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!

The Qualities Of A Qualified Mortgage Broker In Texas

6 Characteristics Of A Capable Texas Mortgage Broker

Mortgage brokers are the middleman between the borrower and the lender. They have to be knowledgeable about the terms and conditions of mortgage financing to provide the best service to their customers. In certain areas, mortgage brokers will have to be licensed before they can legally work. When looking for a mortgage broker, there are other characteristics that you need to look for in a good mortgage broker.

Having Your Best Interests At Heart

If you have found the house you want and it has passed the home inspections, you need to look for a new mortgage. A broker will be able to help you with this and help you secure the loan for your new home. Their knowledge and expertise will help them simplify the mortgage process and make it less confusing for you. However, you will need to be careful of any brokers who are desperate to close the loan. These brokers do not have your best interests in mind and only want to close as quickly as possible for their own needs.

Attention To Detail

The mortgage process can be very complex as you deal with various programs and financial transactions. The problem is that important details can get lost even when you work with a broker who is not on top of everything. When you meet with the different brokers, you need to check for an eye for detail and the ability to close the loan quickly.

The broker should also be friendly and easy to contact via emails and calls. You should get a list of references from past clients and vendors to see what they have to say. They will be able to tell you more about the service you are going to get.

Market & Industry Savvy

The mortgage market is always changing and a good broker will stay on top of this. They will know what the latest trends in the local area and industry in general are. It is important that you have a broker that is market savvy as this reduces the chances of deals falling through or the loan is canceled.

Honest & Straightforward

Desperate brokers will under-deliver and over-promise. The good news is that you do not have to work with a broker that pull a bait and switch. The only way this broker is able to secure the loan is through hiding fees and changing the rate at the end before you close. To avoid this, you have to look for a broker that is honest and straightforward. A good mortgage broker will be upfront about what you qualify for, particularly if you have bad credit or high debt.

Competitive Rates

Interest rates are still at all-time lows. If you are getting a mortgage through a broker, you should not be afraid to ask them to compete with other brokers who offer low rates. The worst that could happen is that your request is declined. The best result is that your broker will be competitive and you get the rates that you want.

Upfront About Fees

There are a lot of brokers who work hard for every cent they get. If your broker is honest and trustworthy, they will be upfront about all the fees they will get from your mortgage. Any brokers who are unwilling to provide this information should be avoided. It is best to ask about this when you first meet with the broker.

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 Guide For Looking A Motivated Mortgage Lender In Texas

Top 5 Things To Consider When Looking For A Texas Mortgage Lender

Are you searching for a reputable mortgage lender to help you secure the money you need to purchase your new home? Below are the top five factors worth keeping in mind that signify the best mortgage professionals and lenders in your area to approach for a home loan:

1. Work With A Mortgage Lender Who Is A Home Loans Specialist

Starting off the list is the need to work this a professional that has in-depth knowledge and understanding of mortgage finance. You can get the money you need from your bank as well as a mortgage company. What you should keep in mind is that the distinctions between the two grow ever so apart. Banking institutions have, since the last economic turmoil, face significant regulatory hurdles from the government. As a result of this, specialized niche and opportunity cropped up for mortgage lenders.

The borrowing scene regarding people and businesses needing mortgage finance, the regulatory hurdles have seen many mortgage lenders restructure their services to ensure they continue to bridge the gap for those looking for home loans. They specialize in this while working closely with appraisers and underwriters to help borrowers ensure they close deals.

2. Knowledgeable Of All Available Loans & Finance Programs For The Desired Property

Work with lenders that are informed of ongoing and new releases of loan programs as well as qualification requirements for borrowers. The lender will help you get the best finance program that will see you buy your dream property while also taking into account the interest, down payment, and the monthly payments. The mortgage lender and assist with the negotiations for purchase.

3. A Lender That Provides You With A Pre-Qualification Letter

A pre-qualified loan request means that the application has gone through most of the necessary processes. Furthermore, the loan officer has reviewed the requirements, such as verified income, debt-to-income ratio, and tax returns.

