Tag: blanket loan

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

Ambitious Determination To Own A Texas Home

What Homeownership Truly Means In Texas?

There is a considerable difference in the experience and relationship you build with a home you are renting and one you actually own. For example, if you have a problem with your rental home, you simply complain to the landlord and like magic, the situation is resolved. No worries about homeowners insurance, saving for a roof replacement or considering the longevity of the HVAC.

But, when it comes to homeownership everything changes. Suddenly all those repairs, payments and upgrades fall on your regular expense account. You may even ask yourself if you actually want the responsibility of the landlord.

But, here is my longer answer on why you will find the homeownership experience to be most rewarding.

Build Equity

When you own your own home and make amortized payments (not interest only), you are not simply shelling out cash to your landlord and you are building the equity of your home. As the property values in the surrounding area also increase, the value of the property of your home also climbs higher. Through keeping your home and property well-maintained and keeping up with your regular payments, your home’s total equity will increase. Knowing that your hard-earned housing payments are improving your total worth and not just filling your landlord’s coffers is an especially satisfying notion.

Your Payments Are Predictable

When you rent a house, you have a very unstable agreement on how much your payments will be each month. When the costs of housing go p, the difference in your rent is only more riches for your landlord. But when you own a home the only thing that can change the costs of your regular payments are tax hikes and increased charges for homeowners insurance. Although, certain neighborhoods may include special assessments and homeowner’s associations that also include increased prices on a yearly or monthly basis.

Your Home Is Your Castle…A Place Of Your Own

Generation to generation teaches the value of being industrious and frugal as the optimal path to gaining the things we desire. Children and adolescents learn to save allowance and take on additional responsibilities to accumulate the resources to purchase toys, vehicles and the capacity to increase their life experience.

Home ownership is yet another step in this grand scheme of finance as you are engaged financially, mentally and very personally to your home and its ownership. If something is amiss, there is no one to complain to. You alone are responsible for maintaining and upgrading your home as well as enjoying the benefits thereof.

A home is the largest investment many people will make in their lifetime and it is important to protect this investment at all costs. In many ways, your home will be a reflection of yourself and your capacity as a responsible homeowner. It is not uncommon for homeowners to feel their home as an extension of themselves; feeling anxious when it is not well-maintained and especially proud when everything is just right.

If you are interested in taking this considerably large step into the joys of homeownership, we would love to tell you more about your options and what to expect from this new stage in your life.

We hope to create lasting relationships with our clients and continue our plans for excellent service through your future as a homeowner. Unlike some of the larger nationwide services, we value our clients far too much to ever share their information or data with anyone. This is what makes us a trusted name in the mortgage community.

To speak directly with one of our representatives, call us up at the number listed below or visit our website and use any of the interactive tools provided. We look forward to being a part of your bright future as a homeowner.

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! 

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!

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

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

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

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

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

What Is A Mortgage Broker?

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

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

How Do Direct Lenders & Banks Work?

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

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

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

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

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

Which Lender Is The Broker More Likely To Choose?

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

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

That is how you save money on your mortgage.

How To Shop For A Mortgage

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

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

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

Pros & Cons Of Both

Advantages of Working with A Mortgage Broker:

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

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

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

Disadvantages of Working With a Mortgage Broker:

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

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

They charge higher fees sometimes.

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

Delays In Closing

Advantages of working with Direct Lenders and Banks:

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

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

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

Disadvantages of Working with a Direct Lender or Bank:

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

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

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

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

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

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

Reasons Why You Should Buy A Texas Home

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

Rent Or Buy: Which Is Better?

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

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

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

Why Should You Buy A House?

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

1. The Shelter Is One Of Our Basic Human Needs

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

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

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

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

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

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

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

3. It Is Easier To Retire As A Homeowner

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

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

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

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

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