically assume full ownership of the property.

Let’s take a closer look at joint tenancy with right of survivorship, or JTWROS, as well as listing some specific examples so you can see exactly how it works in action.

What Is a Joint Tenant With Right of Survivorship (JTWROS)?


Joint tenancy with right of survivorship is — as mentioned — co-ownership in an asset like a home or bank account with assumed ownership after one party’s death. So a joint tenant with right of survivorship is any one person in that ownership relationship.

With JTWROS, two or more people jointly own an entire asset — rather than each owning some proportional measure of the asset’s value.

Requirements for Joint Tenancy With Right of Survivorship


In order to establish joint tenancy with right of survivorship, all parties involved must meet four criteria known as the “four unities” of joint tenancy. They must have:

•  acquired the asset at the same time

•  obtained the same title document

•  an equal share of interest in the property

•  equally exercised their right to ownership of the property

Keep in mind that specific laws around JTWROS vary by state, so to fully understand how it works where you live, you’ll need to look up your own state’s laws. For example, in California, the default state is for co-owners of property to be tenants in common — which is a different type of ownership structure (more on that below). You should always look up your own local laws, or speak to a local legal expert, in order to ensure you fully understand your ownership rights.

First-time homebuyers can
prequalify for a SoFi mortgage loan,
with as little as 3% down.


Understanding Joint Tenancy With Right of Survivorship: Examples


Definitions are all well and good — but how does JTWROS work in practice?

One of the most common examples of joint tenancy with right of survivorship is when a married couple purchases a home together. Say Rebecca and Jane buy their first home as young newlyweds, preparing to build a family and a life together.

If both Rebecca and Jane meet the four unities of joint tenancy — including purchasing the home together and having both of their names on the home’s deed — they can share 100% ownership of the home, rather than each of them laying claim to 50% of the home’s value. That means that, if either one of them were to pass away, the other would immediately assume full ownership of the home rather than having to go through the process of probate. (Of course, it also means that neither Rebecca nor Jane could choose to leave the home to someone else — including their children — without first terminating the joint tenancy.)

You could also choose to enter into a joint tenancy with right of survivorship with a non-spouse. Say you and two friends choose to purchase a condo in Seattle together, which you plan to rotate between you as a vacation home. So long as you meet the four unities and specify it at the time of purchase, you can all share 100% ownership of the condo. That said, none of you would be able to leave the condo to your children in your will, sell your share of the property, or even specify what proportion of the property value you own. In order to do any of that, you’d need to be in a tenancy in common. So as you’re thinking about a home mortgage loan, a down payment, and other details around a home purchase, it’s important to think about how you want ownership expressed on the deed as well.

Other Examples of Joint Tenancy With Right of Survivorship (JTWROS)


Although we’ve been talking primarily about homeownership in this article, keep in mind that joint tenancy with right of survivorship can apply to other sorts of ownership and property, too. For example, a married couple or pair of business partners might hold a bank account in joint tenancy with right of survivorship. The same may hold true of personal property, such as a vehicle, when purchased jointly.

Different Types of Joint Tenancy


In order to fully understand joint tenancy, you have to understand tenancy in common — which is the primary alternate ownership structure.

Tenancy-in-common allows mutual owners to designate proportional ownership (rather than sharing 100% ownership), and any tenant can sell their portion of the property whenever they choose. In addition, the right of survivorship clause does not hold, and each tenant-in-common can leave their share of ownership to a beneficiary in their will if they so choose.

Joint Tenancy with Right of Survivorship

Tenants-in-Common

Each tenant enjoys full ownership of the shared property. Tenants may designate proportional ownership: 50/50, 60/40, etc.
If one tenant dies, full ownership is automatically bestowed on the surviving tenant(s). If one tenant dies, they can will their share of the property’s ownership to anyone they want.
The four unities must be met in order for joint tenancy to be established. Tenancy in common can be established without meeting the four unities.

What are the Tax Implications of JTWROS?


Part of the reason some people choose to enter into a joint tenancy with right of survivorship is to avoid probate — the lengthy, and often costly, legal process by which a person’s assets are assigned to new owners after their death. Still, it’s important for tenants to understand that JTWROS comes with certain tax implications.

For example, if your joint tenant is not your spouse, and the value of your shared property is higher than the annual gift tax exclusion ($17,000 in 2023), the transferal of ownership at the time of their death could trigger the federal gift tax. You may also be subject to estate taxes if the value of your shared property exceeds the IRS’s threshold for that tax — $12,920,000 in 2023.

Always check with a qualified tax professional to be sure you understand the tax implications of shared property ownership.

Advantages and Disadvantages of JTWROS


As you can see by now, joint tenancy with right of survivorship has both advantages and disadvantages. Here are some of them at a glance.

Benefits of JTWROS

•  Right of ownership is automatically transferred at the time of a tenant’s death, avoiding the lengthy probate process and simplifying estate planning for families and married couples.

•  All tenants claim equal ownership over the asset, be it a home, bank account, or vehicle.

Drawbacks of JTWROS

•  No tenant can choose to leave their share of ownership to an heir in their will.

•  Because all tenants share 100% ownership of the property, if one tenant has financial trouble, this trouble affects other tenants even if their finances are in better shape. (For example, if two people share joint tenancy of a vehicle and one falls deeply enough into debt for their car to be repossessed, the other will, obviously, also be unfairly penalized in the process.)

When Does Joint Tenancy With Right of Survivorship Make Sense?


Joint tenancy with right of survivorship can be a great choice for families or married couples whose long-term financial goals and life plans are woven together — and who both have similar financial histories and habits. On the other hand, for those purchasing an asset together in the short term, or in situations where one tenant may have serious debt while another does not, joint tenancy with right of survivorship may not be the best choice.

How to Enter a JTWROS Agreement


Ensuring that a joint purchase is a JTWROS has everything to do with the wording on the asset’s title or deed — so it’s important to ensure that your mortgage lender, bank account representative, or whoever you’re making a purchase from, understands your intention to enter into a joint tenancy with right of survivorship at the time the asset is acquired.

