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.

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

The Important Things To Know About USDA Loans In Texas

All You Need To Know About Texas USDA Loans

If you have not yet heard of the USDA loan, you are not the only one. In many ways, this most advantageous form of financial aid has not been greatly publicized, until today.

In the following article, we will provide you with all you need to know about how USDA loans work.

The USDA Loan is available to most regions of the United States and offers zero-down mortgage opportunities. These loans come from private lenders with guarantees from the USDA. And are primarily used to provide homebuyers in rural areas a chance to purchase homes in less industrialized areas.

These USDA loans function in the same way as a government-backed mortgage. To gain the loan a homebuyer will work with a USDA lender to become preapproved before putting down an offer, going through the loan appraisal, getting the lender underwriting and closing the deal.

While the 0-down offer is probably the most enticing thing about this deal, there are some other benefits here too. Following are 10 other facts and benefits that you may not have known about.

1) Most of The U.S. Is Eligible

A USDA loan can be purchased for financing housing in just about any “rural area” and many people will be surprised what constitutes such a zone. You might think this means living miles from civilization, but actually any region with a population of under 35,000 could fall into this category. As a matter of fact, most of the US (97%) is eligible for this loan.

2) USDA Loans Are Only For Primary Residences

But, you are looking for that sweet little home away from home in the countryside? Sorry, the USDA loan is offered only to those homebuyers looking to finance their primary residence. This means that the home you would like to mortgage with a USDA loan will have to be the place where you reside all the time.

3) Many Property Types Are Eligible

When you were here rural, you may get the idea of a ranch or sprawling Southern Estate or anything with endless acreage. That’s not usually the case, USDA loans are in place for just about any size of the dwelling and include new constructions and single-family homes as well, the opportunities are truly extensive.

4) You Can Make Too Much Money To Qualify For A USDA Loan

The USDA loans will not be catering to all budgets either. Your household income levels will play an important role in deciding your eligibility for this. As a rule of thumb, a USDA loan will only be for those making within 115% of the areas average income.

Lenders will be looking at the household income although there will be some deductions that qualify for subtraction.

5) The Loan Program Encompasses Two Separate Types

The term “USDA Loan actually encompasses a couple of different loan types. Here is what you need to know about these very different programs.

  • USDA Direct Loan. This type of loan provides you with funds coming from the USDA directly. To qualify for this type of support, you must have an income equal to 50 to 80% of the local average. The terms can also be much longer than the average 30 years, up to 38 years in some cases. Plus, it comes with special interests rates that make the monthly payment plan far more attainable. Those looking for a USDA Direct Loan will need to contact their Rural Development office.
  • USDA Guaranteed Loan. The USDA Guaranteed Loan functions very much like any other loan backed by the government, like FHA and VA Loans. This type of loan must be processed through valid USDA lenders and uses the household income numbers to decide who is eligible. Because these loans are guaranteed by the USDA, they are a little more stringent in their policies. For example, the borrower must have a credit score of 640.

6) Even If You Have Had A Foreclosure Or Bankruptcy, You Can Still Qualify For A USDA Loan

If you have hit a rough road financially, you can expect the USDA to be very understanding. There is a chance for those recovering from foreclosure and bankruptcy. After a Chapter 7 Bankruptcy or a foreclosure, the USDA will ask for a three-year waiting period before eligibility is restored.

7) They Have Some Of The Lowest Mortgage Insurance Fees

When you request a loan through the regular mortgage process, you will need to pay up roughly 20% down as well as an additional monthly fee for “Private Mortgage Insurance”. This PMI protects the interests of the investment and can be anywhere from 0.5% to 1% of the entire loan value. In the traditional framework, this can be a very expensive payment and a $200,000 loan will cost as much as $200 a month in just PMI.

The USDA offers a much more rewarding scenario. The upfront fee is a mere 1% of the total loan amount and the annual insurance will come out to 0.35% of the loan. This means that on the same loan described above, the insurance payments would be $58.

8) Flexible Credit Guidelines

The USDA has not made any specific credit score too low, but you can expect that your USDA-approved lender will require a score of 640 or more. This is the number held by the USDA’s Guaranteed Underwriting System (GUS) and is used to determine credit risk. If your score is below 640, your loan would have to be underwritten manually, if your lender decides to grant you the loan.

9) They Allow You To Use A Co-borrower

The USDA also allows a co-borrower to sign on with you and promise to continue paying the loan if you will not be able to. There is no requirement to use such a co-borrower, but if in the event that you have one it can improve certain requirements and make you seem more creditworthy. You should note that the borrower should be someone who lives with you and the same income, credit and debt guidelines that apply to you will apply to them as well.

