An Effective Guide For Hiring A Texas Mortgage Lender

10 Important Questions To Ask Your Mortgage Broker Or Lender In Texas

Are you planning to get a mortgage loan? If so, you need to ask the right questions from the mortgage broker or lender before committing to the loan. You need to know about the type of loan you are getting and whether it’s right for you. Not asking the right questions may lead to many problems after you get the loan. Unanticipated and hidden fees are a big issue with most mortgage loans. That’s why you need to continue to shop for the right mortgage broker or lender until you feel confident about the answers you are getting.

Having a solid relationship with the broker is important to get the best deal in town. You will get better assistance, advice, and accurate information from the broker the more he or she knows you. You shouldn’t hesitate to share your personal information with the broker or lender including permission to run your credit report to build a solid relationship with the broker. Here are 10 questions to ask the broker or lender before committing to the loan.

1. Which Type Of Mortgage Loan Is Best For You?

A good lender will want to know more about you and your goal before placing different loan options in front of you. You wouldn’t want a doctor to suggest surgery before knowing your medical condition and history. Likewise, the broker should gather sufficient information before offering the best type of loan for you. Ask the lender or broker to explain the pros and cons of adjustable-rate loans, fixed-rate loans, negative amortization loans, and interest-only loans. Check out how each option would fit in with your personal situation.

2. What Is The Annual Percentage Rate & Interest Rate?

The annual percentage rate (APR) of a mortgage loan is a complex calculation. It adds the interest rate and other related lender fees and divides the sum by the term of the loan. But all brokers don’t compute the APR correctly. On the other hand, you cannot accurately compute the APR rate for an adjustable loan. The APR won’t account for early payoffs either. Ask the lender about the adjustment frequency if the interest rate is adjustable. Also, don’t forget to ask about the highest rate or cap, the margin, index, and the maximum annual adjustment.

3. How Much Down Payment Is Needed?

The 20% down payment is not always mandatory. For example, if you are well-qualified for the loan, you can get away with a down payment of 3% for some types of loans. But there are pros and cons to a lower down payment. Make sure you ask the lender about all the options you have.

One disadvantage of a low down payment is you will have to pay for private mortgage insurance if you put less than 20% down. You will have to pay an increased monthly payment and more closing costs under such circumstances.

4. What Are The Origination Fees & Discount Points?

Each point will be equal to 1% of the loan amount. For example, two points on a $100,000 mortgage will cost you $2,000. The more points you pay, the lower your interest rate will be. Points are also tax-deductible. Most lenders have origination fees in addition to points. They are also known as lender fees. You should ask about lender fees when you are trying to get information on a lender’s or broker’s policy.

5. What Are All The Costs?

Mortgage lender fees also include third-party vendor fees such as credit reports, appraisals, pest inspection reports, title policy, taxes, recording fees, and escrow where applicable. The loan estimate should include an estimation of all these fees. Federal law requires that the broker or lender gives you a loan estimate when getting a mortgage loan. The lender should deliver the loan estimate when the loan application has been completed.

6. Is It Possible To Get A Loan Rate Lock?

Interest rates can change or fluctuate on a daily basis. If you believe that the interest rates are moving up, you should ask the lender if it’s possible to get the loan rate locked. A lender should charge zero to one point to lock the loan rate. Ask if the lender charges a fee for the service and whether the lock-in protects all the loan costs. Are they giving the loan lock-in writing and for how long will they lock the rate?

7. Are There Any Prepayment Penalties?

Some states don’t allow prepayment penalties. So, you need to ask about this. A prepayment penalty will allow the lender to collect an additional 6 months of unearned interest if you decide to pay off the loan early – ether by selling the property or through a refinance. If your state permits prepayment penalties, make sure you ask the lender how much it is. Get to know about the terms of the prepayment since some are in effect only during the first 2-5 years of the mortgage loan.

8. Will The Lender Approve The Loan In-house?

Make sure you get to know if the lender can handle its own underwriting or it’s assigned out. Underwriters will review the loan and issue certain conditions before rejecting/approving the mortgage. FHA and VA loans would take longer to process. But some lenders will automatically approve or disapprove a loan without sending it to the FHA or VA.