It, thus, is a better option than getting a pre-approved letter in which case the borrower most likely only had a discussion with the lender and passed some general information needed for the loan request. Nonetheless, both documents are subject to final approval. In the pre-qualification letter, an offer is stated that signifies to the seller that the buyer is interested and ready to buy.

4. A Seasoned Loans Officer Can Better The Odds Of A Successful Deal

Lending is, in most cases, a process with ten steps and should take roughly under thirty days to complete. During that period, the loan officer will be collecting and reviewing all the borrower’s information given in the loan request. Conversely, the officer will also assess the collateral (property of interest).

Communication will be integral in the process, in which the officer will be in touch with the underwriters, real estate agents, inspectors, and appraisers. The value of the targeted property, as well as the financial records and credit score, will be taken into account when qualifying the borrower for the mortgage loan. However, the success of the request and even the purchase or sale going through significantly depends on how experienced the loan officer is with dealing with all related parties. That is why communication is an invaluable element in many tough real estate transactions.

5. The Mortgage Lender Connect With You At A Personal Level

When borrowing money, the loan officer will require you to give details of your income, credit score, work history, and spending habits. However, the law expects the mortgage professional to observe client confidentiality and protect such personal information. Moreover, an experienced lender will try and handle such data with respect, and try to make the borrower feel comfortable and be confident when sharing such private information, hence the need to connect with you at a personal level. In so doing, the loan officer will be able to understand your needs right from the beginning of the loan application process.

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!

Features Of An Adept Mortgage Company In Texas

Helpful Guide To Choosing A Texas Mortgage Company

For many people, applying for a home loan is seen as an easy but necessary step towards their goal of owning a home. To this end, many lenders afford people the chance to apply for a home loan with them. This may sound quite encouraging for many people, however, the real problem is usually choosing which company to apply to for your home loan.

To ease this process, we highlight some of the attributes you should look for when making this choice. The best mortgage providers have a certain set of characteristics.

The qualities to look out for in a good mortgage company are;

Must Listen To & Focus On Your Unique Needs

The most important questions to ask are; Is this shy-lock concerned about my needs? How are they addressing my needs? Remember, the real estate sector is a very complex sector with several parties with various interests, therefore, as a newbie in this field, you are likely to end up caught in a web of confusion.

The pawnbroker you see should be able to answer all your questions and expound on all the clarifications you require. In the event you are not sure about which brand fits your needs, the loan shark should assist you in the steps to take.

Experience Of The Company

Banks that have operated in the real estate industry for more than 20 years are excellent mortgage lenders. Since you are fresh in this field and just an ordinary person, the company must provide you with relevant and insightful information to make the best decision. Most likely, a bank with a shorter history in real estate will lack the necessary experience and expertise to provide the important information you need. This means their short term experience limits their knowledge on the real estate industry and their ability to provide the best solutions for you.

Credible Reputation

Choose a mortgage company with an excellent reputation to avoid having regrets in the future. A company with a good reputation is known to provide transparent, genuine, and favorable solutions to its customers. In most of the cases, these are lenders who do not charge exorbitant fees and interests that are likely to negatively affect the financial well-being of their customers. To gauge the reputation of a company visit their website as well as online review sites to read some of the comments left by customers.

Provides Insurance Coverage

A company that provides an insurance policy to ensure the loan that you are taking up is clearly a top of the range provider. If you pass away before fully repaying the mortgage, the insurance policy will cover your outstanding debt. Due to the insurance coverage, your personal properties will not be attached as securities to your loan. This will assure you that you have chosen the right option for yourself and give you peace of mind regarding your financial status. The best-in-class providers give the best terms, so insist on the best to receive the quality mortgage you deserve.

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!

Thoughtful Ideas About Owning A Home In Texas

10 Advantages Of Owning A Texas Home

It is everyone’s dream to own a home at some point in life. Among other reasons, owning a home means you can have a space you call genuinely yours, and that you can settle down without having to think rent and everything else that comes with renting a home. While owning a home is one of the best feelings and achievements ever, it sure does come with lots of obligations and responsibilities, all of which you have to take care of. If everything is done correctly, having a place you can call your own not only increases your investment power and saves you lots of money in the long run, but also limits your financial risks. Here are some of the benefits of owning a home.

