First-Time Homebuyer In Houston? These Loans Are Available For You

10 Houston First-Time Homebuyer Loans & Programs

As a first-time homebuyer, you must be navigating one of the toughest real estate markets in the economy. It’s very hard to find the right house to buy since most people are buying any available houses to flip for profit. On the other end, builders are now focused on high-end homes because of the escalating costs so they can boost their own profits.

The Benefits Of Loan Programs For First-Time Homebuyers

Are you thinking about buying your first home? Well, there are first-time homebuyer programs, loans, and grants available to you. These are financial assistance programs given to qualified buyers, especially if they meet the set income restrictions and have high credit scores. Here are some of the ways you can benefit from these programs.

1. Grants

You might be eligible for a grant to cover costs related to buying a home such as down payment or closing costs.

2. Assistance With Closing Fees

You can get a loan that puts a cap on the total amount you can be charged for closing fees.

3. Deferred Payments

With these loans, you will not be charged interest or be forced to repay the loan until you sell the home or pay off the mortgage.

4. Savings On Interest

Some loan lenders will pay the interest or subsidize it. You can also get help with qualifying for a loan with reduced interest rates.

5. Loan Forgiveness

If you stay in the home for a predetermined period, a portion of your loan will be forgiven.

6. Assistance With Down Payment

With this program, you will put down a small down payment and the lender covers the rest. Also, in some cases, you will not pay the down payment at all.

10 First-Time Homebuyer Loans & Programs

1. FHA Loan Program

It is a loan for buying a home guaranteed by the Federal Housing Administration. It is the best loan program if you have low credit scores and a little amount of money as a down payment.

2. USDA Loan Program

It is a loan program guaranteed 100% by the U.S Dept of Agriculture. It is applicable to low-income loan borrowers in rural areas.

3. VA Loan Program

It is a loan program guaranteed by the U.S Dept of Veteran Affairs. Here, any military personnel will not pay any down payment. It’s also applicable to veterans and their families.

4. Good Neighbor Next Door Buyer Aid Program

It is a program offered by HUD (the U.S Dept of Housing and Urban Development). It is a housing program for people in law enforcement, emergency medical technicians, firefighters, and teachers.

5. Freddie Mac Or Fannie Mae Loans

They are conventional loans that are backed by Freddie Mac or Fannie Mae. They require a 3% down payment. It’s the best loan for people with strong credit.

6. HomePath Ready Buyer Program

Here, you will get 3% assistance with closing costs if you are a first-time homebuyer. To qualify you must complete an educational course and also buy a foreclosed Freddie Mac or Fannie Mae property.

7. Energy Efficient Mortgage Program

It is backed by VA or FHA loan programs. Here, buyers can combine the total cost of energy-efficient upgrades and apply for loan upfront.

8. FHA Section 203 (k) Loans

Here, you can borrow the money needed to pay for any home improvement projects. You will roll the costs into an FHA loan with the primary mortgage.

9. Local First-Time Home Buyer Programs & Grants

Various cities and states offer first-time buyer grants and programs for a down payment on a new home or assistance with closing costs.

10. Native American Direct Loan

It is a program backed by the VA that offers loans to Native American Veterans. They can buy, build, or renovate homes on their federal trust land.

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.  Feel free to contact us or call us today!

First Time Home Buyer In Texas? FHA Loan Can Clear The Path For You

Why An FHA Loan Is Ideal For First Time Home Buyer In Texas

It is every American’s dream to own a home. However, homeownership is becoming increasingly expensive with each day. Real estate prices have spiked in many parts of the US, and aspiring homeowners are finding it much harder to put down a down payment and afford the monthly payments. This is not to mention the upkeep and maintenance costs. For some people, renting appears to be the more favorable option.

However, while renting isn’t necessarily a bad thing, you will be pleased to learn that, in a bid to make housing more affordable, US government offers some home loan programs. This is particularly beneficial for those with poor credit. One such loan program is the FHA loan offered by the Federal Housing Authority, and it can prove to be more beneficial than you think.

The Advantages Of FHA Home Loans

There are three key reasons why you should consider the Federal Housing Administration loan program- easy credit requirements, reduced down payments, and low closing costs. While in the case of a conventional home loan you may be required to put a downpayment of 5% or more, with an FHA loan, you are allowed to put down as little as 3.5% or $3,500 per every $100,000 you borrow.