9. How Long Will You Take To Disburse The Loan?

The average time to process a loan is between 21 to 45 days. You should know about the closing date when writing a purchase contract. You should coordinate with the lender to get this date. Ask about the obstacles to closing the loan and how long the final application approval will take.

10. Do You Guarantee On-Time Closings?

Closing the transaction on time is important. Your lender should be able to give you a closing date with committing to the loan. You will have to face problems if the lender can’t disburse the loan on time. Ask about any increases in interest rates if the lock-in expires. What if you have to pay movers to reschedule? You need to ask all this from the lender before committing to the loan.

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.

Helpful Guide For Buying Your First Home In Texas

7  Steps To Take Prior To Buy Your First Texas Home

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

1. Credit

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

2. Budget Analysis

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

3. Debt Percentage

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

4. Your Down payment

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

5. Know The Other Costs

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

6. Interest Rate & Mortgage

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

7. Local Market

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

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

Discovering & Identifying A Great Mortgage Lenders In Texas

Useful Advice For Finding The Best Possible Texas Mortgage Lenders

Going through the process of finding a great mortgage lender and then getting pre-approved for your own loan is a sequence of crucial steps that must be done in a certain order. When you work through each of these steps systematically, you put yourself in a great position for the fast approval of a good loan.

While you likely aren’t too worried about doing heavy vetting of the lender you pick for your loan, you might want to reconsider. Picking your mortgage lender will wind up being among the more substantial choices you make throughout the whole housing purchase process. Keep in mind, you’re going to be working with your chosen lender for several decades into the future.

How to identify great mortgage lenders? Well, mortgage lenders are professionals working for financial institutions, such as banks, who are responsible for the approval or rejection of new home buyer loan applications. If you’re like most people, then your pending home purchase might just be the single largest financial transaction of your life. It’s crucial to make sure the best professional is at your side in order to guide you through this process.

Finding a great lender means identifying a veteran professional that works with your particular loan specifics. You need a lender who actually works with the kind of loan that you’re hoping to get, one who can approve the loan amount you want, and one that’s able to work with borrowers that fit in your particular credit profile. The right lender selection might just make or break the entire home-buying experience for you.

How Do You Find Mortgage Lenders?

1) Check Out Your Credit Score

Prior to starting anything in regards to your search for a mortgage lender, check your personal credit score. You need everything lined up just right, and your credit score is one of the biggest factors that will impact your approval or denial for any mortgage loan. Potential lenders use your credit score in determining your creditworthiness, what sort of rate they can provide you, and how much total they can safely lend to you. Use online services to find out your score as it is now, so you’ll have a better idea of what you can and can’t qualify for.

2) Identify Credit Report Errors & Dispute Them

While having knowledge of where your credit score is proving helpful, you need to take the extra step of being sure the report is accurate. You want it to demonstrate your current financial picture in a good way. Credit reports are known to have negative marks, errors, and mistakes that shouldn’t be there.

Take enough time to go through the whole report entirely to be sure any and all information is accurate and current. When you find any discrepancies, contact the institutions or companies responsible for the erroneous information in order to get things corrected. Even the smallest of discrepancies can leave a serious effect on your overall score, and that can render you unable to get a pre-approval for your mortgage loan.

3) Collect All The Require Documents

Prior to shopping lenders and putting in mortgage applications, you need to be sure that you have collected all the necessary documents in one single place. You can make this whole process far more painless if you do all this before you look. The most crucial documents you’re going to need are copies of your credit reports, tax returns, bank statements, asset statements, photo ID, a detailed renting and/or purchasing history, and pay stubs or tax documents such as W2S and 1099S. If anyone is giving you money for assistance in home buying, then you need written confirmation of those funds that clearly stipulate the gift instead of a loan, as well as an explanation of the relationship that person has with you.

4) Compare & Contrast The Various Kinds Of Loans That Are Available

Once everything is ready on your side of things, you need to start looking over the available loan options. If you’re totally new to all of this, then you might not be aware that not every loan is the same. Various kinds of loans you can pick from including their own pros and cons, as well as different limits and terms, among other things. Popular options include interest-only loans, fixed-rate loans, conventional loans, VA loans, and ARM or FHA loans, which stand for Adjustable Rate Mortgage and Federal Housing Administration.

