What Are The Things To Avoid When Applying For A Texas Mortgage

6 Things You Must Never Do When Applying For A Mortgage In Texas

Applying for a mortgage is never an easy process. Although you might have been pre-approved or have all the documents ready to make an application, it is never a done deal until you have signed the closing papers. Whether looking for refinancing for your current home, or wish to buy a new one, specific actions can give the underwriter the impression that you aren’t in a position to repay the loan. This is one of the reasons you need to be careful right before and after applying for a mortgage. Here are some of the things you mustn’t do:

1. Avoid Making Large Withdrawals Or Deposits

Making large deposits and withdrawals from your account a few weeks too and after applying for the mortgage could raise a red flag, causing the application to be denied. Recent bank statements are a standard requirement when applying for mortgage loans. If for one reason or another happen to make a large withdrawal or deposit, you then should discuss the same with your mortgage office when submitting the application. Although such deposits/withdrawals may not be a deal-breaker, the nature of the deposits and the source of the funds should be discussed before the application is made. This will help avoid red flags when the application is being processed.

2. Don’t Change Jobs

You also need to provide proof of income (steady) for the mortgage to be approved. That said, you should avoid jumping from one job to another until the mortgage has been processed, approved/closed. If you must, then ensure the new job is within the same industry/niche as the previous one. Switching to a different industry might raise red flags, costing you the mortgage.

3. Don’t Make Large Purchases On Credit

As tempting as it is fighting the temptation to buy a new car or furnish your new home on credit. For starters, making such large purchases on credit means the company will have to pull your credit report, which again could hurt your credit score. Most lenders will see such a large purchase on credit as a risk hence avoid lending you.

4. Avoid A Home Equity Line Of Credit

As earlier mentioned, don’t make any large purchases on credit or even put your home as equity for the same. Although you are free to use your home as a line of credit, the lender may think you rely too much on credit, hence consider you a high-risk customer. As a rule of thumb, show the lender you are capable of living comfortably with your income flow and don’t depend on loans or credit lines. Wait until the loan is closed before using such lines of credit.

5. Avoid Closing Credit Accounts

Avoid the temptation to close any (or all) credit accounts you might have (even if you no longer use them) several months or days before and after applying for a mortgage. Closing these accounts will only lower your available credit, raise your DTI (debt to income ratio), and other chain reactions. Closing these accounts will only put your mortgage at risk, hence not recommended for the moment. Be sure to talk to a financial advisor if thinking of closing one or two of these credit accounts.

6. Don’t Make Payments On Old Collection Accounts

Making payments on old collection accounts could hurt your chances of getting the mortgage approved as well as your credit score. Making payments to these accounts also revives their collection status, meaning the creditor can start pursuing you for debt. Although this depends on the state you are in, creditors can only pursue you for payment for up to 10 years after the last payment.

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.

FHA Loan In Texas: How Much Can You Qualify For & Afford?

Factors To Determine The Texas FHA Loan Amount You Qualify To Borrow Or Can Afford

Many of the questions that we get from your potential applicants of FHA (Federal Housing Administration) loans and readers tend to touch on issues related to ‘how much’. We get tons of frequently asked questions (FAQs), and some of the most common inquiries include:

• What minimum income level do I need to qualify for the FHA loan?

• What kind of house can I afford once my FHA loan is approved?

• What mortgage amount can I get with the FHA loan?

The goal of this post is to answer these frequently asked questions. We will start by going over the official application guidelines for an FHA loan as stipulated by the HUD (Department of Housing and Urban Development) of America. Next, we shall examine how financial institutions and mortgage lenders implement these guidelines when offering mortgage loans. We also will delve into other factors that these lenders consider to determine the FHA loan amount you qualify to receive based on your income.

FHA loans are offered at 43% debt to income ration. That means your combined debts after taking the loan should not exceed your gross monthly income by more than 43%. Fortunately, there are exceptions to this rule. For instance, you can get an FHA loan approved if you have a DTI (debt to income ratio) of up to 50% if you have a significant amount of savings in your bank account, or numerous sources of income.

What Mortgage Amount Can You Take With An FHA Loan?

In as much as there are directives regulating what amount you can get when applying for an FHA loan, the lender does have some substantial prerogative in decide the mortgage amount to offer. In short, the lender can determine how much of the FHA loan to give you based on your gross monthly income, the HUD withstanding.

The lender will first review the official HUD Handbook 4000.1 to examine the FHA loan guidelines when determining the much you qualify to get for the FHA loan. The HUD handbook is commonly referred to as the Single-Family Housing Policy Handbook.