The Takeaway


Joint tenancy with right of survivorship is an ownership structure in which all parties share 100% ownership of an asset such as a home, joint brokerage account, or vehicle. If one of the tenants dies, the ownership is automatically transferred to the other(s), which makes it a common choice for married couples and families.

Ready to take the leap into homeownership for yourself? SoFi Mortgage Loans come with competitive rates and terms suited to every phase of life.

Checking out rates is a smart step toward homeownership — take a look today.

FAQ


What is the primary advantage of being a joint tenant with right of survivorship?


One reason married couples and families so frequently choose this ownership structure is that ownership of the property is automatically conferred to the surviving tenant if the other party dies — which avoids the lengthy probate process and doesn’t require anyone to move at a very difficult emotional time.

Which tenancy is best for married couples?


Although every couple is different, many married couples choose a joint tenancy with right of survivorship to simplify their estate planning.

What is a primary feature of property held in joint tenancy?


Property held in joint tenancy is owned 100% by all parties involved — rather than each party owning a proportional share of the property’s value.


Photo credit: iStock/PeopleImages

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information.


SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.


Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

This article is not intended to be legal advice. Please consult an attorney for advice.

SOHL0523011

Read more
man signing mortgage paperwork

What Is a Piggyback Mortgage Loan and Rates?

Have you heard the term “piggyback mortgage” and wondered what it is? At its most basic, a piggyback mortgage can be considered a second mortgage. These are usually either a home equity loan or home equity line of credit (HELOC).

Piggyback mortgage loans can sometimes also be a wise option for homebuyers looking to finance a home without putting down a significant down payment. In this situation, they are taken out at the same time as the main mortgage. A benefit is that they may help you pay less over the life of the loan because you don’t need to pay for private mortgage insurance (PMI).

Read on to learn more about what a piggyback loan is and how it works.

What Is a Piggyback Mortgage Loan?

Homebuyers can use a piggyback mortgage loan to fund the purchase of a property. Essentially, they take out a primary loan and then a second loan, “the piggyback loan,” to fund the rest of the purchase.

Using the strategy helps homebuyers reduce their mortgage costs, such as by not needing a 20% down payment to qualify. It also helps them avoid the need for private mortgage insurance, which is usually required for those who don’t have a 20% down payment.

First-time homebuyers can
prequalify for a SoFi mortgage loan,
with as little as 3% down.


Recommended: How to Qualify for a Mortgage

How Do Piggyback Loans Work?

When appropriate for a homebuyer’s unique situation, a piggyback mortgage might potentially save the borrower in monthly costs and reduce the total amount of a down payment.

Here’s an example to consider of how they work:

Jerry is buying a home for $400,000. He doesn’t want to put down more than $40,000 for the down payment. This eliminates several mortgage types. He works with his lender through the prequalification and preapproval process to secure a first mortgage for $320,000, then with a piggyback mortgage lender to secure a piggyback mortgage of $40,000, and finishes the financing process with his down payment of $40,000.

Piggyback home loans were a popular option for homebuyers and lenders during the housing boom of the early 2000s. But when the housing market crashed in the late 2000s, piggyback loans became less popular, as a lack of equity proved homeowners more vulnerable to loan defaults.

Fast forward to today’s housing market. With the cost of living by state rising in certain areas, piggybacks are starting to become a viable and acceptable option again.

Recommended: First-Time Homebuyer Guide

Types of Piggyback Loans

Here are some of the types of piggyback loans to consider:

A 80/10/10 Piggyback Loan

There are different piggyback mortgage arrangements, but an 80/10/10 loan tends to be the most common. In this scenario, a first mortgage represents 80% of the home’s value, while a home equity loan or HELOC makes up another 10%. The down payment covers the remaining 10%.

In addition to avoiding PMI, homebuyers may use this piggyback home loan to avoid the mortgage limits standard in their area.


💡 Quick Tip: With SoFi, it takes just minutes to view your rate for a home loan online.

A 75/15/10 Piggyback Loan

A loan with a 75/15/10 split is another popular piggyback loan option. In this case, a first mortgage represents 75% of the home’s value, while a home equity loan accounts for another 15%. And like the 80/10/10 split, the remaining 10% is the down payment.

For example, a $300,000 75/15/10 loan would break down like this:

Main loan (75%): $225,000
Second loan (15%): $45,000
Down payment (10%): $30,000

See how these options stack up in chart form:

80/10/10 Piggyback Loan

75/15/10 Piggyback Loan

Structure: 80% primary loan
10% HELOC
10% down payment
75% primary loan
15% HELOC
10% down payment
Typical use: Commonly used to avoid PMI and stay under jumbo loan limits Commonly used when purchasing a condo to avoid higher mortgage rates

Average Piggyback Mortgage Rate

A piggyback loan usually has a higher interest rate than the primary mortgage, and the rate can be variable, which means it can increase over time. Let’s say your primary mortgage rate is 6.75%. The rate on the second mortgage might be 7.5%. If you borrowed $35,000 with this piggyback mortgage, your monthly payment for that loan would be $416. Of course, the exact rates you are able to secure from a piggyback mortgage lender would be based on how much you borrow, your credit score, current interest rates, and other variables.

Benefits and Disadvantages of a Piggyback Mortgage

A piggyback mortgage may help homebuyers avoid monthly PMI payments and reduce their down payment. But that’s not to say an 80/10/10 loan doesn’t come with its own potentially negative costs.

There are pros and cons of piggyback mortgages to be aware of before deciding on a mortgage type.

Piggyback Mortgage Benefits

Allows you to keep some cash on hand. Some lenders request a downpayment of 20% of the home’s purchase price. With the average American home price of $346,270 as of mid-2023, this can be a difficult sum of money to save, and paying the full 20% might wipe out a buyer’s cash reserves. A piggyback mortgage may help homebuyers secure their real estate dreams but still keep cash in reserve.