5) Ask Trusted Sources For Suggestions

It’s a good idea to consult veteran buyers and those with industry experts for insights into the whole process. They can provide you do’s and don’ts that only get learned from experience. Just make sure you can trust your sources of suggestions and recommendations. You might have family and friends offering you advice, and they likely want the best for you, but good intentions don’t always mean sound financial advice. Understand the sources of recommendations in order to weigh the suggestions properly.

6) Figure Out What Matters To You

Once you have sufficient information about your options, the time has come to decide what’s important to you and what isn’t. Make sure that you know the differences between what you need and want. Writing down your list on paper can really help with this part. It’s just not possible to know what it is you’re seeking if you don’t actually know what specifically it is that you want. Have a fixed target in your head before you shop lenders.

7) Compare Every Lender Based On Your Most Crucial Criteria

Once you finish each of the six prior steps, now you can start looking into lenders. If you save this particular step until the end of the process, you’re making sure that you’ve had the chance to get fully educated about the whole process. This will protect you from committing needless errors, missing good opportunities, or misinterpreting anything that might cost you dearly. In this step, you need to identify any potential lender who meets your criteria, and then you can start comparing them all. Look at factors like lender reputation, conditions, terms, rates, and anything else that might apply to your own home-buying situation.

In Conclusion

Purchasing a home should be a wonderful adventure, provided that you do all that you can to make sure it all proceeds smoothly. Picking your lender is one of the biggest choices you’ll make along the way. It’s easy to find mortgage lenders, but finding the right one isn’t quite so simple.

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 When Applying For A Texas Mortgage This Year 2020

Minimum Texas Mortgage Requirements For 2020

If you want to purchase a home this year and wondering how to qualify for a mortgage, you can find the right loan program by learning the minimum borrowing guidelines. In 2020, mortgage options will be available at relatively higher loan amounts that indicate the increasing home prices across the U.S.

By going through the guidelines for the most popular loan types, you should know the amount of mortgage that you can qualify for.

Conventional Loan Requirements

Undoubtedly, conventional loans are the most common mortgage option, but no government agency guarantees them. Compared to the borrowing requirements for government-insured loans, Freddie Mac and Fannie Mae set conventional loan standards, which are stricter.

If you want a mortgage for a more expensive home, it’s much easier to qualify this year since loan limits are increasing up to $510,400 for a majority of the country in 2020. For conventional lending, below are the latest minimum mortgage loan requirements.

A Conventional Loan’s Current Minimum Requirements

  • Down payment. For conventional loans, the minimum down payment is usually 3% and can come as a gift from a family member or simply your money.
  • Mortgage insurance. The lender needs security with private mortgage insurance (PMI) for conventional loans that have less than 20% down in case you default. Each year, you’ll pay anywhere between 0.15% and 1.95% of your loan amount; however, the premium can even exceed 2.5%, especially if you have a small down payment and a low credit score. Typically, you pay the premium as part of your monthly payment, but you can also pay in a lump sum upfront during closing.
  • Employment. Since lenders need proof of your steady income, they’ll review your income and employment history from the past two years. Those with variable incomes and self-employed borrowers alike will need to present extra paperwork to verify income.
  • Credit score. For a conventional mortgage, the minimum score is 620. Most likely, you’ll receive a more favorable interest rate offers with higher credit scores.
  • Income. There are no income limits with many conventional loans. Freddie Mac’s Home Possible loans and Fannie Mae’s Home Ready, however, demand that borrower’s incomes should fall within that area’s income limits.
  • Occupancy. Generally speaking, conventional financing can be useful in purchasing a primary residence, an investment property that you can rent out, or a second home (also called a vacation home).
  • Debt-to-income ratio. The measure of your overall debt divided by your specific gross income is your debt-to-income ratio (DTI). A DTI of 45% or less is much preferable to most conventional lenders but might extend it to 50% with considerably higher credit scores, along with additional cash reserves. Mostly, borrowers with DTI ratios exceeding 45% might be needed to have a minimum credit score of 740 by private mortgage insurers.

