A Deeper Understanding About Conventional Loans In Texas

Texas Conventional Loans: Everything You Need To Know

Remember as a kid, you used to dream about purchasing a home? Maybe you didn’t want to rent anymore, and that’s when you started to daydream about it. Whatever the case is, you probably envisioned everything from a gorgeous backyard to a front yard with a tree in it, all the way to what your rooms were going to look like.

Know what you weren’t imagining? You weren’t picturing research mortgage options and speaking to lenders. Now you probably are overwhelmed and you might prefer to go back to daydreaming. So, what should you be doing now?

Let’s start things off by talking about the conventional loan. This loan is the most common mortgage option out of there. You might have even had a person recommend this type of loan to you.

However, do you know what a conventional loan is? How are they in regards to other loan options? Before you decide whether or not to apply for a conventional loan, make sure you read the rest of this article.

What Is This Type Of Loan

It is a mortgage loan. It isn’t guaranteed by the government, nor is it insured. Instead, private lenders are the ones backing the loan. The borrower typically pays the insurance.

Conventional loans are more common than loans backed by the government. In fact, over 70% of new home sales involved conventional loans. That was just in the first quarter of 2018 alone.

There is a lot of flexibility with conventional loans. But, they are extremely risky due to not being insured by the government. Not only that but qualifying for a conventional loan can be extremely difficult.

Conventional Loans & Government-Backed Loans: The Difference

When you’re considering a mortgage, you have to know the difference between government-backed loans and conventional. Government-backed loans are loans like VA loans and FHA loans. These types of loans are backed by the government, in some capacity. For example, the Veterans Administration backs VA loans and that administration is part of the government.

An FHA loan requires you to put down 3.5%, at the very least. You have to pay a mortgage insurance premium every single month too. The insurance is paid to the lender in the event you default on the loan.

In order to get a VA loan, you have to be or have been in the military. This includes being a member or former member of the National Guard, or you have an eligible surviving spouse. You don’t need a down payment with a VA loan, but there is a funding fee you pay. It’s a one-time fee and it is around 2% of the loan amount.

If you default on the loan, the lender is the one at risk, who will sell your home via a short sale or foreclosure if you do end up defaulting. The bottom line is you don’t get out of this loan simply by defaulting on it. Just like any other kind of loan, there are consequences associated with not keeping up with payments or defaulting.

Lenders take on additional risk. This is why you have to pay private mortgage insurance. The way to avoid this is to put at least 20% down.

Conventional Loans: The Different Types

There are two types. One is a conforming loan. The other is a non-conforming loan. Below are a few key differences between the two types of conventional loans.

Conforming Conventional Loans

Fannie Mae and Freddie Mac have guidelines that loans have to meet in order to be classed as a conforming conventional loan. These two enterprises are sponsored by the government, and they buy mortgages from lenders.

The loan limit is one of the rules set forth by the two enterprises. A one-unit property has a baseline loan limit of around $450,000. The limit may be higher if the property is located in a high-cost area. If you want to find out what the current conforming loan limits are in your area, then you can contact lenders and ask them or you can ask your current lender.

Nonconforming Conventional Loans

How about loans that exceed the limit? These loans are called non-conforming conventional loans. They are also called jumbo loans.

Nonconforming loans are loans that aren’t purchased by Freddie Mac or Fannie Mae. This is because the loans don’t meet requirements for loan amounts. Private institutions or lenders are the ones that fund these types of loans.

Qualifying For Conventional Loans

You have to speak with a lender, as this is the first step you take. If you’re in the middle of buying a home, speak to Texas Mortgage Pros. They can give you excellent advice.

When you speak with a lender, they’ll ask you for info. This includes documentation such as bank statements, pay stubs and tax returns to name a few. The point of this is to make sure you have income coming in on a regular basis.

A down payment is required in order to be approved for a conventional loan. The amount could be as little as 3% of the amount. However, it’s a good idea to put down 20% or 10% at the very least, that way you won’t have to pay PMI.

Speak with your lender and ask how to become a certified home-buyer. You will have to take a few extra steps in order to do this, but it is worth it. In short, this will help you get to the closing part of the process much quicker, so essentially you will have an edge over other people searching to buy a home.

Need Additional Mortgage Help

Do you need additional mortgage help, even after reading all of the above? Remember, the type of mortgage you decide to go with can impact your financial future. This is why you want to learn as much as you can about the different options out there. The more research you do, the better off you’ll be.

You want to choose a lender that will thoroughly explain what your mortgage options are and a lender that will help you make a well-informed decision. This is why you should speak with Texas Mortgage Pros. They have helped many people get the financing they need for the home of their dreams. Go ahead and contact them today or whenever the time you want to buy a home comes.

Feel free to contact us or give us a call if you have any further questions.

Understanding The Process For Home Loan In Texas

Adept Texas Home Loan Process Explained

Buying a home is extremely exciting. It can take a long time to find just the right house that you love and then, you will need to find a loan that will work for you. This can be a confusing time and you may need to have some pointers on how to get the best loan for your needs. Here are some great tips for you while you are going through the process of finding the proper loan for your home-buying experience:

You Should Get A Pre-Approval For The Loan

During the process of pre-approval, you will be able to find out if your credit score will meet the requirements of obtaining a loan. You will need a credit score of 580 in order to qualify with the Federal Housing Administration (FHA). If you decide to go through the conventional track for loans with Fannie Mai or Freddie Mac, you will need to have a credit score of 580. Another option that you can utilize is through the VA, the US Department of Veterans Affairs. The lenders set the guidelines for a credit score themselves. When the lender is checking your score, they will also look into the amount of debt you are carrying. They will look into your income and assets and get the debt-to-income ratio, which is the DTI ratio.