10) They Have No Pre-payment Penalty

Another important benefit is the lack of any penalty for prepayment. While it does seem unlikely that anyone would make larger payments on their loan than necessary, there are some situations in which the lender may require the borrower to pay a penalty if they have managed to pay their loan off before a specific timeframe. The good news, this is not a stipulation you will have to face when taking out a USDA loan.

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 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! 

Types Of Texas Mortgages: Which One Is Perfect For You?

All You Need To Know About The Types Of Mortgages In Texas

Did you realize that there are various types of mortgages available? In this article, we will discuss the most common options along with the benefits and drawbacks to each.

When it comes to purchasing a house, you may think the only option is a fixed-rate mortgage for 30 years. However, this is not true as there are various mortgage options available. Below is a basic discussion of the 16 types of mortgages – some very common and others quite rare.

1. The Fixed-Rate Mortgage

The fixed-rate mortgage is potentially the most popular and commonly used alternative. Having a set interest rate means one has predictable monthly payments. The payment schedule can be spread over a term ranging from 15 to 30 years. It should be noted that shorter terms are gaining popularity.

  • 30-Year Mortgage. Approximately 90% of all homebuyers in 2016 opted for the standard fixed-rate, 30-year mortgage. A longer repayment period makes the payments more affordable and can help buyers organize more affordable monthly payments for expensive properties.
  • 20-Year Mortgage. Similar to the 30-year mortgage option, the 20-year mortgage offers fixed rates resulting in consistent monthly payments. Most homebuyers opt to split the difference between short and long terms allowing people to pay off their mortgage sooner. Typically, the 20-year mortgage option has a lower interest rate than the popular 30-year mortgage.
  • 15-Year Mortgage. Contrary to popular belief, the payment schedule for a 15-year mortgage is not more costly than the rates for a 30-year mortgage. This type of mortgage offers lower interest rates making them affordable as a short-term mortgage. You would be able to pay off the mortgage in a shorter period without an increase in interest rates.

2. The Adjustable-Rate Mortgage (ARM)

The adjustable-rate mortgage allows for fluctuations in the interest rate. The interest rate will differ according to the type of loan you choose. If interest rates are decreasing, the ARM allows homebuyers to take advantage of this without any refinancing. However, if the interest rates rise, ARMs are surprisingly expensive asking for high payments.

  • The Variable Rate Mortgage. Variable-rate mortgages are merely another form of adjustable-rate mortgages. The common factor is that variable-rate mortgages have an adjustment in the rates throughout the loan term. Rates will often change according to the third party’s index rate and the lender’s margin. The rates are adjusted on a set payment schedule regardless of whether payments are made every month, every year or on a longer period. It also caps the maximum amount of interest you will need to pay.
  • The Hybrid ARM. A hybrid adjustable-rate mortgage involves a fixed initial rate for a set period of time. The most common hybrids include three years of fixed interest followed by adjustable interest rates. The 5/1 option is similar to the 3/1 option with the difference being a five-year introduction period instead of three years.
  • The Option ARM. The option adjustable-rate mortgage option provides borrowers a four monthly payment alterative. The mortgage includes a set minimum payment amount, a 15-year or 30-year amortizing payment schedule, and interest-only payments. In most cases, the option ARM is utilized to achieve a much larger loan than the borrower would typically qualify for.

3. The Balloon Mortgage

Balloon mortgages are paid over a short term, mostly 10 years or less. For the majority of the set term, the balloon mortgage requires low payments and sometimes interest only. At the end of the set term, the full balance of the loan needs to be paid. This can place borrowers in a risky position.

4. The Interest-Only Mortgage

The interest-only mortgage offers borrowers an alternative for a lower monthly repayment schedule over a set period. After this, the individual will need to start paying the principal amount. Balloon mortgages are technically a form of interest-only mortgages; however, it does not require any lump sum payments of principal amounts.

Instead of asking for a lump sum payment, the mortgage allows borrowers to pay interest-only payments over a set period. After this, the individual is required to “make up for lost time” through the payment of more than the principal amount using a standard fixed-rate mortgage schedule.

5. The Reverse Mortgage

The reverse mortgage option is reserved for senior citizens exclusively. Reverse mortgages offer homeowners access to the property’s equity in a loan which can be set up for monthly repayments, withdrawn in a lump sum, or receiving a line of credit.

The reverse mortgage is only available when you need to leave the property. If you leave, even if it is before death, you are required to repay the mortgage amount using the proceeds of the loan. This can reduce the equity on which most seniors depend to fund long-term expenses.

6. The Combination Mortgage

A combination mortgage is useful to avoid any private mortgage insurance or PMI if you cannot pay 20% of the property value. On average, borrowers take out a mortgage for approximately 80% of the property value with another 20% payment on the home value. This is known as an 80/20 combination mortgage loan.