FHA Loan Requirements

One of the most accessible home loans to obtain is a mortgage-backed by the FHA or the Federal Housing Administration. Since the FHA insures the mortgage, there are more favorable terms and rates available with FHA-approved lenders, particularly to first-time homebuyers.

Borrowers trying to qualify for a mortgage for high-priced homes will have some relief in 2020. In most parts of the country, there has been an increase in the FHA loan limits to $331,760 in 2020. Affluent areas might receive even more FHA bang for the buck since the maximum loan amounts can stretch up to $765,600.

An FHA Loan’s Current Minimum Requirements

  • Down payment. Whether it’s from your funds or as a gift, FHA demands a 3.5% minimum down payment. With a credit score ranging from 500 to 579, the down payment goes up to 10%.
  • Mortgage insurance. There are two kinds of mortgage insurance when it comes to FHA loans. The upfront mortgage insurance premium (UFMIP) can be rolled into your particular loan and is often 1.75% of the loan balance due. As part of your monthly payment, you’ll also incur an annual mortgage insurance premium (MIP), and those costs vary between 0.45% and 1.05% of the loan amount. Regardless of credit score, FHA mortgage insurance premiums are similar.
  • Employment. Typically, FHA loan requirements focus on the consistency of employment and earnings for the last two years. Job hoppers must explain gaps or changes in employment.
  • Credit score. With a 10% down payment, you can have a low credit score of 500. Homebuyers will require a minimum score of 580 if they make a 3.5% down payment.
  • Income. FHA loans have no income limits. In most parts of the country, the maximum FHA loan is, however, capped at $331,760 as opposed to $510,400 for conventional loans.
  • Occupancy. Whether it’s a single-family or multi-unit property, the property must be your primary residence for a minimum of one year after buying it.
  • DTI ratio. FHA loans have a front-end DTI ratio of 31%, while the back-end ratio is often 43%. Only housing-related costs matter with the front-end ratio, such as your insurance, property taxes, and monthly mortgage payment. Meanwhile, the back-end ratio considers credit card payments, car loans, mortgage payments, and other recurring debt payments. With proof of extra cash reserves or strong credit scores, higher DTI ratios might be approved.

VA Loan Requirements

Generally speaking, the U.S. Department of Veterans Affairs makes it much easier to qualify for a mortgage loan, especially for active-duty military personnel, eligible spouses, veterans, and reservists. There are no longer loan limits with VA mortgages in 2020. That implies that VA borrowers may be in a position to purchase homes with VA financing instead of a jumbo loan, or perhaps financing for loans that surpass conventional loan limits.

A VA Loan’s Current Minimum Requirements

  • Certificate of eligibility. If you want to qualify for a VA loan, a VA loan certificate of eligibility (COE) will be necessary since it proves you satisfy the military service requirements demanded by a VA loan. Most lenders can acquire a COE online; however, veterans and military personnel can apply for one online.
  • Mortgage insurance. No PMI is needed since the VA guarantees loans given to eligible borrowers.
  • Down payment. For a VA loan, no down payment is needed. Lenders might, however, demand a down payment, especially if the loan surpasses standard loan limits. The source of your down payments can be your funds or simply a gift from an employer, a close friend, a relative, charity, or government agency.
  • Funding fee. Many VA loans have this fee to defray the program cost to taxpayers. Generally, the amount varies depending on the down payment amount, the VA loan benefit usage, and the type of service. If military borrowers have service-related disabilities, they might be eligible for a waiver. VA funding fees jump to 0.15% for those borrowers who come up with 10% or less of the buying price. That sums up to an additional $1,500 in funding fee costs per $100,000 borrowed.
  • Employment. Proof of two years of employment is necessary, and the only exceptions are recently discharged veterans.
  • Credit score. Although there’s no credit score requirement with a VA home loan, VA-approved lenders need a 620 score.
  • DTI ratio. 41% is the preferred DTI ratio. VA-approved lenders might approve higher DTIs, especially if the borrower has additional money leftover after-tax deductions, or has residual income, and there’s a subtraction of monthly maintenance costs. Generally, the amount required varies depending on your family size and location.
  • Occupancy. Primary residences are fundamental to VA loans.