Besides lowered down payment requirements, you don’t need to have a perfect credit score to qualify. People with a credit score as low as 580 can be approved for an FHA loan. It is worth noting that you can also be approved even with a lower credit score but you will have to put a downpayment of 10% or more.

The Federal Housing Administration has made it even easier to qualify as you can be approved even if you have other types of debts. As opposed to conventional mortgage lenders who require that you have a debt-to-income ratio_(your total amount of debt compared to your total income as a percentage) of below 36% including housing, you can be approved for an FHA loan with a debt-to-income ratio of up to 43%.

Should You Get An FHA Home Loan?

While the benefits and downsides discussed above will help you to determine whether you are a good candidate for an FHA loan, you should consider speaking with several lenders before making a final decision. By consulting a mortgage expert, you will be able to find out which loan will be ideal for your financial situation and needs.

Ultimately, FHA loans are suitable for first-time homebuyers who are still struggling to build their credit and save up enough money to invest in a home. With the easy credit requirements, reduced down payment requirement, and higher debt-to-income ratio, the FHA has made it easier for almost everyone to afford a home. However, this is only so if you are looking to buy a home within FHA loan limits.

Even though an FHA loan is favorable to buyers with less-than-perfect credit, the conventional mortgage offers a better deal to those with a good credit score and have enough money for a sizeable down payment. Additionally, if you’ve saved up 20% of your home’s purchase price, a traditional loan will definitely be your best option as you will avoid mortgage insurance costs altogether.

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.  Feel free to contact us or call us today!

The Suitable Home Loans For Texas First Time Homebuyers

Financing Basics For First Time Homebuyers In Texas Part 3

 

Fixed Vs Floating Rate Mortgages

Another consideration to make is whether to go for a fixed-rate or floating-rate (variable rate) mortgage. For fixed-rate mortgages, rates don’t change throughout the loan period. The benefit of getting this loan is that you know the monthly costs of the loan for the whole period beforehand. Whenever the prevailing interest rates are low, you’re guaranteed a good rate for a considerable duration.

first time home buyer banner for planoFloating-rate mortgages, like interest-only mortgages or adjustable-rate mortgages (ARM), are meant to assist first-time homebuyers or people who speculate an income rise along with the loan duration. Floating-rate loans normally enable one to get lower introductory rates in the initial years of the loan, enabling you to qualify for more money compared to opting for a more costly fixed-rate loan. This option can, undoubtedly, pose a risk if your income doesn’t grow at the same rate as the increase in interest rate. Another disadvantage is that the market interest rates may fluctuate: Whenever they rise drastically, the terms of your loan will shoot up with them.

How ARMs Work

The commonest types of ARMs are usually of one, five, or seven-year periods. The opening interest rate is usually fixed for a particular period of time and is then reset with time, often every month. Whenever an ARM changes, it adapts to the prevailing market rate, which is often done by adding a predetermined percentage (spread) to the usual U.S Treasury rate. Though an upper limit is imposed on the increase, and ARM adjustment may be more costly than the usual fixed-rate mortgage loan to compensate the financier for giving a lower rate in the introductory period.

Interest-only loans are a kind of ARM in which one only pays the mortgage interest and not principal in the introductory period until the loan returns to a fixed and principal-paying loan. These types of loans can be beneficial for first-time borrowers since paying interest only reduces the monthly cost of borrowing significantly and will help you qualify for a bigger loan. However, since you don’t pay the principal during the initial period, the amount due on the loan remains unchanged until you commence repaying the principal.

The Texas Mortgage Pros

The Texas Mortgage Pros team consists of mortgage professionals all over Texas. We are committed to providing our clients with the highest quality service for your mortgage needs. Combined with the lowest rate and multiple loan programs available in your area – Spring, San Antonio, Tomball, The Woodlands, Dallas, Austin, and Houston, Texas. Our outstanding mortgage professionals with years of experience will work with you one-on-one to ensure that you get the home loan that is tailored specifically to meet your situation and expectation. Whether you are purchasing your dream home, first home, refinancing an existing loan, or consolidating debt, our highly experienced team of loan officers can help you find the right loan program at the lowest rate possible.

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.  Feel free to contact us or call us today! Click here to go to the first article in this series.