Determine Your Budget

After you get your pre-approval letter, you will want to develop a budget that you will stick to. Use a mortgage calculator to help with the amount of money that you will need to meet your mortgage payments. You will want to write down your budget and carry it with you at all times. Make sure that you leave some money available for you to enjoy yourself some of the time without going overboard.

Time To Go House Hunting

This is the fun part of house hunting because you can look at so many different houses that you will want to buy. Keep your budget in mind as you are looking around at the ones that you can afford. This is the time that you should enlist the services of a real estate agent. They are so helpful in finding the houses that are in our price range. Since they are a wealth of knowledge, they will be able to tell you all kinds of interesting facts about the area that the homes are in. This will help you to get a better idea of which home you eventually will buy.

Make An Offer To The Seller

You will want to place an offer when you have found a house that meets your needs. This is when you will make an agreement to purchase and your real estate agent will present this to the seller to see if they will agree. You will also need to determine how much of a down payment you can put down on the sale. Talk this offer with your real estate agent thoroughly so that they can advise you in the best way possible about this issue.

The Underwriting Process

Once the offer is accepted, the agreement will be sent to the bank for approval. The underwriting process begins and they will check on your employment, income, and assets. Your pre-approval will only last for 90 days so if you will not want to take on any more credit affecting purchases during that time so that your loan will go through quickly. You will need to supply the bank with any documentation that is necessary to show your details.

An Appraisal & An Inspection

The appraisal is used to protect both the buyer and the seller of the house. This occurs when an estimated worth is given about the home. It compares other homes that are selling for the same price range. If there are discrepancies in the appraisal process, you may want to talk to your real estate agent about a counteroffer of some sort. If not, you will proceed to the closing phase. An inspection is not necessary but is highly advantageous for you the buyer. It will allow you to see what work may need to be done and if you need to, you can ask the seller to also include this work in the purchase agreement. Since it can work to your benefit, you should have the inspection completed on the home during this time.

The Closing Phase

After the underwriting process is complete, you will reach the closing phase in the purchase of the home. You will bring along your downpayment and any other closing costs to this meeting and you will receive the deed of transfer. Signing the mortgage is also completed during their phase and you will be the proud owner of the home that you have wanted. The closing period is an anticipated but frustrating time so make sure that you stay calm during it. Once you get through that part, you will be able to get into your home and start making your personal touches to it.

Count On Your Real Estate Agent

Utilize your real estate agent to the fullest extent. You want to make sure that you are getting the most for your money when it comes to purchasing a home. They will be able to negotiate with the seller on a variety of issues. Sometimes, they may suggest putting a higher downpayment on the home so that the seller will complete work and repairs that need to be done. Listen to your real estate agent because they are practiced and experienced in these matters. They will know how to get you the best deal possible.

Your Home Search Should Be All-Inclusive

Make sure that you look at all the homes that are in the price range that you can afford and the area that you want. Take your time in order to find the right one for you. Your real estate agent will understand if you want to keep looking so be honest with them while you are looking for your home. They become a friend during this time and they will get to know your likes and dislikes too. Give them specifics when you have them about the homes that you are interested in. Pick their brains because they will know a lot about the people and places in the area, which can make a huge difference in whether or not you will feel comfortable living in a home.

Sticking To A Budget

Though sticking to a budget is difficult for many people, it is necessary when you are willing to take on the responsibility of a mortgage. Be sure that you are willing to live within your means. You will need to give up certain things in order to purchase the home but it is all worth it in the end. Be sure that you meet your budget so that your credit continues to stay good while you are living in your new home.

Throw A Housewarming Party When You Are In Your New Home

You will want to invite your friends, family, neighbors, and coworkers to a party in your new home. They will generally bring a housewarming gift that can assist so much in getting the things that you need to furnish your home. Be sure that you offer them food and drinks, and in many cases, they may help with tasks that need to be done in your new home. It is beneficial for you to throw this type of party and to make sure that everyone has a great time.

Know The Area Where You Live

Your real estate agent is a great person to talk to about all the things that you need to know about the area. Go out and explore too. You will want to know the shopping, entertainment, community services, hospitals, police, and other aspects of the area. As you go about learning this type of information, you are bound to meet a lot of interesting people. You will make friends in a short period of time when you are friendly to those that you talk to along the way.

Once you have your house, you will want to make it your personal home. Start your traditions and make it a place that you can call your own. Take as long as you need in order to give it the touches that you have always dreamed of. Your home will become your palace so take the time and the attention that it deserves. Create the space that you want to stay in for as long as you desire.

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 @ (866) 772-3802

The Complete Guide To Buying A Texas Home You Can Afford

9 Steps To Buying A Home You Can Afford In Texas

Buying a home will be, for most of us, the single biggest purchase we ever make. The scale alone makes it a complex process; you need to take steps to ensure you end up in a house you can really afford. This nine-step checklist is a good framework to use:

1. Check Your Credit And Income

Checking your credit score is the best place to start budgeting for your house. Your score will dictate the interest rate you get on a mortgage; the higher the score, the lower the rate. Good credit can take a healthy bite out of your monthly mortgage payments. If your score looks bad, you might want to consider delaying your home purchase and taking some time to improve it.

