Good Prices For First Time Home Buyers Loans In Texas?

What’s A Good Price For First-Time Homebuyers?

Part 2

If you have credit cards, then you know that issuers give you credit lines you can spend. Some cards might give you as much as $25,000. Should you actually go out and spend every dollar? No, you shouldn’t, and you probably never came anywhere close to that if you had such a card.

That $25,000 is just what they figured you could safely handle after they went through your reported income, your employment history, and your credit reports.

You can expect mortgage lenders to do much of the same thing. They’ll figure out your max purchase price based on factors like debt-to-income ratio and the down payment you’re willing to make.

This is no different than a credit card in that you shouldn’t spend it all. It’s a smart money move to aim for a home that costs less than your upper bound, particularly if you are buying for the first time ever.

Owning a home has a lot of costs that you might not know about yet. Veteran homeowners know about them, but if your history is in renting, then you don’t.

Just the monthly overhead that keeps your home up can be daunting. If you rented, you maybe had the rent, the power, and the cable or Internet, and some apartments even throw those in these days. You weren’t paying for maintenance, water, trash, landscaping, insurance, or property taxes.

Forget the monthlys. What about the furniture? What about the new baby coming? Oh boy! You also have to factor in something known as payment shock, and that’s basically a big jump in monthly liabilities.

For instance, should your housing payment double, it will stun you. If you had been renting for a grand each month and now owe triple that every month, then you might hear concerns from an underwriter.

You need to be concerned too. At the very least, recognize what you happen to be getting into here.

What’s A Good Price For First-Time Homebuyers?

Trying to buy your first home can make you want to pull your hair out. No matter how much you pay, you’ll lose sleep for a few weeks, if not longer.

When I bought my first home, I buried my head under pillows and stayed there as long as I could every morning. I was stressed out beyond belief.

I eventually talked to one of my friends, and brought it up. He told me that if I was anxious over what could happen, then I was halfway there already. I was told in no uncertain terms to chill out. I tried. I really did try.

You’ll Find Out The Most You Might Afford From Your Lender

Start the process by visiting your bank or a mortgage lender.

Many of them offer pre-qualification or pre-approval letters free of charge and without any commitment on your part.

They’ll look at your finances to figure out how much they can afford to lend you.

This will establish how much you can spend when you hunt for a home.

Data from the National Association of Realtors looked at the national median prices of single-family homes in the fourth quarters of 2017 and 2018. They went from $247,800 up 4% to $257,600.

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 click here to go to the next article in this series.

Good Prices For First Time Home Buyers Loans In Texas?

What’s A Good Price For First-Time Homebuyers?

Part 1

Buying your first-ever home can get rather nerve-wracking. No matter how much you pay, whether that feels like a lot or a little, you’re going to have some nights early on where you can’t sleep.

When I first bought a place, I buried myself under my blankets and didn’t come out for a while, and that happened for more nights than I want to admit. It was very stressful.

I even talked to a friend about this, and he told me that if I was worrying about what-ifs, then I was practically already there. He told me to chill out, okay? I got it.

The Lender Tells You How Much You Can Afford

Your first stop is probably going to be a mortgage lender or bank.

You might get a pre-approval or pre-qual letter free of cost or obligation.

You can use that to determine how much you can afford just based on your current finances.

That will at least set up a price ceiling you can use as an upper limit for your home search.

There’s no universal answer that suits everyone, but we’re able to talk about underlying stuff that comes up with solutions that work for you.

The National Association of Realtors has data that claims the national median home price for an already existing home for a single family during the last quarter of 2018 was $257,600, which was up 4 percent from the previous year, when it was $247,800.

First-timers might want to look for prices close to these points because starter homes usually fall on the cheaper side of the price scales. Then again, it’s not always so simple.

Home prices in different housing markets around the country are all over the place, with a lot of cities being over the median.

Also, your finances will factor in since they will limit just how much you’re able to afford, and there’s no way around that.

The mortgage lender or bank is only going to let you borrow so many dollars based on your down payment, income, and assets.

That means you could just visit to get your pre-approval or pre-qualification so you can know just how much you are able to afford. This is known as an upper bound, meaning you know you can’t exceed it.

Even if you’d like to purchase a million-dollar home, you might wind up getting limited to properties worth $400,000 because of your finances.

This is a good start since you at least have a pretty good idea what your price ceiling and affordability are. It means you’re able to set your filters on things like Zillow and Redfin so they don’t exceed your purchase price of $400,000.

If you’d rather not talk to anyone, you can even just run numbers on your own through a mortgage calculator, although odds are that it won’t be nearly as accurate.

