Good Prices For First Time Home Buyers Loans In Texas?

What’s A Good Price For First-Time Homebuyers?

Part 2

If you have credit cards, then you know that issuers give you credit lines you can spend. Some cards might give you as much as $25,000. Should you actually go out and spend every dollar? No, you shouldn’t, and you probably never came anywhere close to that if you had such a card.

That $25,000 is just what they figured you could safely handle after they went through your reported income, your employment history, and your credit reports.

buying your first house in houstonYou can expect mortgage lenders to do much of the same thing. They’ll figure out your max purchase price based on factors like debt-to-income ratio and the down payment you’re willing to make.

This is no different than a credit card in that you shouldn’t spend it all. It’s a smart money move to aim for a home that costs less than your upper bound, particularly if you are buying for the first time ever.

Owning a home has a lot of costs that you might not know about yet. Veteran homeowners know about them, but if your history is in renting, then you don’t.

Just the monthly overhead that keeps your home up can be daunting. If you rented, you maybe had the rent, the power, and the cable or Internet, and some apartments even throw those in these days. You weren’t paying for maintenance, water, trash, landscaping, insurance, or property taxes.

Forget the monthlys. What about the furniture? What about the new baby coming? Oh boy! You also have to factor in something known as payment shock, and that’s basically a big jump in monthly liabilities.

For instance, should your housing payment double, it will stun you. If you had been renting for a grand each month and now owe triple that every month, then you might hear concerns from an underwriter.

You need to be concerned too. At the very least, recognize what you happen to be getting into here.

What’s A Good Price For First-Time Homebuyers?

Trying to buy your first home can make you want to pull your hair out. No matter how much you pay, you’ll lose sleep for a few weeks, if not longer.

When I bought my first home, I buried my head under pillows and stayed there as long as I could every morning. I was stressed out beyond belief.

I eventually talked to one of my friends, and brought it up. He told me that if I was anxious over what could happen, then I was halfway there already. I was told in no uncertain terms to chill out. I tried. I really did try.

You’ll Find Out The Most You Might Afford From Your Lender

Start the process by visiting your bank or a mortgage lender.

Many of them offer pre-qualification or pre-approval letters free of charge and without any commitment on your part.

They’ll look at your finances to figure out how much they can afford to lend you.

This will establish how much you can spend when you hunt for a home.

Data from the National Association of Realtors looked at the national median prices of single-family homes in the fourth quarters of 2017 and 2018. They went from $247,800 up 4% to $257,600.

Before making a decision, let one of the experts at The Texas Mortgage Pros help you find out exactly what loan is best for you.  Contact us today Or Call Us @ (877) 280-4833 click here to go to the next article in this series.

Good Prices For First Time Home Buyers Loans In Texas?

What’s A Good Price For First-Time Homebuyers?

Part 1

Buying your first-ever home can get rather nerve-wracking. No matter how much you pay, whether that feels like a lot or a little, you’re going to have some nights early on where you can’t sleep.

When I first bought a place, I buried myself under my blankets and didn’t come out for a while, and that happened for more nights than I want to admit. It was very stressful.

I even talked to a friend about this, and he told me that if I was worrying about what-ifs, then I was practically already there. He told me to chill out, okay? I got it.

The Lender Tells You How Much You Can Afford

Your first stop is probably going to be a mortgage lender or bank.

You might get a pre-approval or pre-qual letter free of cost or obligation.

You can use that to determine how much you can afford just based on your current finances.

That will at least set up a price ceiling you can use as an upper limit for your home search.

There’s no universal answer that suits everyone, but we’re able to talk about underlying stuff that comes up with solutions that work for you.

buying your first house in houstonThe National Association of Realtors has data that claims the national median home price for an already existing home for a single family during the last quarter of 2018 was $257,600, which was up 4 percent from the previous year, when it was $247,800.

First-timers might want to look for prices close to these points because starter homes usually fall on the cheaper side of the price scales. Then again, it’s not always so simple.

Home prices in different housing markets around the country are all over the place, with a lot of cities being over the median.

Also, your finances will factor in since they will limit just how much you’re able to afford, and there’s no way around that.

The mortgage lender or bank is only going to let you borrow so many dollars based on your down payment, income, and assets.

That means you could just visit to get your pre-approval or pre-qualification so you can know just how much you are able to afford. This is known as an upper bound, meaning you know you can’t exceed it.

Even if you’d like to purchase a million-dollar home, you might wind up getting limited to properties worth $400,000 because of your finances.

This is a good start since you at least have a pretty good idea what your price ceiling and affordability are. It means you’re able to set your filters on things like Zillow and Redfin so they don’t exceed your purchase price of $400,000.

If you’d rather not talk to anyone, you can even just run numbers on your own through a mortgage calculator, although odds are that it won’t be nearly as accurate.

Either way, you should look past money because there are certainly other considerations, like why you’re buying to start with, just how long you intend to stay, the features you might need, and so forth.

Do You Plant To Live Within, Below, Or Above Your Means?

Are you a frugal soul that enjoys getting by with less? Or do you swing for the fences? It’s not necessary to spend the full maximum that you’re able to afford.

It can even make some sense to buy under so you wind up with a safety net that can cover unexpected costs.

Using the instance from earlier, assume you only qualify for a maximum purchase price of about $400,000. It’s helpful, sure, but it also doesn’t mean that you should spend it all.