When you start thinking about how large a mortgage payment you can afford, look at how much money you’re currently taking home. Personal finance experts suggest that you should consider 30 percent of your monthly income as an absolute maximum for your mortgage payment.

This is also the time to start thinking about how long you plan on staying in your new home. You’ll save money if you prepare yourself for a long stay – 10 years or more. Selling this home later will oblige you to turn over a hefty chunk of the selling price (typically six percent) over to your Realtor. If you only stay in the house a few years before selling it, this sales cost can easily offset any growth in the value of the property. Remember that moving is often a significant expense, too.

2. Build Up A Strong Down Payment

Modern home financing opens up some options that will allow you to buy even if you don’t have the cash for a down payment. Your finances might not be ready for purchasing a home if you can’t put together a down payment of at least 10 percent, though.

The ideal down payment to shoot for is 20 percent. This is a magic number because your lender will require you to buy private mortgage insurance if your down payment is less. PMI gives the bank an added layer of protection if you can’t pay off the mortgage. Depending on your down payment and your credit score, PMI can inflate your mortgage’s total cost by 0.3 to 1.5 percent.

3. Try To Expect The Unexpected

Fitting your mortgage payments into your monthly budget is a good start to planning outsmarts home purchase. Remember that other expenses come along with owning a home! You’ll have to pay for insurance, property tax, and maintenance expenses. The addition to your monthly expenses can run into the hundreds of dollars.

Consider a full range of known and potential expenses when deciding whether or not you’re ready to buy. Look past the mortgage. Do you have the resources to handle taxes, renovations, closing costs, maintenance, inflation, and fees?

4. Get Your Lender To Pre-Approve You For A Mortgage

By this point, if your finances are ready for buying a home, you should have a pretty good idea of how much you can afford to spend. You want to resist any temptation to exceed your limits when you start looking at houses.

If you start the process by talking to a lender, you can go into it with a pre-qualification letter that sets out your financial capacity. This is a handy tool for you, potential sellers, and real estate agents. Having a pre-qualification letter makes you a more attractive buyer if a seller is considering multiple offers.

Applying for pre-qualification means picking out a lender and being fairly committed to borrowing from them. Speak to multiple banks and mortgage brokers before you finalize your decision.

Remember that there’s no penalty for spending less than you’re approved for. In the long run, you’ll be doing yourself a favor if you buy a home that doesn’t use up every last penny of the financing you’ve lined up.

5. Pick The Right Agent

The best real estate agent to work with is one who understands your goals and has the right skills and experience to work toward them. Be aware that some agents specialize and you need a suitable one. If you’re buying a primary home and looking to raise a family, you don’t need the expertise of an agent who specializes in investment property.

Making a good match with an agent can pay off big in the long run. One scheme that’s worth considering is signing a contract that adds client satisfaction bonuses into your agent’s compensation scheme. This can make a dramatic difference in the level of service you receive, and working with an agent who prioritizes satisfaction will make the whole buying experience easier for you.

6. Add Your Home Needs To Your Price Range

The previous steps should have provided you with a pretty clear budget for your home. Now is the time to start combining your financial resources with your specific needs. Where do you want to live? How much space do you need? Do you have school zone preferences?

Thanks to internet tools, you can do far more preliminary research than ever before. You can get a very good grasp on your local housing market before you ever set foot on a piece of for-sale property. The more effort you’re willing to put into the research process, the better your results are likely to be.

7. Check Floor Plans Before Visiting

You need to be aware of the potential drawbacks of modern, online house-hunting, too. Photos are a huge part of selling modern homes – and photos can be deceptive. Look out for camera trickery that can make rooms look bigger than they are. Are the blinds always closed in the photos posted online? Chances are, the views are underwhelming.

The most honest depiction of a prospective home you’ll find online is the floor plan. The goal is to find a place that you can make into a home, so you should study floor plans and make sure that the layout of a home that interests you is really suitable.

8. Don’t Step Outside Your Comfort Zone When Putting In An Offer

Buying a home can be an exciting, emotional process, but you always need to keep a clear sight of the financial stakes. Hang onto your budget and stay rational about what you’re spending your money on. If you develop an interest in a broadly appealing house, you may find yourself in a bidding war. Don’t overextend yourself and offer more than you can afford in the mistaken belief that any given house is “the one” for you.

By the same token, don’t settle for a home because the buying process has exhausted you. You’re going to miss out on some great homes and pass up some stinkers before you strike the right deal.

9. Close Wisely

After you make an offer and the seller accepts it, the sale will be contingent on the closing process. This means securing your mortgage and passing all the necessary inspections, including your own walk-through of the property.

Don’t get tripped up by the many expenses involved in closing! Plan to pay for appraisals, attorneys, transfer taxes, inspections, and title insurance. As a rule of thumb, expect closing costs to be roughly five percent of your total mortgage cost. Your specific closing requirements will vary according to the state you’re buying in. Review the details with your agent and/or lawyer so you know what to expect.

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! 

A Step-By-Step Guide On How To Find A Professional Texas Mortgage Lender

Understanding How To Find & Finance Your Home In Texas

Buying a house can be a bit of a complex process, but by keeping to the following 10 steps you will the process of finding and financing your future home easy and manageable.