1. There’s Little To No Returns On Investment In Renting

One of the perks of renting a home is the fact that you don’t necessarily have to maintain the house or pay a mortgage. Living in the same house for a long time, however, means you have to handle minor repairs and maintenance at some point. The landlord may also be adamant about doing major renovations, forcing you to either move or handle the repairs yourself. That said, it is a lot more beneficial to pay the mortgage as compared to rental payments. Rental payments aren’t an investment but rather a recurring expense.

How much money do you pay in terms of rent? Supposing you pay $1000 per month, the amount could quickly add up to $120,000 within ten years. This is roughly the same amount you would have spent on your mortgage which totals to 1/3 of your total home mortgage. It would, therefore, be a wiser decision to pay for a mortgage instead.

2. Your Home Is An Investment

A home, unlike other purchases, appreciates over time. Although each market is different, the price of homes generally goes up regardless of recession times. That said, you can be assured that the value of your home will continue to increase as you pay down the mortgage. The best thing with mortgage payments is that the debt amount goes down each time you make payment. This creates better equity for you, the homeowner.

3. Gain Equity

A home is not only an investment but also translates to equity. Each monthly payment goes to both the interest and paying down the principal balance. Equity can also be defined as the amount of money you’ve paid towards paying off the principal balance. In other words, the money is available for reinvestment in both the home and another home you might consider buying in the future.

4. Tax Benefits

You get to enjoy a few tax incentives from investing in your home. This is because the government sees it as economic growth, hence rewards you (the buyer) by offering several tax incentives. You can, therefore, deduct the mortgage interests in your tax returns. This comes in handy during the start of the mortgage payments, where one is required to make a significant amount in the deposit. In addition to this, you can enjoy tax benefits from private mortgage insurance and other purchases related to the home-ownership.

5. Stabilized Housing Costs

With a fixed-rate mortgage, you are required to make the same payments over the life of the loan. This is usually 30 years depending on the initial deposit amount. The fact that you already know how much you will be paying per month over the 30 years, monthly rental payments are more likely to fluctuate or even climb over time. Adjustable-rate mortgages too, have a fixed cap on them, which again gives you more control over what you can pay and budget for the same. This means you can plan well for all other home-related expenses, some of which can be adjusted to favor the mortgage payments.

6. More Control Over The Living Space

Renters are required to make minimal or no adjustments to space they are living in. This means you cannot renovate or make necessary improvements to the house to accommodate your specific needs. Homeownership, however, gives you the freedom to make required adjustments and improvements for as long as they contribute to increasing the value of the home. The equity gained over time can also be used to help the homeowner get financing for major home improvement projects as well.

7. Improves Your Sustainability

Owning a home makes it possible to create and build a more sustainable future. This isn’t a privilege a tenant would have considering the unusually high cost of living and ever-increasing housing expenses. Mortgage payments make it easier to budget your income accordingly without worrying about the possibility of the payments ever-increasing or changing. For this reason, a homeowner can budget for both the mortgage payments and a retirement plan.

8. No Need to Move Anymore

In addition to increased sustainability, owning a home means you will have a more stable financial plan. This is because you never have to keep on hunting for a better rental house or keep moving throughout your life. Tenants always have to move in search of better homes increasing their emotional and financial burden. Investing a home, however, means you never have to worry about all these, hence you can focus on making your home much better.

9. Social Benefits

Owning a home means you get to create a social circle of friends among other homeowners in the area. The reduced need to move therefore comes with numerous social benefits that a regular tenant cannot or may never enjoy. You also get a chance to be involved in various community developments and education opportunities for your children.

10. Use Your Equity For Another Investment

The fact that you will be paying for your home through a mortgage works in your favor in many ways. For starters, you can use the equity to make future investments on a higher-valued home, the same house, or even a second home. You can also use the home equity credit to seek financing for other forms of investments aside from the home. This could be an RV, boat, or even a cabin.