In many cases, the combination mortgage will be more costly than others regarding interest rates. However, if you review mortgage options, the PMI is also highly costly. If you are able to pay off the high-rate 20% quickly, then you can emerge with a beneficial combination mortgage.

7. The Government-Backed Mortgage

To encourage people to purchase homes, the federal government offers borrowers mortgages backed by government authorities. Should the borrower default on the mortgage, a government-backed mortgage provides coverage of the lender’s losses from the government entity.

  • The FHA Loan. Federal Housing Administration can back loans and are ideal for first-time homeowners or people with a bad credit score. This type of loan is commonly used for cooperative housing projects, single-family homes, some multi-family houses, and condominiums.
  • The USDA Loan. Rural homeownership is highly encouraged using this loan because the US Department of Agriculture offers a specialized mortgage option. The payment schedule is low for people purchasing homes in rural areas.
  • The VA Loan. The US Department for Veterans Affairs backs the zero-down mortgage option for people in active duty, on the national guard, a reserve for government service, and veteran members of all armed forces.
  • The Indian Home Loan Guarantee. HUD mortgages are available to people of Native American descent who are earning a low income. This also includes Hawaiians and Native Alaskans.
  • The State And Local Programs. If you have problems paying a mortgage down payment or have a bad credit score, then it is recommended that you review the different state and local government programs.

8. The Second Mortgage

If you own a house and have equity built on it, you can opt for the home equity loan (also known as a second mortgage). This is another type of mortgage loan secured by the house’s current equity. A further mortgage option is the home equity line of credit. This alternative is a revolving mortgage loan depends on the property’s equity.

Final Words On The Matter

The type of mortgage chosen is a significant consideration when buying a house. The good news is you have various mortgage options available. In most cases, it is recommended that you focus on the fees and interest rates when comparing loans.

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

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

Understanding How To Find & Finance Your Home In Texas

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

Step 1: Begin Your Research Early

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

Step 2: Determine How Much House You Can Afford

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

Step 3: Get Pre-qualified for Your Mortgage

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

Step 4: Find The Right Real Estate Agent

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

Step 5: Shop For Your Home And Make An Offer

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

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

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

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

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

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

Step 6: Get A Home Inspection

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

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

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

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

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

Step 8: Have The Home Appraised

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

Step 9: Coordinate The Paperwork

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

Step 10: Close The Sale

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

Before making a decision, let one of the experts at The Texas Mortgage Pros help you find out exactly what loan is best for you.  Contact us today Or Call Us @ (866) 772-3802

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

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

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

Starting The Search For A Good Lender

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

Start to Work on Improving Your Credit

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

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

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

Understand Your Options

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

Credit Unions

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

Traditional Bank Loans

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

Correspondent Lenders

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

Savings & Loan

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

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

Receive A Pre-approval Letter

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

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

Make Some Comparisons

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

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

Have Questions Ready To Ask

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

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

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

Before making a decision, let one of the experts at The Texas Mortgage Pros help you find out exactly what loan is best for you.  Contact us today Or Call Us @ (866) 772-3802

Understanding The Factors That Affect Texas Mortgage Rates

The Factors That Affect Mortgage Rates In Texas

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

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

Inflation

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

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

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

The Level Of Economic Growth

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

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

The Federal Reserve Monetary Policy

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

The Bond Market

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

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

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

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

The Housing Market Conditions

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

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

Mortgage rates are linked to the rules of supply and demand, much like other parts of the real estate market. There are other factors that impact this as well such as economic growth, inflation, the monetary policy of the Federal Reserve and the overall state of the housing market. Your financial position will also affect the rate you are offered which is why you need to keep it as healthy as possible.

Before making a decision, let one of the experts at The Texas Mortgage Pros help you find out exactly what loan is best for you.  Contact us today Or Call Us @ (866) 772-3802

Effective Thoughts For Searching Your Dream Home In Texas

10 Tips To Help You Find Your Texas Dream Home

It takes more than just a house to find your dream home. Just like a life partner, you have to look for and choose someone that not only understands you but one who makes your heart keep calm despite everything else. The perfect home is where you can make memories and unwind without thinking of anything else. Although a dream home can be compared to finding the perfect partner, finding the perfect home is much easier. All you need is do some legwork, budget well, and plan for your dream home. You never have to go to a blind date to find a good home. Here are a few tips and ideas on how to find the home of your dreams

1. Know What You Want In A Home (Style)

Although the sleek modern kitchen in that penthouse apartment or the craftsman homes might seem fun and appealing, is this what you look for in a home? As mentioned earlier, a home is where you are most at peace. That said, single-family homes are recommended for they offer the freedom and privacy you would need, particularly if there are children or even pets in the picture. This type of home is, however, demanding as you will have to spend several weekends maintaining everything in and around the house. This might or might not be fun for you. Condos, on the other hand, might not have all these maintenance needs, but do not offer lots of green space for the family. In addition to this, you will be required to pay condo association fees for its maintenance monthly.