Step 1: Begin Your Research Early

You will want to begin your search early by going through newspapers, classifieds, magazines and other sources with good listings. Take note of the types of houses you are interested in, what prices they are typically asking for and how long they usually stay on the market. Notice if there are any changes in the prices during the time on the market that could be an indication of housing trends.

Step 2: Determine How Much House You Can Afford

You will want to make a decision based on your own financial capacity. But, lenders ill typically advise homebuyers to look for a house that is three to five times what they can put aside for household incomes. This is if they are calculated to pay a 20% down payment and may have other debts on the side.

Step 3: Get Pre-qualified for Your Mortgage

Before you actually begin to look for the home for you, it would be good to know exactly how much cash you will have to work with. You will need to provide your mortgage bankers with some financial information so that you can see what amount you will be eligible for. Once you know how much financial support you can expect from your mortgage lender you will have a better idea of what price range you can begin in.

Step 4: Find The Right Real Estate Agent

A real estate agent is a powerful tool when attempting to buy or sell the house. A real estate agent can add value to your purchase by helping you find a home with the best value you can receive for your money. A good real estate operates on extensive information that is not readily available to the public and this can be extremely useful in finding a good option in your price range. Finally, a real estate agent has extensive experience in the buying process and how to negotiate a sale successfully.

Step 5: Shop For Your Home And Make An Offer

Now you can begin scheduling some appointments to see the homes you are interested in. Because you will improve your chances of landing the best house for you’re with the more options you see you will want to take as many pictures as you can and plenty of notes so you can remember what you like and dislike about the homes you visit.

Be sure to check out the smaller details of each house. For example:

  • Check the plumbing by testing how strong the water pressure is and how long it takes for hot water to begin flowing.
  • Try out the electrical outlets by turning switches on and off and trying out the plugs.
  • Open and close the windows and doors to make sure they are properly functioning.

It’s also important to take a look at the neighborhood and make some notes on details like:

  • What are the conditions of the other homes in the area?
  • What is the traffic on the street like?
  • Is there enough parking if you have a large gathering with family and friends?
  • How convenient is the location in relation to other places you will want to go like shopping centers, schools, parks or restaurants?

Take as long as you need to find a home you are sure about, then you can work with your real estate agent to prepare the perfect offer and negotiate a fair price based on the prices of other homes in the area. Once you and the seller have found a price you can both agree upon the home is then in escrow until all the remaining detail for the house have been completed.

Step 6: Get A Home Inspection

Most often a home inspection is included in the process of coming up with a fair price for a home. This is because your real estate agent will want to be sure the home is structurally sound and not in need of heavy maintenance work. Your real estate agent will arrange for this inspection to take place within a few days of your offer being accepted. This is important as it allows you to renegotiate the deal you have made if the inspection turns up anything that would make you feel uneasy about going through with the deal.

Both the home seller and buyer will receive a report of what was discovered in the home inspectors’ revision. This is when you can choose to stay with the offer as it stands, withdraw the offer or renegotiate. Before the sale is concluded you will have a chance to walk through the house and make sure that all the changes you had mentioned were made.

Step 7: Work With A Mortgage Banker To Select Your Loan

You will find many lenders and a good portion will be offering very competitive loan rates and excellent customer service. You obviously have many questions during your home buying process and it is good to know that our experienced mortgage bankers are on hand to assist you and make this process much easier.

Homebuyers all have their own specific priorities when looking for a mortgage. Some people want to keep the monthly payments as low as they can and others are more interested in keeping their payments from increasing. Others will want a loan based on the understanding that they will be moving again in a few years.

Step 8: Have The Home Appraised

The mortgage lenders will arrange to have an appraiser come by to provide an estimate of the home worth. This appraiser will be a third party company and associated neither with the lender nor the borrower. The figure provided by the appraiser will let all parties know the fair value of the home.

Step 9: Coordinate The Paperwork

Once the financial matters have been concluded there will still be a considerable amount of paperwork that needs to be completed before a home is purchased. Your lender may have a title company that handles all the paperwork.

Step 10: Close The Sale

The deal is closed once the last of the document has been signed, which also includes the papers for the loan. It will usually take a few days for the loan to be funded once the paperwork has been submitted to the lender. Once the seller has received their check, the process is complete and you can move into your new home.

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 @ (866) 772-3802

Mortgage Lender Shopping: How To Get An Adept Home Loan In Texas

How To Find A Good Texas Mortgage Lender & Get The Loan You Need

If you would like to purchase a home, you need to find a good mortgage lender to work with. Instead of rushing into selecting a mortgage lender, you should take some time to find out more about these lenders and the different ways they can benefit you. When choosing to purchase a property, you should expect to deal with that property for quite some time. In fact, you will likely need to make monthly mortgage payments for several decades until you have officially paid off the cost of the home. Because you need to make payments regularly, finding the right lender is essential.

Starting The Search For A Good Lender

While you do want to get a decent interest rate on your mortgage loan, there is a lot more to it than that. You are going to need to find a mortgage company with caring and experienced professionals that can assist you with the home-buying process. You can follow some of the helpful tips below when you are trying to find the best lender.