Possibly no PMI required. In what may be the largest motivator in securing a piggyback mortgage, homebuyers may not be required to pay PMI, or private mortgage insurance, when taking out two loans. PMI is required until 20% of a home’s value is paid, either with a down payment or by paying down the loan’s principal over the life of the loan.

PMI payments can add a substantial amount to a monthly payment and, just like interest, it’s money that won’t be recouped by the homeowner when it’s time to sell. With an 80/10/10 loan, both loans meet the requirements to forgo PMI.

Potential tax deductions. Purchasing a home provides homeowners with potential tax deductions. Not only is there potential for the interest on the main mortgage loan to be tax deductible, the interest on a qualified second mortgage may also be deductible.

Potential Downsides of Piggyback Mortgages

Not everyone qualifies. Piggyback mortgage lenders take on extra risk. Without PMI, there is an increased risk of a financial loss. This is why they’re typically only granted to applicants with superb credit. Even if it’s the best option, there’s no guarantee that a lender will agree to a piggyback loan scenario. You’ll see whether the cards are stacked in your favor by going through the process of getting preapproved for your home loan.

Additional closing costs and fees. One major downfall of a piggyback loan is that there are always two loans involved. This means a homebuyer will have to pay closing costs and fees on two loans at closing. While the down payment may be smaller, the additional expenses might outweigh the initial savings.

Savings could end up being minimal or lost. Before deciding on a piggyback loan arrangement, a homebuyer may want to estimate the potential savings. While this type of loan has the potential to save money in the beginning, homeowners could end up paying more as the years and payments go on, especially because second mortgages tend to have higher interest rates.

To quickly make an assessment, make sure the monthly payment of the second mortgage is less than the applicable PMI would have been on a different type of loan.

Here are the pros and cons of piggyback loans in chart form to help you decide if this kind of mortgage arrangement is right for you.

Pros of Piggyback Loans Cons of Piggyback Loans

Secure a home purchase with less cash Only applicants with excellent credit may qualify
Possible elimination of PMI requirements Extra closing costs and fees may apply
Could qualify for additional tax deductions A second mortgage could cost more money over the entire loan term

How to Qualify for a Piggyback Mortgage

It’s essential to keep in mind that you’re applying for two mortgages simultaneously when you apply for a piggyback home loan. While every lender may have a different set of requirements to qualify, you usually need to meet the following criteria for approval:

•   Your debt-to-income (DTI) ratio should not exceed 36%. Lenders look at your DTI ratio — the total of your monthly debt payments divided by your gross monthly income — to ensure you can make your mortgage payments. Therefore, both loan payments and all of your other debt payments shouldn’t equal more than 36% of your income, although some lenders may go higher.

•   Your credit score should be close to excellent. Because you are taking out two separate loans, your risk of default increases. To account for this increase, lenders require a strong credit score, usually over 700 (though some lenders may accept 680), to qualify. A higher credit score means you’re more creditworthy and less likely to default on your payments.

Before you apply for a piggyback loan, make sure you understand all of the requirements to qualify.

Refinancing a Piggyback Mortgage Loan

Sometimes homeowners will seek to refinance their mortgage when they have built up enough equity in their home. Mortgage refinancing can help homeowners save money on their loans if they receive a lower interest rate or better terms.

If you have a piggyback mortgage, however, refinancing could pose a challenge. It’s often tricky to refinance a piggyback loan because both lenders have to approve. In addition, if your home has dropped in value, your lenders may even be less enticed to approve your refinance.

On the other hand, if you’re taking out a big enough loan to cover both mortgages, it may help your chances of approval.

Recommended: How Much Does It Cost to Refinance a Mortgage?

Is a Piggyback Mortgage a Good Option?

Not sure if a piggyback mortgage is the best option? It may be worth considering in the following scenarios:

If you have minimal down payment resources: Saving up for a down payment can take years, but a piggyback mortgage may mean the homebuyer can sign a contract years sooner than any other type of mortgage.

If you need more space for less cash: Piggyback loans often allow homeowners to buy larger, recently updated, or more ideally located homes than with a conventional mortgage loan. This advantage can make for a smart financial move if the home is expected to quickly build equity.

If your credit is a match: It’s traditionally more difficult to qualify for a piggyback loan than other types of mortgages. For many lenders, you will need to have your down payment, stable income and employment history, and acceptable DTI lined up.

Piggyback Mortgage Alternatives

A piggyback mortgage certainly isn’t the only type offered to hopeful homebuyers. There are other types of mortgage loans homebuyers may also want to consider.

Conventional or Fixed-Rate Mortgage

This type of loan typically still requires PMI if the down payment is less than 20% of the home’s purchase price, but it is the most common type of mortgage loan by far. They’re often preferred because of their consistent monthly principal and interest payments.

Conventional loans are available in various terms, though 15-year and 30-year options are among the most popular.


💡 Quick Tip: Your parents or grandparents probably got mortgages for 30 years. But these days, you can get them for 20, 15, or 10 years — and pay less interest over the life of the loan.

Adjustable-Rate Mortgage

Also known as an ARM, an adjustable-rate mortgage may help homebuyers save on interest rates over the life of their loan. However, the interest rate will only remain the same for a certain period of time, typically for one year up to just a few years.

After the initial term, rate adjustments reflect changes in the index (a benchmark interest rate) the lender uses and the margin (a number of percentage points) added by the lender.

Interest-Only Mortgage

For some homebuyers, an interest-only mortgage can provide a path to homeownership that other types of mortgages might not. During the first five years (some lenders allow up to 10 years), homeowners are only required to pay the interest portion of their monthly payments and put off paying the principal portion until their finances more easily allow for that.

FHA Loan

Guaranteed by the Federal Housing Administration, FHA loans include built-in mortgage insurance, which makes these loans less of a risk to the lender. So while it’s not possible to save on monthly insurance payments, homebuyers may still want to consider this type of loan due to the low down payment requirements.