USDA Loan Requirements

Typically, the U.S. Department of Agriculture (USDA) provides a mortgage program made to allow low- to moderate-income families to purchase homes in rural areas. Apart from restrictions on the home location, USDA mortgage loan requirements include income limits.

A USDA Loan’s Current Minimum Requirements

  • Down payment. For eligible USDA buyers and properties, no down payment is needed.
  • Home location. The location of the home should be within one of the USDA’s assigned rural areas if you want to be eligible for a USDA loan.
  • Mortgage insurance. Mortgage insurance isn’t a requirement with USDA loans.
  • Guarantee fee. A 1% upfront fee is often charged, as well as an annual fee of approximately 0.35% of the loan amount. Like the mortgage insurance fee charged on an FHA loan, the annual fee is rolled into the monthly mortgage payment, and the upfront fee financed.
  • Income. For USDA loans, it’s usual to have proof of income history and two years of job. Considering all household member’s income is required, irrespective if or not they apply for the loan. Income limits are also a thing with USDA loans, which vary by family size, county, and city. Using USDA’s map tool, find out your area’s income limit.
  • Credit score. A minimum credit score of 640 is needed with USDA mortgage loans for automatic approval, as long as income and employment requirements are met. Homebuyers with lower credit, however, might still be approved in case a temporary hardship impacted their scores, or if the new housing payment is less compared to the amount the borrower is paying.
  • DTI ratio. For USDA loans, 29% is the maximum front-end ratio, and the maximum back-end ratio is 41%. With higher DTI ratios, borrowers might still qualify with a stable income history, large cash reserves, and a credit score ranging around 680 or higher.
  • Occupancy. Only primary residences matter with USDA 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!

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!

Mortgage For Self-Employed In Texas: How To Get An Approval?

Tips To Get Approved For A Texas Mortgage For Self-Employed

You are self-employed and want to get approved for a mortgage. It might seem difficult but it’s not when you have the right paperwork.

Self-employment offers a number of benefits. You are free to work anywhere you want and anytime you want to work, and there is no boss looking constantly over the shoulder. However, it has its own challenges, especially at the beginning. When you are self-employed, you might find it difficult to get approval for a mortgage as lenders typically find it harder to assess the income of self-employed individuals.

However, it doesn’t mean that you won’t get approved for a mortgage. You need to understand the process used by lenders for assessing self-employed income for mortgage applications. You need to do certain things to make your application more appealing. Here is a list of some of the important things you should know about getting approved for a mortgage when self-employed.

Biggest Challenge – Enough Income For Mortgage Approval

The most important thing lenders look at when approving mortgage applications is that the borrower should be able to pay back the money which means you need to show proof that your income is enough to easily cover the mortgage payments. Having a W–2 makes it easy as it shows the lenders that you have a steady paycheck and you will continue to earn money to cover the mortgage.

Being self-employed also means a fluctuating income and there is also the possibility of your income shrinking enough that you are unable to pay the bills. This is the reason, mortgage lenders typically ask for proof of two years’ worth of income from self-employment in order to ensure that a study revenue stream exists. You will need to provide the last two years’ tax returns and you might also be asked for a complete list of your existing assets and debts. If you are a business owner, you might be asked by the mortgage lender to provide two years’ worth of profit and loss statements for your business.

Things get tricky for you as mortgage lenders take out all the deductions when considering your income. It means the expenses you have written off for the business including costs of business trips, office supplies and phone and Internet services among others for taxes also lower your income that is considered by mortgage lenders. This increases the debt to income ratio for you. The debt to income ratio is used by lenders to figure out the amount of money coming in and going out every month. You are unlikely to get approved for a mortgage in case your debt to income ratio crosses 43%. Simply put, if you are making debt payments that are more than 43% of the income, you are unlikely to get approved for a mortgage.

However, you should not have issues getting approved for a mortgage in case you are making steady money from being self-employed and you can show documents to prove that your income has not gone down or even risen with time.