Section II-A-5 of the handbook stipulates the “approvable ration requirements” in which the term “ratio” is used in reference to the DTI (debt to income ratio). The DTI is based on a comparison of the cash amount you can get from your income in relation to what you spend on servicing your recurring debts.

As such, the DTI is one of the most crucial factors that influence the mortgage amount you qualify to borrow or receive when applying for an FHA loan. It also determines the type of house you can afford to buy. The DTI might be one of the influential elements used to calculate the much you can borrow when purchasing a home or property, but it is not the only decisive factor that lenders consider.

You should be aware of two essential rations when acquiring an FHA loan; these are:

  • Total Mortgage Payment to Effective Income Ratio (PTI)

It indicates the much from your gross monthly income that can be used to service your housing costly – primarily meeting your mortgage loan obligations. The PTI ratio is also referred to as the ‘front-end debt’ ratio.

  • Total Fixed Payments to Net Income Ratio (DTI)

It indicates the much from your gross monthly income will go towards the servicing of your monthly debts, such as your credit card payments, mortgage payments, or car payments. The DTI is also known as the ‘back-end’ debt ratio.

To have your loan application approved, you must meet the 31% – 43% threshold. That means your mortgage payments will have to take up less than 31% of your gross monthly income while the total monthly debts should consume less than 43%. You should use this rule when trying to determine the FHA loan amount to borrow. It is one of the determinants mortgage lenders will use to calculate the FHA loan you qualify to receive.

For Example:

An individual applying for an FHA loan has a gross monthly income of $6,000. The applicant should have total debts (inclusive of credit card expenses, car payments, mortgage, and other recurring expenses) that are less than $2,580 each month. That figure is determined by the following calculation (gross monthly income X 0.43). And the total mortgage payments should be less than $1,860, which is a figure reached using the following calculation (gross monthly income X 0.31).

Keep in mind that the applicant can qualify to get the FHA loan if the lender determines that the borrower has a Total DTI of up to 50%.

Attaining a total DTI of up to 50% is something that is possible based on several exceptions applied to the 31% – 43% rule. A mortgage lender can do checks and find ‘compensating factors’ that indicate the applicant is an excellent candidate for the FHA loan. The then lender can give some leeway for a higher back-end ration that can be as much 50% in some situations. Some of the ‘compensating factors’ considered by mortgage lenders include:

• Residual income

• Significant additional income not reflected in gross monthly income

• Minimal increments in housing payments

• Documented and confirmed cash reserves

Keep in mind that the mortgage lender will also take into account many other factors before determining if you qualify for the FHA loan and the amount to offer. Therefore, if you are thinking of applying for an FHA loan, you should contact a lender that has the recognition and approval of the HUD (Department of Housing and Urban Development) of America. Ask them to be upfront about your prospects of qualifying for the loan. Answering this question will be a matter determined by doing background checks on your income level, debt situation, and credit history, among other things.

Which Kind Of House Can I Afford To Buy?

At this point, we hope that you have enough knowledge about the amount of mortgage you can get with an FHA loan. But it only is half the picture. You must know what type of house you will be in a financial position to afford when applying for an FHA backed mortgage. You do not need to rely on an expert to figure this out.

Always remember that it is possible for an FHA mortgage to be too huge for you to service or it can become affordable as time passes depending on how your financial situation fluctuates. In some cases, loans become a financial burden in the long that many people cannot afford and thus they face foreclosures.

That is why we highly recommend that you create a basic housing budget so that it helps you avoid getting yourself in a financial crisis. It will help you know the kind of house you can comfortably afford based on the much you qualify to get when you apply for the FHA loan.

The wisest investment decision you can make when purchasing a home is to ensure that you can comfortably finance the mortgage. That means you able to make the monthly mortgage payments and meet other recurring monthly expenses while also managing to save some money.

How Can You Determine The Type Of Home You Can Afford?

Below are a few expert tips on how you can determine the best kind of house to afford with the FHA loan comfortably

• Compare net monthly income and overall expenses

Your net monthly income is the total payments you receive at the end of the month. So, the goal is to figure out your total expenditure which means knowing the costs your accrue each month on your housing-related expenses including gas, food, electricity bill, car payments, credit card payments, entertainment, and your savings contributions.

• Subtracting monthly expenses from the net income

Once you have determined the much you spend on your monthly bills, you then need to deduct that amount from the net monthly income. What you are left with is what you go towards servicing the mortgage.

Keep in mind that you do not have to put all that money into that basket meant for repaying the FHA loan. You also need to set up an account for emergency funds. Overall, once you have deducted what you need to cater to your monthly expenses, you will then assess what is left to know what you can save for a rainy day and the much that will be for mortgage payments after you have purchased your new home.