Other Options to Consider

Some other alternatives to a piggyback mortgage might include:

•   Speaking to a lender about PMI-free options

•   Quickly paying down a loan balance until 20% of a home’s value is paid off and PMI is no longer required

•   Refinancing (if a home’s value has significantly increased) and allowing the loan to fall under the percentage requirements for PMI

•   Saving for a larger down payment and reducing the need for PMI

The Takeaway

Before signing on for a piggyback mortgage, it’s always recommended that a homebuyer fully understand all of their mortgage options. While a second mortgage might be the best option for one homebuyer, it could be the worst option for another. If a piggyback mortgage is selected, understanding its benefits and potential setbacks may help avoid financial surprises down the line. The home loan help center can help you make decisions.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.


SoFi Mortgages: simple, smart, and so affordable.

FAQ

What is a piggyback fixed-rate second mortgage?

A piggyback fixed-rate second mortgage is a home equity loan or home equity line of credit (HELOC) that is obtained at the same time as the primary mortgage on a home purchase. Because its rate is fixed, the interest rate does not change over the life of the loan.

Is it hard to get a piggyback loan?

Because piggyback borrowers typically don’t pay for private mortgage insurance, the requirements to obtain this type of loan can be more strict. You may need a credit score of 680-700 or more and a debt-to-income ratio less than 36%.

What is the advantage of a piggyback loan?

A piggyback loan can help you avoid having to pay for private mortgage insurance (PMI) if you are making a low down payment on a home purchase. However, you’ll want to compare the costs of the second mortgage (including its closing costs) against the costs of PMI before making a decision.


SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.


SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information.


*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SOHL0723029

Read more

How Much Will a $700,000 Mortgage Cost per Month?

The monthly amount that you pay on a mortgage for $700,000 covers the principal payment and interest, and your exact payment depends on several variables, including your interest rate. A $700,000, 30-year mortgage with a 6% interest rate, for example, costs around $4,200 monthly. However, there may be additional costs that you have to pay throughout the life of the loan, not to mention upfront costs that you must pay when you first close on the home.

The monthly cost of a mortgage depends on the interest rate, the length of the loan, and any additional costs, such as private mortgage insurance (PMI) charged on some loans. Mortgage loan terms are typically from 15 years to 30 years, and the monthly payments for a 15-year loan can be much higher than the payments for a 30-year loan, although, over its lifetime, the 30-year mortgage is typically more costly because interest costs are higher.

Here’s a look at how much a 700,000 mortgage might cost per month for a 15-year or 30-year loan term with various interest rates.

Key Points

•   The monthly cost of a $700,000 mortgage depends on factors like interest rate, loan term, and down payment.

•   Using a mortgage calculator can help estimate monthly payments and determine affordability.

•   Factors like property taxes, homeowners insurance, and private mortgage insurance (PMI) can also affect the overall cost.

•   It’s important to consider your budget and financial goals when determining the affordability of a mortgage.

•   Working with a lender or mortgage professional can provide personalized guidance and help you understand the costs involved.

First-time homebuyers can
prequalify for a SoFi mortgage loan,
with as little as 3% down.


What Is the Total Cost of a $700K Mortgage?

A $700,000 30-year mortgage with a 6% interest rate (which, as noted above, costs around $4,200 monthly) has a total cost of $1,510,867. The same loan over 15 years would have a $5,900 monthly payment and a total cost of $1,063,260. These amounts are simply estimates; exact costs will depend on interest, escrow, taxes, and insurance. A rule of thumb when buying a home is to not pay more than 28% of your gross monthly income. So someone whose monthly mortgage payment is $4,200 would need to take home at least $15,000 a month.


💡 Quick Tip: Buying a home shouldn’t be aggravating. SoFi’s online mortgage application is quick and simple, with dedicated Mortgage Loan Officers to guide you through the process.

The Upfront Costs of a $700K Mortgage


When you buy a house and take out a mortgage, in addition to your down payment, you will have to pay closing costs. Closing costs are mostly the administrative expenses for closing the deal. They include mortgage lender fees, titling fees, insurance fees, taxes, and appraisal fees. These costs are typically not covered by your down payment. Here’s a closer look at some upfront costs a buyer will face.

Earnest money Also known as a deposit, this is the money you put down to show the seller you’re serious about buying their place.

Down payment The amount you pay as a down payment will depend on the type of home loan. A conventional loan without private mortgage insurance (PMI) may call for a 20% down payment. On the other hand, you might get a conventional loan with mortgage insurance with a 3% down payment. A down payment for a Federal Housing Administration loan is typically around 3.5%, and Veterans Affairs loans or U.S. Department of Agriculture loans have no down payment required.

The more you can afford as a down payment, the less interest you will pay because the lender considers you less risky as a borrower.

Closing costs Your lender will charge you fees for administrative services, such as application, origination, and underwriting fees. And then there are transfer taxes associated with transferring the title from the seller to the buyer.

Recommended: First-Time Homebuyer Guide

The Long-Term Costs of a $700K Mortgage

Your mortgage payments pay down the principal and the interest on your loan. Proportionally, more of your payment will go toward interest rather than the principal at the beginning of the loan term, and at the end of the loan term, more of your payment will go toward paying down the principal.

If you paid less than 20 percent as a down payment, your mortgage lender may also require you to pay private mortgage insurance (PMI) on a monthly basis. However, there are also other long-term costs:

Property taxes These can add up to thousands of dollars a year and can change annually, or as often as your town raises taxes.

Home maintenance One rule of thumb is to set aside 1% of your home’s total value each year for maintenance costs.

HOA, condo, or co-op fees If your home is a condo or part of a homeowners association (HOA) or co-op, you will need to pay a monthly fee. The fee covers services such as grounds maintenance, use of a community center, and snow removal. HOA fees can range anywhere from $100 to $1,000.

Homeowners’ and hazard insurance Some areas are designated “high risk” for natural disasters, such as floods, earthquakes, wildfires, or severe storms. If your home is located in one of these areas, you will need to pay hazard insurance, which could cost between 0.25% to 0.33% of the home’s value paid annually.

Recommended: Home Loan Help Center

Estimated Monthly Payments on a $700K Mortgage

The table below shows the estimated monthly payments for a $700,000 mortgage loan for both a 15-year and a 30-year loan with interest rates varying from 5% to 8%.