In addition to these, mortgage lenders also consider some other factors.

Important Factors Other Than Income For Mortgage Approval

As mentioned above, your debt to income ratio is the most important thing lenders look at when they consider your mortgage application. If you’re making $ 1 million a year but $ 900,000 is used for paying off existing debt, it is going to be of no use. Therefore, you need to make sure that your debts are kept down to a manageable level. You need to ensure that your debts do not exceed 43% of the income and ideally, this ratio should be kept under 36%.

Lenders also check your credit score. It simply shows how responsible you are with borrowed money. The credit score is used by lenders for assessing the risk of lending to an individual. If your credit score has a number of repossessions and late payments, lenders will be hesitant to approve your mortgage. Similarly, if your credit utilization ratio is high, it will also affect your chances of getting approved. The credit utilization ratio is the ratio of the amount of credit you are using to the amount of credit that is available to you. Needless to say, your credit score should be kept as high as possible to improve your chances of getting the mortgage approved.

Mortgage Application Denied – Things To Do Next

In case a lender denies your mortgage application, the first thing you need to do is figure out why it has happened in order for you to take corrective measures. You should get some kind of signal from the lender why your application has been denied and that should be a good starting point for you.

In case your application was denied due to a lack of enough income, there are few options available to you. You have the option of making a bigger down payment if that’s possible for you as that will reduce the amount of loan. You also have the option of finding a cosigner who will cosign on the mortgage for you. Keep in mind that co-signing carries a lot of risks and there are no rewards which means it’s not something that should be asked slightly.

If your application has been denied due to having too much debt, your focus should shift to paying off the existing debt before reapplying for the mortgage. It has a couple of benefits. It will bring your debt to income ratio down and it will also bring down the credit utilization ratio which, in turn, will help in boosting your credit score.

You should be able to get the mortgage approved with one of the above-mentioned strategies. If things do not work out, you might have to wait for some time and try again later. During this time, you should try to increase self-employment income and once you have started earning a bit more money, it’s time to reapply. All the necessary financial documentation should be kept ready to give to the mortgage lender when you reapply.

Self-employed individuals need to jump through a couple of extra hoops in order to get approved for a mortgage. It’s possible to get approval but you need to prove that you are making a steady income through your business.

The Texas Mortgage Pros

The team of Texas Mortgage Pros has mortgage professionals from all over Texas. We provide the highest quality service to our clients for their mortgage needs. We combine it with multiple loan programs and the lowest rate in your area – The Woodlands, Austin, Houston, Dallas, Tomball, San Antonio and Spring, Texas.

Our team of professionals has a number of years of experience in the industry and will personally work with you to make sure that you get a specifically tailored home loan for your specific situation and expectations. Whether it is buying your first home or a home you have always wanted, consolidating the existing debt or you want to refinance a loan, our loan officers will work with you to find the best loan program tailored to your needs at the lowest possible rate.

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

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

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

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

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

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

What Is A Mortgage Broker?

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

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

How Do Direct Lenders & Banks Work?

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

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

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

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

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

Which Lender Is The Broker More Likely To Choose?

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

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

That is how you save money on your mortgage.

How To Shop For A Mortgage

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

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

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

Pros & Cons Of Both

Advantages of Working with A Mortgage Broker:

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

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

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

Disadvantages of Working With a Mortgage Broker:

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

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

They charge higher fees sometimes.

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

Delays In Closing

Advantages of working with Direct Lenders and Banks:

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

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

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

Disadvantages of Working with a Direct Lender or Bank:

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

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

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

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

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

Shopping Around For Texas Mortgage Rates

A Perfect Guide To Finding A Suitable Mortgage In Texas 

For most people, a mortgage will be the largest long-term debt they will ever have. This is why you need to take the time to get the best possible mortgage rate. Doing so will help to minimize the overall costs of owning your own home. If you are unsure about how to start shopping around, there are some tips that you can use to unlock the best rates possible.

Know Your Credit Score

Your credit score will be used by potential lenders to determine if you qualify for a loan and the interest rate you will pay. The higher your credit score, the better the terms of your mortgage will generally be. This is why you need to be proactive and scrutinize your credit report at least 6 months before you start applying for loans. This will give you time to identify and correct any errors.