The Suitable Home Loans For Texas First Time Homebuyers

Financing Basics For First Time Homebuyers In Texas Part 2

 

Equity & Income Requirements

The financier determines the pricing of home mortgage loans in two distinct ways, with both relying on the creditworthiness of the borrower. On top of checking your FICO score from the major credit bureaus, financiers will compute the loan-to-value ratio (LTV) as well as the debt-service coverage ratio (DSCR) to determine the amount they will offer you, and the interest rate.

LTV refers to the actual or implied amount of equity available in the security being borrowed against. For home purchases, the LTV is arrived at by dividing the amount of loan by the home’s purchase price. Financiers assume that the more the amount you are paying in the form of the down payment, the less the possibility of defaulting on the loan. The higher the LTV, the bigger the risk of default, and the lenders will, therefore, charge more.

The debt service coverage ratio signifies your ability to service the mortgage. Financiers divide your net monthly income by the costs of the mortgage to determine the probability of defaulting on the mortgage. Most financiers require a DSCR greater than one. The higher the ratio, the higher the probability that you will cover the borrowing costs, which means less risk to the lender. The higher the DSCR, the higher the probability of the lender negotiating the loan rate since, even at a lower rate, the lender gets a better risk-adjusted return.

As such, you should submit any kind of qualifying income when negotiating with a mortgage financier. Often, an additional part-time job or other income-generating ventures can be the difference between qualifying and failing to qualify for a loan or achieving the best possible rate.

Private Mortgage Insurance

LTV also determines whether you will need to buy private mortgage insurance (PMI). The PMI protects the financier from default by transferring some of the loan risks to a mortgage insurer. Most financiers require PMI for loans bearing an LTV higher than 80%, implying any loan where equity ownership in the home is less than 20%. The amount to be insured, as well as the mortgage plan, will determine the mortgage insurance cost and collection plan.

The majority of mortgage insurance premiums are collected monthly alongside tax and property insurance securities. Once LTV equals or is less than 78%, PMI should be eliminated automatically. You can cancel PMI as soon as the home appreciates sufficiently in value to grant you 20% equity, and a set duration has elapsed, say two years. Some financiers, such as the FHA, will evaluate the mortgage insurance as a total sum and capitalize it into the amount of loan.

There are tactics to evade PMI payment. One should not borrow more than 80% of the property value when buying a home; another way is using home equity financing or another mortgage to make up more than 20%. The commonest program is known as an 80-10-10 mortgage. The 80 represents the LTV of the first mortgage, the first 10 represents the LTV of the second mortgage, while the third 10 stands for your equity in the homeownership.

Though the second mortgage’s rate will be higher than that of the first, on a combined basis, it should not exceed the rate of a 90% LTV loan. An 80-10-10 mortgage may be less costly than paying for PMI and also enables you to hasten the payment of the second mortgage and do away with that part of the debt fast for you to pay off your home early.

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.  Feel free to contact us or call us today! Click here to go to the next article in this series.

The Suitable Home Loans For Texas First Time Homebuyers

Financing Basics For First Time Homebuyers In Texas Part 1

 

The numerous financing options at the disposal of First Time Homebuyers often seems overwhelming. However, researching on the various property financing basics can save you a great deal of time and money. Understanding the market of the property location and whether it provides incentives to financiers could mean a whole lot of advantages for you. Consider your finances to be sure that you are getting the most suitable mortgage.

Standard loans are uninsured mortgages or those that are not guaranteed by the federal government. They are basically fixed-rate mortgages. Their sterner requirements of making a larger down payment, having a higher credit score, lower-income to debt ratios, and often the need for private mortgage insurance render them the toughest to qualify for. However, standard mortgages are often less costly expensive than guaranteed mortgages.

Corpus Christi texas classic home bought with assistance paymentsStandard loans are classified as either confirming or non-conforming loans. The conforming loans are those that adhere to rules such as loan limits, which are set by the government-sponsored enterprises Freddie Mac or Fannie Mae since they or other financiers often buy and package such loans and sell them in the form of securities in the secondary market. The loan limit for a conventional mortgage in 2020 is $510,400 overall. Although it can go up in the case of well-known high-cost areas.