Interest rate

15-year term

30-year term

5% $5,567 $3,779
5.5% $5,752 $3,997
6% $5,941 $4,221
6.5% $6,133 $4,450
7% $6,328 $4,684
7.5% $6,526 $4,922
8% $6,728 $5,166

How Much Interest Is Accrued on a $700K Mortgage?

The amount of interest accrued on a $700,000 mortgage will depend on the length of the loan and the interest rate. A shorter loan term will mean less accrued interest. For example, for a 15-year loan for $700,000 with a 6% interest rate, the interest would amount to around $363,259 over the life of the loan. For a 30-year loan with a 6% interest rate, the interest would be more than double at $810,867.

Amortization Breakdown for a $700K Mortgage

An amortization schedule for a mortgage loan tells you when your last payment will be and how much of your monthly payment goes toward paying off the principal and how much goes toward paying off the interest. At the beginning of the loan term, most of your payment will go toward the interest.

Below is the mortgage amortization breakdown for a $700,000 mortgage with a 6% interest rate for a 30-year loan.

Year

Beginning balance

Interest paid

Principal paid

Ending balance

1 $700,000.00 $8,596.08 $41,766.16 $691,403.92
2 $691,403.92 $9,126.27 $41,235.97 $682,277.65
3 $682,277.65 $9,689.16 $40,673.09 $672,588.49
4 $672,588.49 $10,286.76 $40,075.48 $662,301.73
5 $662,301.73 $10,921.23 $39,441.02 $651,380.50
6 $651,380.50 $11,594.83 $38,767.42 $639,785.67
7 $639,785.67 $12,309.97 $38,052.27 $627,475.70
8 $627,475.70 $13,069.22 $37,293.02 $614,406.48
9 $614,406.48 $13,875.30 $36,486.94 $600,531.18
10 $600,531.18 $14,731.10 $35,631.14 $585,800.07
11 $585,800.07 $15,639.68 $34,722.56 $570,160.39
12 $570,160.39 $16,604.30 $33,757.94 $553,556.09
13 $553,556.09 $17,628.42 $32,733.82 $535,927.66
14 $535,927.66 $18,715.70 $31,646.54 $517,211.96
15 $517,211.96 $19,870.05 $30,492.20 $497,341.91
16 $497,341.91 $21,095.59 $29,266.65 $476,246.32
17 $476,246.32 $22,396.72 $27,965.52 $453,849.60
18 $453,849.60 $23,778.10 $26,584.14 $430,071.50
19 $430,071.50 $25,244.68 $25,117.56 $404,826.82
20 $404,826.82 $26,801.72 $23,560.53 $378,025.10
21 $378,025.10 $28,454.79 $21,907.46 $349,570.31
22 $349,570.31 $30,209.82 $20,152.43 $319,360.50
23 $319,360.50 $32,073.09 $18,289.15 $287,287.40
24 $287,287.40 $34,051.29 $16,310.95 $253,236.11
25 $253,236.11 $36,151.50 $14,210.74 $217,084.61
26 $217,084.61 $38,381.25 $11,981.00 $178,703.36
27 $178,703.36 $40,748.52 $9,613.73 $137,954.85
28 $137,954.85 $43,261.80 $7,100.45 $94,693.05
29 $94,693.05 $45,930.09 $4,432.15 $48,762.96
30 $48,762.96 $48,762.96 $1,599.29 $0.00

What Is Required to Get a $700K Mortgage?

Let’s say you want to buy a home for $875,000 with a down payment of 20% or $175,000. To qualify for a 30-year mortgage loan of $700,000 with a 6% interest rate, you would need to earn around $180,000 annually. For a 15-year loan, you would need to earn around $253,000 annually.

This calculator shows you how much of a mortgage you can afford based on your gross annual income, your monthly spending, your down payment, and the interest rate.


How Much House Can You Afford Quiz

The Takeaway

When calculating how much a mortgage loan for $700,000 will cost per month, the principal and interest are two of the biggest components. However, there are other costs that may be included, such as private mortgage insurance. And don’t forget about closing costs as well.

The length of the loan will drastically affect the amount of interest paid over the life of the loan. For example, the interest paid on a 30-year loan versus a 15-year loan with a 6% interest rate could be more than double.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.


SoFi Mortgages: simple, smart, and so affordable.

FAQ

What will the monthly payments be for a $700K mortgage?

The longer your loan term, the lower your monthly payment on a mortgage loan, but you will pay more interest over the life of the loan. The exact monthly payment for a $700,000 mortgage will depend on the interest rate and the loan term. The payment for a $700,000 30-year mortgage with a 6% interest rate is approximately $4,200. For a 15-year loan with the same interest rate, the monthly payment is around $5,900.

How much do I need to earn to afford a $700K mortgage loan?

To buy a home for $875,000 with a down payment of 20% or 175K, and with a 30-year mortgage loan of $700,000 with a 6% interest rate, you would need to earn around $180,000 annually. For a 15-year loan, you would need to earn around $253,000 annually.

How much down payment is required for a $700K mortgage loan?

The down payment you will pay will depend on the type of mortgage and the lender. Some lenders accept 3%, while some expect 20%. If your down payment is less than 20%, you might have to add private mortgage insurance (PMI) to your monthly payments.


Photo credit: iStock/Xacto
SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.


SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information.


*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SOHL0323011

Read more
ladder and paint

Cash-Out Refi 101: How Cash-Out Refinancing Works

If you’re cash poor and home equity rich, a cash-out refinance could be the ticket to funding home improvements, consolidating debt, or helping with any other need. With this type of refinancing, you take out a new mortgage for a larger amount than what you have left on your current mortgage and receive the excess amount as cash.

However, getting a mortgage with a cash-out isn’t always the best route to take when you need extra money. Read on for a closer look at this form of home refinancing, including how it works, how much cash you can get, its pros and cons, and alternatives to consider.

What Is a Cash-Out Refinance?