You will be expected to honor your loan obligations. But that does not mean that serving the mortgage should strain your pockets. You also should ensure that you have some bit of money left at the of the month for a rainy day. You never know what tomorrow has in store for you; thus, you should have some cash lying around to cater for the unexpected expenses, such a car repairs and hospital visits. Exercising financial prudence dictates that you sort your income to ensure that it caters to your expenditures, debts, and you also manage to set something aside for emergencies.

When you implement the tips discussed above, you will be able to determine which is the ideal type of house you can afford using the FHA loan or any other kind of mortgage.

Which Other Things Do I Need To Get An FHA Loan Approved?

First and foremost, you should have enough monthly income. Mortgage lenders will examine your level of income and consider this when determining if you qualify for a loan and which type and amount to offer you.

Besides having a dependable monthly income, you also must take into account other factors that influence your chances of getting the loan request approved. Some of these things include:

• Down Payment

When you are looking to get an FHA loan, you will need to provide 3.5% of the price of the house you plan to buy, or its appraised value. That is why you must consider this when you are researching the kind of home you can comfortably afford if you will be relying on an FHA mortgage program to help finance the acquisition of the property.

• A Good Credit Score

According to the HUD guidelines for FHA loans, borrowers seeking the maximum amount on an FHA loan should have a credit score of 580 or more. They also should be able to make a 3.5% down payment for the loan. Note that some mortgage lenders will require loan applicants that want the maximum amount to have a higher credit score.

• Manageable Debt

Lastly, you should not overlook the DTI (debt to income ratio) for the FHA loan. It is one of the crucial determinants that lenders consider when approving a loan request.

And there you have it; we have sufficiently answered the two most essential questions, namely:

1: How much of an FHA loan can I get based on my monthly income?

2: What type of house can I afford to buy with the FHA loan?

The above are the pertinent questions you need to think about when applying for this loan. Most importantly, you should come up with a basic housing budget before you start the application process for the FHA mortgage.

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!

Knowing How To Get Your Texas Mortgage Approved

6 Tips To Get Your Mortgage Approved In Texas

When it comes to getting a mortgage, there are many people who do not know where to start. They will decide to jump into homeownership when they hear about lower prices and dropping interest rates. However, the process of getting a mortgage is different from a car loan or renting an apartment. Any applicants who do not recognize the differences will be disappointed when their applications are declined.

It is important that you learn about mortgages first and see the ways that you can avoid this rejection. Buying a house is very stressful and your anxiety will only increase when you are not prepared. There are some tips that you can use to help get your mortgage approved without any issues.

Know Your Credit Score

Pulling your credit report will take a few minutes and you can easily order your credit score. This is something that a surprising number of potential home buyers never review before they submit their mortgage application. They assume their score is high enough to qualify for the mortgage they want. Many people also never consider the possibility of identity theft. The problem is that credit fraud and a low score can stop your mortgage application very quickly.

Your credit score and credit activity is one of the major factors that lenders look at. A lot of mortgage lenders require a credit score of 680 as the minimum. If your score is below this, lenders will deny your application for a conventional mortgage.

While a high credit score is important, you also need to look out for missed payments and frequent lateness which will stop applications. This is why you need to pay your bills on time, lower any debts you have and stay on top of your credit report. Taking the time to clean up your credit history and fixing any errors is key to a good credit score and successful mortgage application.

Save Your Money

The requirements for getting a mortgage often change and if you think you might want to apply for one in the near future, you need to have cash on hand. When you apply for a mortgage without any cash, you are going to be rejected. Mortgage lenders have become cautious over the years and will no longer approve any zero deposit mortgages. You need to have a down payment.

The minimum down payment will vary depending on the mortgage and other factors. Each lender has its own requirements, but the average is to have a 3.5% down payment. It is better to have more than this if you can. A 20% down payment will reduce the loan amount and will reduce the chances of rejection as well as mortgage insurance. Lenders will generally require this insurance if you do not have 20% equity. Having a higher deposit will reduce the monthly costs of a mortgage.

It is important to note that the down payment is not the only cash expense you have to think about. When you get a mortgage, there are other fees you need to consider such as home inspections, closing costs, title searches, application fees, and credit report fees. Closing costs will generally be 3% to 5% of the mortgage balance and needs to be paid before the deal is sealed.

Stay At Your Job

When you stick with your employer throughout the home buying process, everything will be better. If there is a chance your income or employment status will change, it can delay or stop the mortgage application.