Start to Work on Improving Your Credit

Some people do not have the ability to get approved for a mortgage loan because they have such bad credit. You need to know that there are certain requirements you must meet before a lender is going to approve you for the mortgage loan. The reason that people with bad credit are often denied is that the lenders view them as risks. It is hard to believe that someone with such bad credit is going to make payments each month on time.

Some lenders are willing to work with people that have lower credit scores, but they will charge much more interest. If you can start improving your credit score little by little, you can get approved for a decent mortgage loan with very low-interest rates, which will help you save some money over time. You can even negotiate better terms with the different lenders until you find something that is perfect for you. Work on getting your score above the 580 range because it does make such a difference.

Check the credit report to see if the information on your report is accurate. Work on paying off your credit cards at a faster pace, even if it means putting down much more than the monthly minimum. If you start to get your debt lowered, your credit score is going to start going up and you will see a massive improvement.

Understand Your Options

Different types of lenders are available for those looking to obtain a mortgage loan to purchase a home. You need to know of these options before you decide where you are going to get your mortgage loan from.

Credit Unions

Unlike traditional banks, credit unions are owned by the members. They tend to provide mortgage loans with lower interest rates because they are all about helping the people. If you are not a member of a credit union, you can always look for one to join before you start applying for a mortgage loan.

Traditional Bank Loans

Mortgage loans are often provided by some of the leading banks in the industry. If you are banking with a company that does provide these loans, you may even have a better chance of getting approved for the mortgage loan.

Correspondent Lenders

You do have the option of applying for a loan with correspondent lenders. These lenders do have the funds available to provide you with a loan. However, once they do give you the loan, they may choose to sell it to a different financial institution that you would then have to deal with in the future when making your payments.

Savings & Loan

If you are saving with a specific institution, you could potentially get a loan for your mortgage from that institution. Savings and loan institutions regularly offer mortgage loans, but they are not as easy to find as they once were. Even so, they are such a suitable option, so it helps to look around to see if you can find one.

When you are thinking about working with a specific lender, you should check the Better Business Bureau website to get more information on them. You can find out what other people are saying about these lending institutions, too.

Receive A Pre-approval Letter

Getting a pre-approval letter for a mortgage could improve your chances of getting the loan you need. By having the pre-approval letter, lenders will realize that you likely have a decent credit score with a good track record of paying off any debt you might owe. It shows different lenders that your information has been pulled and it is quite possible for you to afford the cost of paying down on your mortgage each month.

If you can get the pre-approval, you can avoid wasting valuable time. The process of receiving a preapproval letter is quite simple. You would simply need to supply some importation information about yourself, including your full name, your social security number, details on any debt you owe, and details on the income you earn. You would need to have copies of your tax returns to provide proof of your income.

Make Some Comparisons

Go online to start getting more information on some of the different mortgage rates that are offered. Although you can get rate quotes, those quotes are subject to change, so you should keep that in mind. The only way to know your exact rate is to provide the lender with your specific information while completing an application for the loan.

After you have obtained a few different quotes, you can start comparing them to figure out which one is best. Doing as much research as you can is ideal. Remember that it is always possible for you to negotiate the rates, too.

Have Questions Ready To Ask

You might want to speak to loved ones about the companies that have worked with when getting mortgage loans. Some of the people you trust the most, such as your siblings, parents, or best friends could have some great advice and recommendations based on their own experiences. When reaching out to different lenders, you should have several questions that you are ready to ask them. These questions include:

  • How can clients reach you when they need to discuss certain matters?
  • How long does it take, on average, to get approved for the mortgage loan?
  • Are there lender fees that I will need to pay after purchasing a home?
  • Are certain fees waived?
  • How much money will I need to have for the down payment to get the loan?

It helps to know more about the costs that come along with purchasing a home. While you know that you will need to make mortgage payments, there are some other expenses that you will have to deal with, such as the cost of closing the deal and the cost of specific transaction fees. You might even need to make a deposit of a certain amount of money to get the process started. If you receive documents from a lender, read through everything before agreeing to anything and signing the documents in front of you.

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 @ (866) 772-3802

Understanding The Factors That Affect Texas Mortgage Rates

The Factors That Affect Mortgage Rates In Texas

The long-term cost of buying your home will be affected by mortgage interest rates if you have a mortgage. Mortgage borrowers will want to get the lowest possible rate while mortgage lenders will want to manage their risks when the rates change. This is why the lowest possible interest rates will only be available to borrowers who have the best credit histories and solid finances.

The rates that a borrower can get will be determined based on their financial health, but there are some government financial policies and economic factors that affect the overall mortgage industry. All of these factors can be broken down into the 5 most important ones. All of these factors are based on supply and demand in some form. While you might be more concerned with your financial health, it is important to know what these factors are as they help you determine what you could be paying in the future.

Inflation

When the price of something rises, the value of a single unit of currency will decrease meaning it can buy fewer items or services. This process will create a loss in purchasing power and it will impact the overall cost of living. This generally leads to a decline in economic growth. Economists state that sustained inflation will happen when the economic growth of the country is outpaced by the supply of money.

A gradual increase in pricing because of inflation is one of the essential factors in the economy and will be critical for mortgage lenders. Over time, the purchasing power of dollars is eroded by inflation. This results in mortgage interest rates needing to stay at a level that is sufficient to overcome the erosion and ensure that they get a real net profit from their interest returns.

An example of this will be a mortgage rate of 5% when there is an annual inflation of 2%. The real return on these loans will be 3%. The mortgage lender will need to carefully monitor the inflation rate and adjust their rates accordingly to maintain this 3% return.