A cash-out refinance involves taking out a new mortgage loan that will allow you to pay off your old mortgage plus receive a lump sum of cash.

Like other types of refinancing, you end up with a new mortgage which may have different rates and a longer or shorter term, as well as a new payment amortization schedule (which shows your monthly payments for the life of the loan).

The cash amount you can get is based on your home equity, or how much your home is worth compared to how much you owe. You can use the cash you receive for virtually any purpose, such as home remodeling, consolidating high-interest debt, or other financial needs.

💡 Quick tip: Thinking of using a mortgage broker? That person will try to help you save money by finding the best loan offers you are eligible for. But if you deal directly with a mortgage lender, you won’t have to pay a mortgage broker’s commission, which is usually based on the mortgage amount.

How Does a Cash-Out Refinance Work?

Just like a traditional refinance, a cash-out refinance involves replacing your existing loan with a new one, ideally with a lower interest rate, shorter term, or both.

The difference is that with a cash-out refinance, you also withdraw a portion of your home’s equity in a lump sum. The lender adds that amount to the outstanding balance on your current mortgage to determine your new loan balance.

Refinancing with a cash-out typically requires a home appraisal, which will determine your home’s current market value. Often lenders will allow you to borrow up to 80% of your home’s value, including both the existing loan balance and the amount you want to take out in the form of cash.

However, there are exceptions. Cash-out refinance loans backed by the Federal Housing Administration (FHA) may allow you to borrow as much as 85% of the value of your home, while those guaranteed by the U.S. Department of Veterans Affairs (VA) may let you borrow up to 100% of your home’s value.

Cash-out refinances typically come with closing costs, which can be 2% to 6% of the loan amount. If you don’t finance these costs with the new loan, you’ll need to subtract these costs from the cash you end up with.

💡 Quick tip: Using the money you get from a cash-out refi for a home renovation can help rebuild the equity you’re taking out. Plus, you may be able to deduct the additional interest payments on your taxes.

Example of Cash-Out Refinancing

Let’s say your mortgage balance is $100,000 and your home is currently worth $300,000. This means you have $200,000 in home equity.

If you decide to get a cash-out refinance, the lender may give you 80% of the value of your home, which would be a total mortgage amount of $240,000 ($300,000 x 0.80).

From that $240,000 loan, you’ll have to pay off what you still owe on your home ($100,000), that leaves you with $140,000 (minus closing costs) you could potentially get as an get as cash. The actual amount you qualify for can vary depending on the lender, your creditworthiness, and other factors.

Common Uses of Cash-Out Refinancing

People use a cash-out refinance for a variety of purposes. These include:

•   A home improvement project (such as a kitchen remodel, a replacement HVAC system, or a new patio deck

•   Adding an accessory dwelling unit (ADU) to your property

•   Consolidating and paying off high-interest credit card debt

•   Buying a vacation home

•   Emergency expenses, such as an unexpected hospital stay or unplanned car repairs

•   Education expenses, such as college tuition

Qualifying for a Cash-Out Refinance

Here’s a look at some of the typical criteria to qualify for a cash-out refinance.

•  Credit score Lenders typically require a minimum score of 620 for a cash-out refinance.

•  DTI ratio Lenders will likely also consider your debt-to-income (DTI) ratio — which compares your monthly debt payments to monthly gross monthly income — to gauge whether you can take on additional debt. For a cash-out refinance, many lenders require a DTI no higher than 43%.

•  Sufficient equity You typically need to be able to maintain at least 20% percent equity after the cash-out refinance. This cushion also benefits you as a borrower — if the market changes and your home loses value, you don’t want to end up underwater on your mortgage.

•  Length of ownership You typically need to have owned your home for at least six months to get a cash-out refinance.

Tax Considerations

The money you get from your cash-out refinance is not considered taxable income. Also, If you use the funds you receive to buy, build, or substantially improve your home, you may be able to deduct the interest you pay on the cash portion from your income when you file your tax return every year (if you itemize deductions). If you use the funds from a cash-out refinance for other purposes, such as paying off high-interest credit card debt or covering the cost of college tuition, however, the interest paid on the cash-out portion of your new loan isn’t deductible. However, the existing mortgage balance is (up to certain limits). You’ll want to check with a tax professional for details on how a cash-out refi may impact your taxes.

Cash-Out Refi vs Home Equity Loan or HELOC

If you’re looking to access a lump sum of cash to consolidate debt or to cover a large expense, a cash-out refinance isn’t your only option. Here are some others you may want to consider.

Home Equity Line of Credit

A home equity line of credit (HELOC) is a revolving line of credit that works in a similar way to a credit card — you borrow what you need when you need it and only pay interest on what you borrow. Because a HELOC is secured by the equity you have in your home, however, it usually offers a higher credit limit and lower interest rate than a credit card.

HELOCs generally have a variable interest rate and an initial draw period, which can last as long as 10 years. During that time, you make interest-only payments. After the draw period ends, the credit line closes and payments with principal and interest begin. Keep in mind that HELOC payments are in addition to your current mortgage (if you have one), since the HELOC doesn’t replace your mortgage.

Home Equity Loan

A home equity loan allows you to borrow a lump sum of money at a fixed interest rate you then repay by making fixed payments over a set term, often five to 30 years. Interest rates tend to be higher than for a cash-out refinance.

As with a HELOC, taking out a home equity loan means you will be making two monthly home loan payments: one for your original mortgage and one for your new equity loan. A cash-out refinance, on the other hand, replaces your existing mortgage with a new one, resetting your mortgage term in the process.

Personal Loan

A personal loan provides you with a lump sum of money, which you can use for virtually any purpose. The loans typically come with a fixed interest rate and involve making fixed payments over a set term, typically one to five years. Unlike home equity loans, HELOCs, and cash-out refinances, these loans are typically unsecured, meaning you don’t use your home or any other asset as collateral for the loan. Personal loans usually come with higher interest rates than loans that are secured by collateral.