2. Research

Before settling on a neighborhood you’d wish to live in, research on it and see what appeals you more about it. Some find the perfect home in the countryside, downtown, and even uptown; what do you look for in a home environment. Take your curiosity online and start researching on the neighborhoods you find appealing. Use various tools to find out more about the area, its walkability scores, and safety.

Online research isn’t enough. Go to these neighborhoods in person, walk or drive around, and see if you can find everything you need in a home environment. Be sure to look into factors such as security and social amenities.

3. Get Your Finances In Order

Once satisfied with the neighborhood, you can then start getting your finances in order. You need to get pre-approved as a homebuyer. The first step to doing this is by requesting your credit score and report to have an idea of your credit standing. From this, you can plan your next cause of action; this can be to correct any errors with the credit reports, as well as having all bills paid on time to improve your score. Next, you need to see how much you have saved, how much is required for a down payment, and closing costs.

4. Stick To Your Budget Range

It’s after getting pre-approved that you can know what you qualify for. For most people, the most expensive homes (within their price range) seem more appealing than the cheaper more affordable ones. Although you might be tempted to go for the top of the range homes, it’s advisable to go for something you can afford comfortably. Going for the expensive home might taint the love you initially had for the new home.

Financial experts recommend sticking to the 28/36 rule when budgeting for your money. This is to say; you shouldn’t pay more than 28% of your total monthly income on housing expenses. In addition to this, other expenses such as car payments, student loans, and housing costs mustn’t exceed 36% of your income. Sticking to your budget and the guidelines outlined here is the only way you will be comfortable in your new home.

5. Make Future Plans

The process of looking for the ideal home can be lengthy and tiring. You, however, should look for a home you will be able to stay in for at least 5 years. That said, it is advisable to consider what works for you now, and what your future plans are (with the home). Planning well will help you build equity and even be able to pay the mortgage on time.

The perfect home will always grow with you. Any plans, such as getting a family, having kids, the need for a home office, and such need to be put into consideration before buying that five-bedroomed house. While the -bedroomed house might seem ideal then, it won’t make any sense when it’s just you and the walls. Give yourself time to grow before shooting for such a big house.

6. Don’t Focus Too Much On The Flaws

Most of the houses you will come across when ‘hunting’ for the perfect home will have a few flaws here and there. Some will have odd-shaped rooms, not the best roof, or even slight damage on the entry door. While some issues might be hard to overlook, you shouldn’t focus too much on the minor flaws a house might have. Some of these imperfections are what make a house a home.

Instead of focusing on the cosmetic blemishes, look for homes with a layout fitting your lifestyle, space, and a price you can work with. Some of these cosmetic issues can be dealt with or fixed over time. Merely updating the colors and kitchen cabinets would create the home you have been dreaming of.

7. Pay Special Attention To Potential Home

Finding a house, you’d consider a potential home takes a lot of research and legwork. Should you find a home you are interested in, start looking into the tiny details that aren’t noticed on the first day. Some homes will seem to have all the qualities and be in a peaceful neighborhood, only to turn out to be in the worst neighborhood. Although the neighborhood was quiet and calm when you came for viewing, it might be close to a night club or a noisy part of the street. Paying special attention to these can save you lots of frustration in the future.

8. Know More About The Neighborhood

The only way your love for your new home will last is if you fall in love with the neighborhood as well. There’s no better way to learn about the region that taking a walk around. Taking a walk will help you identify amenity centers, jogging trails, and even the nearest supermarket or grocery store you’ll use in the future. Look for restaurants, schools, and other aspects that will make you love the neighborhood.

9. Have A Licensed Home Inspector Inspect The House

Don’t take any chances with such a huge investment. While the house might seem OK to you, you still need the confirmation of a licensed home inspector. The inspector should be able to detect anything from potential roof problems, a failing plumbing line, and the age of the house in no time.

10. Be Flexible

Back to a perfect partner. The person you imagined to be an angel while dating doesn’t turn out to be that person in the long run. You, therefore, have to make adjustments to accommodate their bad sides and imperfections. The same applies to find the perfect home. Don’t get fixated simply because the porch is too big, or the stairs aren’t as they seemed to be. Allow yourself to be flexible and deal with each imperfection wisely. This is the only way you will be able to create your dream home from this simple house.

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 or call us today for more pieces of information!