We at Home Loan Center offer the lowest mortgage rates on the market. We also have several low-cost mortgage loan plans that you can choose from for refinancing and purchase. Our officers will help you choose the right home loan program based on your specific needs and requirements in Spring, Tomball, Cypress, and The Woodlands area. Our mortgage rate is calculated according to today’s market conditions, hence favorable to all. 

Before making a decision, let one of the experts at The Texas Mortgage Pros help you find out exactly what loan is best for you.  Feel free to contact us or call us today!

Refined Guidelines & Requirements To Qualify For A Mortgage Loans In Texas

Helpful Tips On How To Qualify For A Texas Home Loan Programs

Purchasing a home for the first time might appear to be an extremely daunting process, and in most cases it actually is.

In this guide, we will give you information on how the process works, along with what loan type suits you best if you qualify.

In this post, we have covered qualifying income, credit score, and down payment requirements, information about debt-to-income ratios, and more.

Each of the mortgage programs is linked to different requirements in order to qualify.

What Type Of Down Payment Will Do I Need?

In general, the need for a 20% down payment is no longer necessary in order to qualify to purchase a home. There are many mortgage types that do not require down payments or very minimal down payments. You are also not required to be a 1st-time home-buyer in order to qualify when it comes to these programs.

The FHA loans are among the more popular mortgage types that are used today. This has to do with its flexible requirements. In the majority of cases, you only need a 3.5% down payment. Each program that we have listed below allow you to utilize gift funds as a form of a down payment.

Here are the down payment requirements for each loan type:

  • USDA Loans – No down payment
  • Conventional Loans – 5% to 20% down payment
  • VA Loans – No down payment
  • FHA Loans – 3.5% down payment with a 580 credit score (10% down payment for credits scores between 500 and 579)

What Type Of Credit Score Will Do I Need To Qualify For A Mortgage?

Perhaps the biggest factor involved in deciding whether or not you are eligible to apply for a mortgage involves your current credit score. If your credit score is great there is nothing to worry about. On the other hand, if your credit score is poor, it becomes harder to obtain approval when searching for home loans. A credit score of 680 or higher is ideal. Some of the lenders will only accept credit scores of 640 or higher, while others may accept scores that are lower.

There are requirements for a set minimum credit score for each of the loan programs. However, the lenders are not required to follow these requirements and usually set their own guidelines when it comes to credit scores. If your credit score is low, it is important to request a copy of the report.

Below is a list of the minimum requirement for credit scores that you will typically find for each of the mortgage types.

Here are the lowest qualifying credit scores:

  • Conventional Loans: 640 credit score
  • USDA Loans: 620 credit score
  • FHA Loans: 580 credit score
  • VA Loans: 620 credit score (some of the lenders might still approve a 580 or higher credit score)

Income Guidelines To Qualify For A Mortgage

To make sure you are eligible for a mortgage, you have to provide proof that your current income is consistent and sufficient. If you receive a monthly salary then this task is simple. However, for those that work for commission-based jobs or self-employed borrowers, this becomes more difficult.

You will need a minimum of 2 years of your income documented from one company, or within the same field or industry in order to qualify. If you are a commission earner, you will be required to provide an average of your income over the last 2 years of your tax returns.

Income That Will Help You To Qualify For A Home Loan

  • W-2 Salary or Income
  • Bonuses and Overtime
  • Income received from a part-time job
  • Seasonal jobs
  • Income received from a 2nd job
  • Child Support and Alimony ( documentation is required)
  • Self-Employed income

Income Regarded As Non-Qualifying

  • Unemployment pay
  • Income received from Rental Properties
  • Gambling
  • VA Income
  • Single bonuses
  • Unverifiable income
  • Co-signer or non-occupying income
  • Income received from winning the Lottery

The Documents Required For A Mortgage

There a number of documents that the loan officers require in order to process loans. To save time and frustrations make sure you have all the right documents prepared before you approach your lender. Here is a list of what you will need:

  • 3 months past bank statements
  • W2’s over the last 2 years
  • Last 2 years of your tax return
  • 3 months of pay-stubs
  • Divorce decree
  • List of your assets and your debts
  • Documentation for additional income

FAQs On Mortgages

How Do I Qualify For A Mortgage?