Pros of Cash-Out Refinancing

•  A lower mortgage interest rate With a cash-out refinance, you might be able to swap out a higher original interest rate for a lower one.

•  Lower borrowing costs A cash-out refinance can be less expensive than other types of financing, such as personal loans or credit cards.

•  May build credit If you use a cash-out refinance to pay off high-interest credit card debt, it could reduce your credit utilization (how much of your available credit you are using), a significant factor in your credit score.

•  Potential tax deduction If you use the funds for qualified home improvements, you may be able to deduct the interest on the loan when you file your taxes.

Cons of Cash-Out Refinancing

•  Higher cost than a standard refinance Because a cash-out refinance leads to less equity in your home (which poses added risk to a lender), the interest rate, fees, and closing costs are often higher than they are with a regular refinance.

•  Mortgage insurance If you take out more than 80% of your home’s equity, you will likely need to purchase private mortgage insurance (PMI).

•  Longer debt repayment If you use a cash-out refinance to pay off high-interest debts, you may end up paying off those debts for a longer period of time, potentially decades. While this can lower your monthly payment, it can mean paying more in total interest than you would have originally.

•  Foreclosure risk If you borrow more than you can afford to pay back with a cash-out refinance, you risk losing your home to foreclosure.

Is a Cash-Out Refi Right for You?

If you need access to a lump sum of cash to make home improvements or for another expense, and have been thinking about refinancing your mortgage, a cash-out refinance might be a smart move. Due to the collateral involved in a cash-out refinance (your home), rates can be lower than other types of financing. And, unlike a home equity loan or HELOC, you’ll have one, rather than two payments to make.

Just keep in mind that, as with any type of refinance, a cash-out refi means getting a new loan with different rates and terms than your current mortgage, as well as a new payment schedule.

Turn your home equity into cash with a cash-out refi. Pay down high-interest debt, or increase your home’s value with a remodel. Get your rate in a matter of minutes, without affecting your credit score.*

Our Mortgage Loan Officers are ready to guide you through the cash-out refinance process step by step.

FAQ

Are there limitations on what the cash in a cash-out refinance can be used for?

No, you can use the cash from a cash-out refinance for anything you like. Ideally, you’ll want to use it for a project that will ultimately improve your financial situation, such as improvements to your home.

How much can you cash out with a cash-out refinance?

Often lenders will allow you to borrow up to 80% of your home’s value, including both the existing loan balance and the amount you want to take out in the form of cash. However, exactly how much you can cash out will depend on your income and credit history. Also, you typically need to be able to maintain at least 20% percent equity in your home after the cash-out refinance.

Does a borrower’s credit score affect how much they can cash out?

Yes. Lenders will typically look at your credit score, as well as other factors, to determine how large a loan they will offer you for cash-out refinance, and at what interest rate. Generally, you need a minimum score of 620 for a cash-out refinance.

Does a cash-out refi hurt your credit?

A cash-out refinance can affect your credit score in several ways, though most of them are minor.

For one, applying for the loan will trigger a hard pull, which can result in a slight, temporary, drop in your credit score. Replacing your old mortgage with a new mortgage will also lower the average age of your credit accounts, which could potentially have a small, negative impact on your score.

However, if you use a cash-out refinance to pay off debt, you might see a boost to your credit score if your credit utilization ratio drops. Credit utilization, or how much you’re borrowing compared to what’s available to you, is a critical factor in your score.


SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information.


SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.


*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

SOHL0723023

Read more
paper ladder and window

How to Start Process of Buying a Home — Home Buying Process Checklist

The decision to buy a home is a significant milestone in life, representing stability, security, and investment. The process of purchasing a home, however, can be complex and overwhelming, especially for first-time homebuyers. There are numerous steps involved, some more complex than others, and you generally need to follow the steps in a certain order to ensure everything goes smoothly.

To help you navigate the home-buying process successfully, we’ve created a simple step-by-step home-buying checklist. Each item you cross off the list will bring you one step closer to achieving your dream of home ownership.

10 Key Steps to Buying a House

1. Determine How Much House You Can Afford

The first step in the home-buying process is to evaluate your financial situation and determine a realistic budget. While a lender can tell you how much of a mortgage you can get approved for, you may want to do some calculations on your own to make sure your budget doesn’t get stretched too thin. A general rule of thumb is to spend no more than 28% of your gross monthly income on housing costs, including mortgage (interest and principal), property taxes, insurance, and any association fees.

Using a home affordability calculator can help you determine how much house you can afford to buy by taking into account your income, debts, location, and down payment amount.

2. Make a Plan for the Down Payment

Once you have a budget in mind, you’ll need to plan for the down payment. You may have heard that you need to make a 20% down payment on a home, but that’s really just the threshold many lenders use for requiring private mortgage insurance (PMI) on a conventional loan.

The minimum down payment you need to make for a house will depend on the type of mortgage you’re planning to apply for. Loans guaranteed by the U.S. Department of Veterans Affairs (VA) usually do not require a down payment, while FHA loans, which are backed by the Federal Housing Administration, may require as little as 3.5% down.

When choosing how much to put down, however, you’ll want to keep in mind that a higher down payment brings down the principal (and lifetime interest payments), which can lower the total cost of homeownership.

3. Get Preapproved for Your Mortgage

Working with a lender to get preapproved for a mortgage is an essential step that demonstrates your seriousness as a buyer and strengthens your position in negotiations. You may want to shop around and look at mortgage offerings and rates from different lenders before you choose a lender for preapproval. Keep in mind, though, that you do not have to use the same lender to finance your loan that you use for your preapproval.

In order to get preapproved, a lender will usually require a significant amount of information and documentation. This may include:

•  Income statements (such as W2s, 1099s, and tax returns)

•  Proof of assets (such as bank statements and retirement accounts)

•  Debts (including student loans, credit cards, and any other mortgages)

•  Records of bankruptcies and foreclosures

•  Current rent

Once you submit all your paperwork, the lender will assess your financial situation and preapprove you for a specific loan amount, which will be spelled out in a preapproval letter. This letter will give you a clear understanding of your buying power. It can also come in handy when submitting an offer, since it shows sellers and real estate agents that you’re a serious buyer who will be able to get financing.