The Level Of Economic Growth

Mortgage rates will also be affected by economic growth indicators such as the employment rate and GDP. When these indicators show high economic growth, it will generally lead to higher levels of consumer spending and bigger salaries. This will lead to more people looking for a mortgage to buy a home. While this is a good thing, the increased demand will propel the rates up because lenders only have a set amount of money to lend to mortgage borrowers.

If the economy is weakening, you will see the opposite happen. When wages and employment is declining, there will be less demand for mortgages. This will put pressure on the lenders and cause a lowering of interest rates.

The Federal Reserve Monetary Policy

One of the most important factors that influence the entire economy and the interest rates is the monetary policy being pursued by the Federal Reserve. It is important to note that the Federal Reserve does not actually set the interest rates for the mortgage industry. However, the actions it takes with the Fed Funds rate and the adjustment of the money supply will have a major impact on this. Generally, when the money supply is increased, there will be lower rates while a tightening of the supply will increase the rates.

The Bond Market

The bond market, also known as the credit or debt market, is a financial market dedicated to debt. In this market, participants can issue new debt as well as buy and sell debt securities. These transactions are usually carried out through bonds, but it is possible to include bills, notes and much more.

In this market, banks and other investment firms will offer mortgage-backed securities for people to invest in. The yield from these securities will have to be high enough to attract some buyers. The reason for this is that corporate and government bonds will offer competing investments. The amount that can be earned on these other investment products will affect the yield that the mortgage-backed products can offer.

This means that the overall condition of this bond market will indirectly affect how much a lender can charge for a mortgage. Mortgage lenders will need to generate yields that are sufficient for the bond market.

One of the government bonds that is often used by mortgage lenders to peg their interest rates is the 10-Year Treasury bond yield. The average spread for mortgage-backed security above this bond yield will be 1.7%. Higher yields will generally have to be offered by mortgage lenders because there is no guarantee of repayment as there is with the government bond.

The Housing Market Conditions

The conditions of the housing market can affect a lot of things from the type of property people buy to the cost of the average house. The real estate market is affected by a range of factors including the overall economy and the unemployment rate. If unemployment is high, there are fewer people who are able to get a mortgage. Additionally, if people are paying more for their groceries and other necessities, they will not be able to afford a new home or mortgage.

The conditions and overall trends in the real estate market will also affect the mortgage rates on offer. If there are fewer homes being built or being listed for sale, there will be a decline in the demand for mortgages and this drives down the interest rates. One of the trends that can force a decrease in interest rates is an increase in the number of people renting instead of buying their own home. This will change the availability of homes and the demand of customers for mortgages.

Mortgage rates are linked to the rules of supply and demand, much like other parts of the real estate market. There are other factors that impact this as well such as economic growth, inflation, the monetary policy of the Federal Reserve and the overall state of the housing market. Your financial position will also affect the rate you are offered which is why you need to keep it as healthy as 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.  Contact us today Or Call Us @ (866) 772-3802

Texas Mortgage Brokers, Mortgage Lenders & Banks: Which Will You Prefer?

Knowing The Role Of Mortgage Brokers, Mortgage Lenders & Banks For Owning A Home In Texas

If you have been looking for a mortgage company then you will have noticed that there are large mortgage companies and banks, and also mortgage brokers. So is there actually a significant difference between them?

What are the pros and cons involved in using a mortgage broker versus going through a bank?

In this article, we will be explaining all of the major differences between Mortgage Brokers and Banks, along with the pros and cons of each so that you can make an informed decision on which is the best option for you and your situation.

What Is A Mortgage Broker?

This professional is an individual who acts as the middle man between the mortgage lender and the homeowner. A broker is able to prepare your financial documents, loan applications and provide you with mortgage pre-approvals just like lenders are able to do.

A mortgage broker will work with several different banks and mortgage lenders and submit your loan files to these financial institutions for them to issue you a loan. The broker’s commission is paid by the lenders for completing your documents and mortgage application.

How Do Direct Lenders & Banks Work?

A direct mortgage lender or Bank is the company that is funding the loan. The loan officer is the person you will be working with and they work for the Bank. Banks are usually licensed in all or most of the 50 states.

Who Can Provide You With A Better Deal, A Mortgage Broker Or A Mortgage Company?

There are important things to take into consideration when choosing whether you want to work with a Bank/Lender or a mortgage broker. Although it might seem like working with a mortgage broker will save you money due to the fact that they have access to numerous lenders and programs, that is actually not always true.

The mortgage company pays the broker’s commission and some lenders pay higher commissions than others. In some cases that can generate a conflict of interest.

One lender might pay a small commission but offer the best deal. Another loan company might pay brokers a higher commission but be more expensive for borrowers.

Which Lender Is The Broker More Likely To Choose?

When you work with a Bank, your loan officer will only have access to the mortgage rates and mortgage programs that their Bank offers. You could potentially get a better deal from a different Bank.

Just be sure to shop around at all times, whether you are working with a Bank or a mortgage broker. You always should speak to at least two lenders or brokers and compare their loan offers. That way you can ensure that you really are receiving the best deal on a home loan.

That is how you save money on your mortgage.

How To Shop For A Mortgage

When you are shopping around for a mortgage loan it is a good idea to talk to both direct lenders and brokers. Mortgage brokers do have access to many different loan programs and hundreds of lenders.