In order to qualify your credit score should ideally not be below 580. You will need to provide documentation that proves a verifiable and consistent income with tax returns and W2s. Depending on the loan you might need to supply a down-payment.

What Type Of Credit Score Do I Need To Secure A Home Loan?

The FHA loans provide a way for borrowers with credit scores of between 500 and 579 to apply for a loan, but they will need to put down a 10% down payment. However, the rest of the lenders will not process loans for the borrowers in this credit score range. You will need a credit score of 580 or higher to improve your chances of approval.

What Type Of Down Payment Is Needed To Purchase A Home?

USDA and VA don’t require down payments. The FHA loans usually require a 3.5% down payment.

About The Texas Mortgage Pros

The team at Texas Mortgage Pros is made of mortgage experts from across Texas. We have a commitment to offering each client with high-quality services for all your mortgage requirements. A combination of various loan programs and low rates, we cover the areas of Houston, Austin, Dallas, The Woodlands, Tomball, San Antonio, Spring, and Texas. Our highly skilled mortgage experts are backed by many years in the industry and we work one-on-one with our clients to ensure they receive a home loan that is tailored to their expectations and requirements. Regardless of whether this is the first time you are buying a home, you are looking to refinance your existing loan, consolidating debt, or you are buying the home of your dreams, we will help to get you the perfect loan program at a low rate.

We have a goal to build up lasting relationships with our clients so that we can carry on providing exceptional services for years into the future. Unlike other mortgage companies across the nation, we maintain confidentiality when it comes to your information. We are a reliable and trusted name within the lending industry.

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.

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

Knowing What Makes A Effective Mortgage Broker In Texas

Professional Texas Mortgage Broker Characteristics

As you know, buying a house is a huge investment and most people do so through a mortgage. If you have decided to hire a mortgage broker, then it is best that you choose the best one possible. We will now take a look at some of the traits you should look for in any prospective mortgage broker.

The main purpose of this type of brokers is to help you to close the home loan. They assist by making the entire process much simpler since it is quite confusing to maneuver all on your own. You need a mortgage broker that is quite experienced so they can ensure you find the right loan. It is best to choose a broker that has the four following traits:

1. Always Keeps Your Interests In Mind

You should not hire a mortgage broker who seems like they are desperate or in a rush to close the loan. If they are acting in this way, then they are doing so for their own benefit and likely do not have your interests at heart. A good mortgage broker will determine your financial situation and then evaluate the mortgage according to it. Avoid any broker who tries to sell you on taking a larger mortgage than necessary by saying that it is only a few more dollars per month.

2. Takes Note Of All The Fine Details & Delivers

Unfortunately, mortgages are quite complex transactions and there are numerous details. Therefore, if you don’t have a very thorough broker, then they will not examine all the details which will negatively impact you. So, when you are looking at prospective brokers, you should pay close attention to them to see if they are diligent, respond to you quickly, are on time for meetings, etc. You should also get references from people who they typically do business with so you can rest assured that the broker you choose does quality work.

3. Frank Or Straightforward

You should always be aware of any potential mortgage broker who tries to sell you the world. Unfortunately, there are many desperate brokers who will either low ball you, play bait and switch games, change your rate unexpectedly, attempt to claim hidden fees, etc. These are the tactics many unscrupulous mortgage brokers use in order to lure people, so be sure to choose a broker that is as honest and as straightforward as possible.

4. Upfront & Honest About Fees

There are many honest and dishonest mortgage brokers. The honest ones definitely deserve to be well compensated since they offer a huge amount of value. These brokers will let you know their fees and compensation. However, you should avoid any broker that doesn’t want to talk about fees or is skittish on the subject.

With that said, once you pay attention to finding a broker with the above traits, everything should go smoothly. The best brokers usually don’t have any issues getting new client since they do such a great job, they get tons of referrals. These type of professionals are not just in it for the money but are truly committed to doing a great job and delivering the best mortgage possible for each client.

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