A loan in amounts higher than this is known as a jumbo loan and usually comes with a higher interest rate. The high rates are attributed to the high risk associated with these loans, since they involve huge sums of money, and this makes them less likable in the secondary market. Non-conforming loans are usually issued by portfolio lenders who determine their lending terms.

FHA Loans

The Federal Housing Administration (FHA), a portion of the U.S Department of Housing and Urban Development, provides several mortgage programs. An FHA loan requires a lower down payment and is easier to qualify for, unlike a conventional loan. FHA loans are great for First Time Homebuyers since they come with lower upfront costs and less severe credit requirements. As such, First Time Homebuyers can make down payments as low as 3.5%. FHA loans cannot go be. FHA loans cannot go beyond the statutory limits stated above.

Most importantly, all FHA borrowers ought to pay a mortgage insurance premium (MIP), which is included in their mortgage payments.

VA Loans

The U.S Department of Veterans Affairs (VA) assures VA loans. The body doesn’t offer loans itself, but rather guarantees mortgages offered by qualified financiers. Such guarantees enable veterans and service people to acquire home loans with friendly terms, normally without a down payment. Mostly, it is easier to qualify for VA loans than conventional loans. Financiers usually limit the maximum VA loan to the conventional mortgage loan limits. Before signing up for a loan, seek eligibility from the VA. If you are granted, the VA issues an eligibility certificate that you can use when applying for the loan.

On top of these types of federal loans and programs, state and local governments and agencies support assistance programs to grow investment or homeownership in specific locations.

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.  Feel free to contact us or call us today! Click here to go to the next article in this series.

Helpful Guide For Buying Your First Home In Texas

7  Steps To Take Prior To Buy Your First Texas Home

One of the most significant milestones in many people’s journey into adulthood is buying a home.

1. Credit

One of the things that you should start off doing is checking your credit. If you have a credit card, you might be able to check through your provider. If not, you can always get a free credit report. When checking, if you find issues that hinder your score, you will be punished with having a higher interest rate. If you find any inconsistencies or wrong accounts linked to your credit, you will want to get full documentation to dispute it. Mortgage companies will always take this into account when they are looking to decide whether or not to provide you with financing. If you don’t have a favorable rating, you want to look for ways to improve it prior to even getting started with the buying process. By raising your credit even a few points, you will be able to drastically improve your rates.

2. Budget Analysis

Understand the numbers. You want to factor in the total amount you have available to spend. Think about everything from how much you are spending on rent, debt, and other fixed costs that you have. While you might believe you can pay for a mortgage, it’s important to go into the process knowing you can. By examining your paycheck and where it is going, you will be able to see where you can improve your budgeting and you will be able to make adjustments to correct issues.

3. Debt Percentage

When you are examining your debt percentage, you want to look to see if you meet the qualifying criteria. A mortgage company is likely going to require that you have 33 percent of your monthly income that you can devote to the cost of the mortgage. Whereas, 38 percent can include consumer debt. If you aren’t within this range, you are likely not going to qualify.

4. Your Down payment

The mortgage company will look very closely at your down payment and its source. They will look at everything from bank statements to money being transferred in and out of your accounts. Because of this, you want to ensure that you are not spending money gifted from friends or family instantly. Rather, you will want to wait for it for a long period of time. The company will also want to be certain that you have the funds available, but also that you are able to cover any and all of the closing costs associated with the sale.

5. Know The Other Costs

When you are looking to purchase a home, you want to be familiar with the other costs that are involved with the home buying process. It’s important that you have considered them. While you might have been paying rent on a monthly basis, you will be taking on a lot of additional costs including but not limited to real estate taxes, a potential association maintenance fee, utilities, homeowner’s insurance, and annual maintenance and repair costs. These costs are likely to be brand new to you have never been a homeowner.

6. Interest Rate & Mortgage

When you enter any mortgage site, you will be presented with so many choices it will make your head spin. Not only will you see different types of rates, but you will also see varying lengths and more. Along with this, you will have to figure out whether you want to lock the rate in or allow it to float throughout.

7. Local Market

You need to understand your local housing market in the area where you are looking to buy. If homes are at an all-time high and the bids are skyrocketing, be wary of jumping in. Housing prices are in a constant state of flux and by purchasing at the wrong time, you can be costing yourself thousands.

Contact our expert mortgage professionals, call us today or use our interactive tools that are on offer on our site. We cant wait to meet you.