They can shop for interest rates on your behalf and help you with comparing different terms like 15-year and 30-year terms, adjustable-rate mortgages vs. fixed-rate mortgages, and provide you with advice on other things so that a loan can be tailored that is ideal for you.

Using a broker instead of a direct lender can be advantageous if you have imperfect credit since there will be more programs available that you might qualify for.

Pros & Cons Of Both

Advantages of Working with A Mortgage Broker:

Working with an independent mortgage broker does have several advantages associated with it compared to going through a mortgage banker or bank. Brokers have the ability to submit your loan application to several different lenders. That can make them a very attractive option, particularly for borrowers who have a hard time getting a loan due to issues having to do with their income or low credit scores.

In these situations, there are several lenders that the broker has access to that might have programs with lower requirements. That can save you money and time in having to apply with multiple lenders in order to find one that will provide you with a loan.

  • Access to multiple lenders for finding the lowest fees and rates
  • Usually more knowledgeable
  • More options available for individuals with bad credit
  • A majority of brokers work for or own a small company which can make it easier to get in touch with them than a loan officer who works for a large bank or lender.
  • If the mortgage broker is located nearby, then you can meet with them in person

Disadvantages of Working With a Mortgage Broker:

There are some drawbacks as well to working with a mortgage broker instead of with a direct lender. The broker, in some cases, might charge a higher origination fee. They are not actual lenders, so it might take longer to get your loan processed sometimes when you go through a mortgage broker.

Independent mortgage brokers often do not have an in-house underwriter that they have direct communication with, so they will need to submit your loan application to the lending institution’s underwriter. That can delay closing since it causes additional overlays.

They charge higher fees sometimes.

You might not get the best deal (they could have a preference for lenders that pay the highest commissions)

Delays In Closing

Advantages of working with Direct Lenders and Banks:

When you work with an actual lender instead of a middleman you will be able to avoid some of the fees you would need to pay to a mortgage broker. Your loan officer will get paid a commission when they close your loan.

On the other hand, mortgage brokers might not be that interested in finding the best deal for you, and instead, choose to work with the lenders that pay the highest commissions.

  • Loans might not have as many overlays since it is a completely internal process
  • If you use a Local Bank you might know the banker already who is processing your loan, which allows you to speak to the lender directly without having a middle man.
  • A conflict of interest is not created by the commission that is paid
  • You can save on fees that are charged by a broker

Disadvantages of Working with a Direct Lender or Bank:

Directly working with a lender does have some disadvantages. The loan programs with a Bank tend to be more rigid and come with higher requirements. If your credit score is low many local lenders and banks might not be able to assist you unless you have a 620 credit score at least.

Since the loan agent will not have multiple companies that can be compared, you cannot be sure you are receiving the best interest rate on your mortgage.

  • Fewer mortgage options
  • Sometimes the loan officer might be inexperienced
  •  You might not get the lowest rate
  •  Requirements are less flexible

To speak with one of our experienced mortgage professionals directly, just call us anytime or use any of the interactive tools that we provide throughout our website. We look forward to meeting and working with you.

If you have any questions, please feel free to contact us today!

A Great Suggestion By The Pros On Why You Should Buy A House In Texas

Reasons Why You Should Buy A Texas Home

Owning a home is an investment, however, it actually is not. Home-ownership is an essential wealth-building tool, apart from the fact that it can be financial suicide. Historically, owning a house outpaced stocks, but they actually do not.

Rent Or Buy: Which Is Better?

Home-ownership in the past was an affordable, accessible option. However, the recent financial crisis saw the value of homes drop dramatically, with home prices reaching astronomical levels now due to a shortage in housing, things have changed dramatically over the last ten years. Finding affordable housing can result in increased commute times and having to move away from jobs, which explains the increase in “super commuters” all across the United States.

Is it still worth it to own a home? The answer varies depending on whom you ask, the inputs that are included in the financial model, and one’s general investment philosophy – so that answer is “it depends” most of the time.

There are numerous online tools that are available to assist you in assessing whether or not your current financial situation would result in monthly mortgage payments that are lower than your current monthly rent. However, there are many other factors that need to be considered before you make what will probably be the biggest purchase you ever make in your life. We have attempted to simplify the arguments for reasons why you should and should not buy a house. If you are a longtime renter who struggles to wrap your head around the question, the following are two opposing perspectives on the great home-ownership debate.

Why Should You Buy A House?

There are many financial advisers and academics, equipped with economic models and spreadsheet, who are very happy to show off their fiscal wisdom and arriving at the following conclusion: in terms of dollars and cents, it doesn’t add up to own a house. However, when trying to determine whether to buy a house or not, you need to consider qualitative factors as well as quantitative ones. Ultimately, you need someplace to live.

1. The Shelter Is One Of Our Basic Human Needs

Frequently the benefits over home-ownership are discussed on the basis of return on investment. However, that is not the best way to think about this issue. One of our most important human needs is shelter. It will not make financial sense for everybody in every location to buy a house, but for many people, it will. If it does for you, the reason you should buy a house is due to needing shelter.

Anybody who has been following current events over the past two years most likely has an increased awareness of just how fragile our organizing principles and institutions are that provide us with a certain degree of societal stability for debating home-ownership from the perspective of an investment rather than a basic need. If any massive shift were to occur in our government or political alliances, personally, I would much rather own the house I lived in than be subject to the wishes and needs of a landlord. That might sound a bit paranoid, but do you want to find out whether or not it is paranoid thinking when you currently have the option to purchase a house?