Lenders will approve your loan based on the information that you provide. If you take a low-paying job or quit to become self-employed, you will be throwing a spanner into the works. Lenders will generally re-evaluate your finances to determine if you still qualify.

Pay Down Existing Debt

While you do not have to have a zero balance on your credit cards, the less you own the better. Your existing debts will determine whether you can get a mortgage as well as the amount the lender is happy to provide. All mortgage lenders will look at your debt to income ratio before they approve your application.

If you have a high debt ratio because of credit card debt, the mortgage lender is likely to reject your application or offer a lower loan. This is due to the fact that your monthly debt payments should not be more than 36% of your gross income. However, if you pay down your other debt before you apply, your ratio will be better and you could get a better mortgage rate.

While it is possible to get a mortgage with consumer debt, you should avoid new debt while you are going through the mortgage process. Lenders are going to recheck your credit before closing. Any new debts could stop the mortgage or delay the closing.

Get Pre-Approved

Before you start looking at houses, you should get pre-approved for a mortgage. This is a financially and emotionally responsible move. When you do this, you know what you can spend before you start looking and you can avoid falling in love with a house that you cannot afford.

The process for pre-approval is fairly simple as you have to contact the mortgage lender and submit your personal and financial information. Pre-approvals will generally tell you how much you can afford and the interest rate of the loan. A pre-approval letter will be provided for your records and the funds will be available when the seller accepts your offer. Of course, it might not always be this simple.

Know What You Can Afford

You should never let the mortgage lender dictate the amount you should spend on the loan. Lenders generally determine the pre-approval amount using your credit report and income. However, they will not factor in other costs such as insurance, groceries, and fuel. Instead of buying a property for the full mortgage value, you should be smarter and keep your expense within your means.

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 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 @ (877) 647-6030

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 @ (877) 647-6030

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 @ (877) 647-6030

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 @ (877) 647-6030

Professional Ways To Budget For Buying A House In Texas

10 Ways To Get Your Personal Budget Fine Tuned Before You Buy A Texas

Purchasing a house is the biggest investment most people will make in their entire lives – so it is essential to not make it an impulse buy. Instead, research and preparation are key to the process.

Tips For Fine Tuning Your Personal Budget To Prepare For Buying A House

1. Determine What Your After-Tax Household Income Is

Figure out how much money you have. Use an income calculator online or your pay stubs and figure out how much money is left after taxes each month.

2. Make A List Of All Of Your Monthly Household Expenses

The next step is to list all of your monthly expenses such as utilities, bills, insurance, groceries and other extra items like tuition. The final amount that is left is the expendable income you have.

3. Figure Out Where You Can Cut Back

After you have a list of all of your expenses, check to see if you have any areas where you can make improvements. You might be spending more than you thought to pay for services that you are not using any longer or things like going out to eat.

4. Pay Off Your Debt

Although you can technically purchase a home when you have debt, it is a lot easier to get approved and manage your mortgage payments when you don’t have outstanding debt to worry about. It can also help to increase your credit score, which is an important determining factor when buying a home, to minimize the amount you owe as much as possible.

5. Save For Your Downpayment

Although the economy looks to be good, leaners still are being very cautious when it comes to lending money. Many will require a 20% deposit at least. So if you are buying a $150,00 house you would need $30,000 upfront. That might seem like a lot of money, but if you are able to focus your budget on saving towards your down payment, you can do it and it will help to improve your chances of being approved for a mortgage.

6. Purchase Realistically

If you end up buying a more expensive house than what you can realistically afford, eventually it will catch up with you. A majority of lenders recommend that you purchase a home that is about 2.5 times your yearly salary. Your total housing costs include not just the mortgage but other expenses as well like homeowner association fees and maintenance costs.

7. Get Pre-Approved

To give yourself the best chance, it is recommended that you obtain pre-approval from a lender before starting to look for a house. That way, when you are ready to put in an offer, the seller will take you more seriously since they know you are ready to move forward on the sale.

8. Hire A House Inspector

You should hire a house inspector who is separate from an appraiser that the lender requires. You want to do this in order to detect any potential problems that you might have to deal with later on. It will also help to protect you from having major issues before you own the property.

9. Before Making An Offer, Check The Market First

Check similar houses in the area before making an offer to ensure you are paying a fair price for the local market. If the property you are interested in is priced higher than other houses in the neighborhood that might a potential bargaining chip for you.

10. Buying A Home

When you take the time to fine-tune your finances, save for a down payment, and thoroughly research the market, it will prepare you to be able to confidently purchase a new home that you will enjoy for many years to come.

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!