Before making a decision, let one of the experts at The Texas Mortgage Pros help you find out exactly what loan is best for you.  Contact us today Or Call Us @ (877) 280-4833 click here to go to the next article in this series.

Facts About Fixed Rate Mortgages And How They Work

For the average person buying a home is exciting and fun. It’s figuring out how to get it financed that is not as much fun. Housing prices and the rates on mortgages vary overtime but a buyer can rely on a fixed rate mortgage to not fluctuate.

What Are Fixed Rate Mortgages?

This type of mortgage is simply one where the interest rate always stays the same amount over the life of the loan. This means that how much you pay each month and the amount of interest that is applied to it will always be the same. The one exception to this is if your homeowner’s insurance or property tax rates change then it could impact your monthly payments. For the average homeowner, a fixed rate mortgage is the most ideal because it’s stable and predictable.

In most situations, a fixed rate mortgage will have a higher interest rate than an adjustable-rate will initially. But ARMs are only lower initially in most cases and then after a certain period of time such as three, five, or seven years, the interest rate goes up. Once that initial period is up, the rate can fluctuate as can your monthly payments and that fluctuation can take place over the remainder of the loan. There are some limits to the fluctuation as most ARMs do have a cap.

The Most Common Mortgages Available Are Either An Adjustable Rate Mortgage Or A Fixed Rate Mortgage

A typical fixed rate mortgage will come with the option of choosing how long you finance for and this can range from 10 to 30 years. The interest rate itself will always stay the same regardless of how long the mortgage is for. Because this is so much more stable it is the preferred type of mortgage for the average homeowner.

The rate of interest paid on an adjustable rate mortgage will fluctuate overtime during the course of the loan. An ARM has its interest rate based on a margin and this is what determines what you pay in interest any given month. The spread remains the same but what causes the fluctuation is the fact that the index changes.

The loan will be adjusted regularly and those changes are based on the terms of the mortgage. When the interest rates increase the borrower will have to pay more and they will need to put that extra amount in their budget to meet the higher payment. A borrower doesn’t need to make this type of adjustment when they have a fixed rate mortgage because it will always stay the same. The one drawback is that they also won’t get the advantage of having their payments go down if interest rates go down unless they refinance.

The fixed rate mortgage can increase if the borrower places property tax and homeowners insurance in escrow. This is due to the fact that insurance and taxes will sometimes go up. This is not the interest rate fluctuating that causes the increase but only the fact that the cost of insurance and taxes went up.

How Long Does It Take To Repay A Fixed Rate Mortgage?

The term of the mortgage is what determines how many years it will take to repay the loan. The most common fixed rate mortgages are either 15 or 30 years. Here are some of the pros and cons to consider with each of these options.

30 Year Mortgage

The biggest pro when it comes to a 30-year fixed-rate mortgage is the fact that the monthly payments can be considerably lower than they will be with a shorter-term mortgage. The drawback to this option is the fact that over the life of the loan you will pay a lot more interest than you would with a shorter-term mortgage. The interest rate is usually more for this type of mortgage as well.

15 Year Mortgage

The pros of this mortgage include the fact that you will pay less interest because it is a shorter term and the interest rate itself will be lower. The reason why more homeowners don’t take advantage of this choice is the fact that the monthly payments are higher.

For most borrowers, the 30-year fixed-rate mortgage is preferable over the 15-year loan simply because the payments are lower. When you go with a longer-term it usually means you can borrow more money. For some homeowners, it means that they can have an additional monthly cash flow that can be applied to other things including emergency savings, children’s college tuition, and other priorities.

For those who have the extra cash flow, the 15-year mortgage may be the better choice because they’ll pay off their home faster and the interest rate will be lower. Because you’re repaying more of the principal it means your overall monthly payments will be higher and this means you’ll need to make certain it’s something you can afford together with other financial goals you have.

Understanding The Difference In Mortgage Lengths

If Jane is a first-time home buyer and she has a tight budget then the length of time she chooses for the mortgage can determine how much she can borrow. If as an example she feels that she can afford $1,000 a month then she may be able to get a payment close to that but the length of the loan will determine how much she can get. If Jane chooses a 30-year fixed mortgage with an interest rate of 4.5% then she can get a $200,000 house and her payment will be $1,013.

If she chooses a 15-year mortgage then the interest rate might be 4% and this would mean for the same monthly payment she would only be able to get a home that was $137,000. This means that if she goes with a 30-year fixed loan she will be able to borrow an extra $63,000 while maintaining the same monthly payment. Of course in that situation, she would pay more interest.

If Jane decides to borrow $200,000 on a 30-year fixed mortgage at four and a half percent then she will pay $164,813 in interest over those 30 years. If on the other hand, she goes with the 15-year mortgage at 4% then she will pay only $66,288 in interest over the mortgage. That means she will save $98,525.

Compare Rates

There are always a number of options that you’ll want to consider. It’s best that you understand exactly how much you’ll be paying in principal and interest and this can easily be done using a mortgage calculator. Obviously, a lender will be more open to offering a competitive rate and terms to those who have a stronger credit history.

Before making a decision,k let one of the experts at The Texas Mortgage Pros help you find out exactly what loan is best for you.  Contact us today Or Call Us @ (877) 280-4833