2. It Isn’t An Investment, But It Is Also Not Financial Suicide

Fact: You shouldn’t purchase a home thinking that you are going to get rich off of the appreciation of its value or believing it will pay for itself ultimately. That might be true in some markets. However, it is better to not view owning a home as an investment asset such as bonds and stock, but more as the four walls or more where you live.

However, if you do your research to ensure this is the right time for you to purchase a home financially, professionally, and personally, then it won’t be a bad investment for you, no matter where you happen to live. That is due to the fact that the underlying supply and demand conditions will, over time, continue to push the value of your home up to at least keep pace with inflation.

Although the supply of houses is being restricted currently by numerous public policy positions and economic factors, the number of people who need shelter will continue to increase (unless, of course, a catastrophe strikes which would make the question of whether you should own a home or not the last thing that you need to worry about).

It is true that it is overly simplistic to state that the prices of houses will always increase, as anybody who has lived through the last 10 years knows. However, the underlying conditions that have resulted in a fairly swift recovery for housing should continue.

3. It Is Easier To Retire As A Homeowner

I’m sure you have noticed that it is pretty expensive to be old, due to healthcare’s skyrocketing costs. When you add in rising housing prices, a social safety net that is increasingly in jeopardy, and the strong likelihood that you will be living on a fixed income and have a lower earnings potential, it is easy to see how not needing to worry about paying rent on a monthly basis could be very beneficial. You will still need to pay insurance, property taxes and other maintenance expenses, but there is a very good chance that it will be less than the amount that you pay in rent.

The detractors of home-ownership often bring up the opportunity cost that is involved in investing in a house. If you assume that stocks outperform house appreciation, and that is a completely reasonable position to take, then you may think you would be better off putting your money into equities and then buying a house with the proceeds when you reach retirement age or use the money to pay your rent with.

You can definitely take that route. However, it is a fairly roundabout way of securing a house when you could simply use the money directly to purchase a home. There are also added risk with the stock market’s higher returns. What will you do if the market is down when you get to retirement age and you don’t have enough money to purchase your house? Or what if your investments end up going bad and you are completely wiped out?

You should seriously consider playing it safe, and simply purchasing a house, and do it before your generation hits retirement age and the housing market is overwhelmed. If you can pay off your house completely, or something close to that, you will always have the option of trading down to a less expensive house and pocketing the difference, which will give you a place to live during your golden years – and have some extra money, also.

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!

Acquire A Fabulous House In Houston Texas With The Help Of Texas Mortgage Pros

How Long Does It Take To Buy A Home In Houston Texas?

new Dallas home bought with an FHA mortgage loan moderate incomeAre you planning to purchase a house in Houston, Texas for the very first time? If you are then over the years you might have heard “rumors” about how long it can take to purchase a house.

Some individuals might have told you it is 30 days and others will say it is 60 days. However, in reality, every individual’s experience is solely based on things such as the state of the Real Estate market when it was purchased, real estate demand, and whether or not a buyer could get pre-approved before looking for a house to buy.

How Long Does Buying A House Take?

Say you know the kind of house in Houston Texas you want to purchase all the way down to the specific area, as well as features and amenities inside of the house.

If that is the case, after you have found a house, and have submitted an offer for it, it can take 30 to 60 days from contract to closing.

Why Does The Process Take So Long?

That’s a good question. Every lender has its own process they follow when it comes to the home appraisal process it can take as long as 30 days for the lender to get their appraisal process completed.

While the lender is undergoing through the home appraisal process, as a buyer you can help yourself by hiring a house inspector on your own to have the house checked from the top to the bottom and also you should review the property disclosure statements to ensure there isn’t anything wrong with the house.

If You Are Just Beginning The House Buying Process

If you just getting started with the house purchasing process, then you should take the time at first in order to identify what you are looking for in a house before hiring a Realtor since that will make the job that your agent is to do help you a lot easier.

Once you know what you want in a house, then you should get pre-approved to get a mortgage loan so that you can move forward with purchasing a home without having any questions regarding the financing of the property.

About Us

The Texas Mortgage Pros

The team at Texas Mortgage Pros is comprised of experienced mortgage professionals all across the state of Texas. We are fully committed to providing the highest quality service to all of our clients for all of your mortgage needs. Multiple loans programs from your local area – San Antonio, Tomball, Dallas, Austin, the Woodlands, Spring, and Houston, Texas are combined with the lowest interest rates. Our excellent mortgage professionals have years of experience and will work closely together with you to ensure you get the home loan that is specifically tailored to meet your expectations and specific situation. So whether you are buying your first house, your dream home, consolidating your debt, or refinancing a loan that you currently have, our highly experienced loan officers can assist you with finding the best loan program for you at the lowest possible rate.

The ultimate goal that we have is to create long-lasting relationships with all of our clients so that we can continue providing outstanding service well into the future. Unlike many big national mortgage companies, we will keep all of your information secure and private. We are a trusted name within the lending community that you can rely on.

To speak with any of our experienced mortgage professionals directly, just give us a call or use any of the interactive tools that are located on our website. We look forward to assisting you. Visit our blog for more related articles on how to execute the best SEO in Houston!