A preapproval letter is typically valid for only 90 days (sometimes less), after which it will need to be updated.

💡 Quick Tip: Buying a home shouldn’t be aggravating. Online mortgage loan forms can make applying quick and simple.

First-time homebuyers can
prequalify for a SoFi mortgage loan,
with as little as 3% down.


4. Find the Right Real Estate Agent

The right real estate agent can make a significant difference in your home-buying experience. A knowledgeable and experienced agent will guide you through the process, provide valuable insights, and negotiate on your behalf. Ideally, you want to choose an agent who understands your needs, has expertise in the local market, and communicates effectively. You may want to ask for recommendations from friends, family, and colleagues, then interview at least three agents before choosing the one you want to work with.

Recommended: Preparing to Buy a House in 8 Simple Steps

5. Shop for Your Home

With the help of your real estate agent, you can begin the fun part of the home-buying process — searching for your dream home. Before you start, it can be a good idea to create a list of your must-haves and nice-to-haves, considering factors such as location, size, amenities, and proximity to schools, workplaces, and amenities. This will help guide your realtor in finding the right homes to show you.

6. Make an Offer

When you find a home that fits the bill, you’ll want to work with your agent to make a competitive offer that reflects your budget and market conditions. Your agent will then prepare a complete offer package, which will include your offer price, any special terms or contingencies, your preapproval letter, and (in some cases) proof of funds for a down payment. If the seller accepts your offer, congratulations — you only have a few more steps left in the home-buying process. At this point, you will likely need to write a check that will serve as a deposit on the home. This typically goes into an escrow account.

7. Get a Mortgage

Once your offer is accepted, you’ll need to get official approval for a mortgage. You’re not obligated to go with the same lender that issued your preapproval, so you may want to shop around and compare rates and terms from different banks, credit unions, and online lenders.

If you do decide to officially apply for your loan with the same lender that did your preapproval, they already have many of the documents you’ll need for your application. However, you will likely need to provide updated and perhaps additional financial statements. If you apply with a new lender, you’ll need to supply much of the same information as you did for preapproval.

The lender will evaluate your financial information, review your creditworthiness, and conduct an appraisal of the property. You’ll want to be sure to work closely with your lender and respond quickly to any requests to ensure a smooth and timely mortgage approval process.

8. Get a Home Inspection

A home inspection is a crucial step to uncover any potential issues or defects in the property. For this step, you’ll likely need to hire a professional home inspector to assess the condition of the home, including its structure, systems, and components. The inspector will provide a detailed report highlighting any areas of concern. Once you receive the inspector’s report, you’ll want to review it with your real estate agent and discuss potential repairs or negotiating points with the seller.

9. Negotiate any Repairs or Credits with the Seller

Based on the home inspection and lender’s appraisal results, you may need to negotiate repairs or credits with the seller. Your real estate agent will guide you through this process, helping you assess the necessary repairs/credits and determine fair solutions.

Your ability to negotiate with the seller will likely depend on the current real estate market. If it’s a hot seller’s market, for example, it may be challenging to get concessions, since the seller can move on to the next offer. However, if it’s an issue that will likely come with other buyers, you may have success. In a buyer’s market, there will typically be more room for negotiation at this stage of the process.

10. Close the Sale

The final step in the home-buying process is the closing. During the closing, you and the sellers will sign legal and financial documents and ownership of the property is transferred to you. It’s important to review all the closing documents carefully, including the settlement statement, loan documents, and homeowner’s insurance. You’ll also need to provide all the necessary funds, including the down payment and closing costs. Once the final paperwork is executed, you will receive the keys to your new home. Congratulations, you’re a homeowner!

The Takeaway

Buying a home is a multi-step process that starts with assessing your current income and expenses and determining how much you can afford to spend on a home. You then need to start saving up for a downpayment, get preapproved for financing, and find the right home. Once you have an offer accepted, it’s time to secure a mortgage, conduct an inspection, negotiate repairs, and close on the sale. It’s a lot. But taking a systematic approach — and following a home-buying checklist — can help ensure a smooth and stress-free home-buying experience.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.


SoFi Mortgages: simple, smart, and so affordable.

FAQ

What are the 3 most important things when buying a house?

Three of the most important things to consider when buying a house are:

•  Location The location of a property impacts your life in a number of key ways, including commute times, access to amenities, schools, safety, and future property value.

•  Affordability A home’s affordability includes not just the purchase price but also ongoing expenses, such as mortgage payments, property taxes, insurance, and maintenance costs. You’ll want to be sure you can comfortably afford the monthly payments without stretching your finances too thin.

•  Condition of the property It’s important to assess the condition of the property through an inspection before you buy. Consider factors such as age, maintenance requirements, repairs needed, and potential future costs.

What is the most difficult step in buying a house?

Securing financing and obtaining a mortgage is often the most challenging step in buying a house. To qualify for a mortgage, you generally need to meet certain criteria, understand various mortgage options, and navigate the loan approval process, which involves providing extensive financial documentation and meeting strict timelines.

What are the 5 phases of buying a home?

The process of buying a home can be broken down into five distinct phases:

•  Planning and preparation This involves evaluating your finances, establishing a budget, saving for a down payment, and obtaining preapproval for a mortgage.
Property search In this phase, you actively search for properties that align with your criteria and budget.

•  Offer and negotiation Once you find your ideal property, you submit an offer to the seller. This phase may involve negotiation, where you and the seller work to find mutually acceptable terms with the help of your real estate agent.

•  Closing process The closing process includes reviewing and signing various legal and financial documents, such as the purchase agreement, mortgage paperwork, and insurance policies.

•  Ownership and moving in At this stage, you complete the closing, make the necessary payments, and receive the keys to your new home. You may also need to coordinate with movers, set up utilities, and take care of other logistics related to the move.


SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information.


SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.


*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SOHL0723044

Read more
TLS 1.2 Encrypted
Equal Housing Lender