Consider The Mortgage Types

When you are shopping around for a mortgage, you need to know which loan type is best for you. There are 2 types that you need to consider.

The first is conventional loans which make up around 65% of all the mortgages which are issues. These loans will be offered by private enterprises such as mortgage companies, commercial banks, and credit unions.

The second is government-backed loans. While these loans are obtained through private lenders, they will be fully or partially insured by the American government. These loans will often have less-rigid requirements, smaller down payments, more flexible income requirements, and low credit expectations. The one thing with these loans is that the property will need to be owner-occupied and not an investment or rental property. Low-income individuals and first-time buyers should consider this type of loan.

After looking at the type of mortgage you can get, you need to consider the financing category that the loan falls into. There are two categories that you need to be aware of.

The first is the fixed-rate mortgage. As the name suggests, this mortgage will have a set rate that does not fluctuate throughout the loan term. This is ideal for borrowers as you have predictable payments for the entire mortgage term.

The second option is adjustable-rate mortgages which are also known as variable rate. These mortgages will have interest rates that change periodically and in relation to an index. The introductory rate for these loans is usually lower than the fixed-rate mortgages, but this will change after a set period of time. These loans can be favorable to buyers as the interest rates could decline.

Contact Several Loan Providers

It is important to note that loan officers are not all-knowing. This is why you need to do some homework and understand what the pros and cons of the different mortgage products are. You can hire a mortgage broker to help with this as they source mortgages from lenders and help to facilitate the transaction.

However, these brokers will take fees from lenders in exchange for sending customers to them even if the mortgage product does not suit the customer. Any recommendations you get from a broker should be considered carefully. Never blindly trust the recommendation provided by a broker.

Include The Additional Costs

Borrowers are often distracted by the low advertised interest lenders advertise and overlook the many fees which can increase the overall costs of the mortgage product. This is why you need to take the time to consider all of the costs such as appraisal costs, application fees, underwriting, loan-origination and broker fees. There could also be settlement costs to look out for.

Linked to the interest rates are points which are fees that are paid to lenders and brokers. The more points paid, the lower the interest rate will be. A single point could cost 1% of the loan amount and reduce the interest rate by 0.25%. To fully understand what you will end up paying, you will need to ask that the points be quoted in dollars.

Negotiate

All lenders have to legally provide a three-page loan estimate which details the costs associated with the mortgage you want to get. This has to be provided within 3 days of application. The information on this estimate will include the monthly expenses, the total closing costs, and the estimated interest rates. It is important to note that this is not a loan offer, but it does obligate the lender to accept the listed terms if you have the available finds and meet the required credit approval.

Get It In Writing

If you are happy with the terms proposed, you need to ask for a written rate lock or lock in on the estimate. This needs to include the agreed rate, the term of the loan and the number of points that have to be paid. The majority of lenders will charge a non-refundable fee for locking the terms, but this is generally worth paying as there are a lot of issues that can occur on the road to approval.

Once you have chosen a lender, you will get a pre-approval letter. This is a legally binding agreement to lend the money after income verification, credit checks and funding is secured.

Choose The Best Rate

Completing some online searches and using mortgage rate calculators can help you get a better idea of what is on offer. However, it is important to note that interest rates fluctuate and different lenders could have offers on certain loan products.

Choose The Best Lender

When it comes to choosing the lender, you need to consider the customer service on offer. Loan applications require a lot of paperwork and information which is why you need a reliable point of contact. This contact will answer any questions that you have and will make the entire application process easier. Good customer service also ensures that the approval schedule stays on track and that all the documentation is signed in an efficient and timely manner.

The Online Option

Human interaction is generally preferred, but you can save some money by choosing a mortgage with online lenders. These lenders will theoretically have lower overheads and can offer better rates and lower fees. However, if you would prefer more hand-holding through this process, a traditional lender might be better.

Shopping around for the best mortgage rate is important and you need to be focused. You need to understand the terminology used and choose the right type of mortgage. Your mortgage is something that you will live with for many years to come and it is vital that you choose correctly.

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!