Either way, you should look past money because there are certainly other considerations, like why you’re buying to start with, just how long you intend to stay, the features you might need, and so forth.

Do You Plant To Live Within, Below, Or Above Your Means?

Are you a frugal soul that enjoys getting by with less? Or do you swing for the fences? It’s not necessary to spend the full maximum that you’re able to afford.

It can even make some sense to buy under so you wind up with a safety net that can cover unexpected costs.

Using the instance from earlier, assume you only qualify for a maximum purchase price of about $400,000. It’s helpful, sure, but it also doesn’t mean that you should spend it all.

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

Are 30-Year Fixed Mortgage Loans In Texas In Danger?

Should We Worry about the 30 Year Fixed Mortgage

Part 2

Calabria Used a 30-Year Fixed Mortgage

Investigative reporting done by The Wall Street Journal has shown that nominee Calabria actually has a 30-year fixed loan on his current residence, which was bought back in 2010. At that time the rate range for these types of loans were anywhere from 4.23% to 5.10%. Rates did drop after that, and he may or may not have taken advantage of a re-finance, another reason these loans and their terms are so popular.

In addition to this it is worth noting that Calabria’s public testimony has no mention of these loans in his prepared remarks. He also re-affirmed that he will be serving Congress and not imposing his own view on how things should be done. While some of this should be expected no matter what when it comes to public hearings and testimonies, it does seem like this is a topic that would come up if a major part of his vision was putting these loans on the chopping blog.

All Smoke Or Is There Any Fire?

As always, it’s hard to know for sure how this is going to work until everyone is in place and actually on the job. While it makes sense to have concern, but at the end of the day based on the reporting right now, this is probably more of unnecessary worry than actual legitimate concern for the pro-30 year loan crowd. In today’s economy few want to take the risk of big or wholesale changes unless they really are confident in this being a necessary change to avert disaster as well as having a clear plan in place to defend against public criticism or importance. The idea that a loan program that is involved in 90% of home purchases & 80% of all mortgages will change or disappear overnight. Even if an adjustment is made away from these loans, this is definitely going to be a long-term shift. That makes the “sudden disappearance” of these loans very unlikely. In the end a major point to consider is that most homeowners only stay on a property for 5-10 years before they move to a different property. Paying more for an interest rate they won’t keep for close to 30 years just doesn’t make sense.

The Texas Mortgage Pros team consists of mortgage professionals all over Texas. We are committed to providing our clients with the highest quality service for your mortgage needs. Combined with the lowest rate and multiple loan programs available in your area – Spring, San Antonio, Tomball, The Woodlands, Dallas, Austin and Houston, Texas. Our outstanding mortgage professionals with years of experience will work with you one-on-one to ensure that you get the home loan that is tailored specifically to meet your situation and expectation. Whether you are purchasing your dream home, first home, refinancing an existing loan, or consolidating debt, our highly experienced team of loan officers can help you find the right loan program at the lowest rate possible.

Our ultimate goal is to create a lasting relationship with each of our clients that we may continue to provide excellent service for many years to come. Unlike many of the larger nationwide mortgage companies that are out there, all your information will be kept secure and private. Our name is trusted throughout the lending community.

 

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 Click here to go to the first article in this series.

Are 30-Year Fixed Mortgage Loans In Texas In Danger?

Worry or False Flag: Is the Popular 30 Year Fixed Mortgage Loan Going Away?

Part 1

The 30 year fixed mortgage has been a mainstay of home buyers for decades now, and for most people who don’t follow financial news or the markets it can be easy to believe it will be around forever. But is that true? While it’s not saying anything controversial to suggest this is the most well-known loan as far as terms and long-standing use, that doesn’t mean the model will stay viable forever.

Back in 2014 some fretting about the 30 year fixed mortgage because when Dick Bove made the attention gathering claim that the Fed’s decision to taper off purchasing mortgages would make those loans non-viable going on in the future. In other words, it might actually be curtains for this loan program – and that caught plenty of attention.

So Should We Kiss the 30-Year Fixed Mortgage Good-Bye?

There’s a lot of controversy over this idea. Seeing as how the terms and affordability of the 30 year fixed mortgage allowed home ownership to become so widespread, it’s kind of hard to imagine a modern lending world where this is not an option. Is this something to actually worry about, or is it just fear mongering and paranoia?

While only time will tell, it does seem that every few years speculation fires up about Fannie Mae & Freddie Mac. These agencies are government controlled and have been since the 2008 collapse. They have long been a necessary part of the economic process to back these loans and make them a viable option that banks are willing to embrace because of the backing that comes from those agencies. In other words, they play the “Middle Man” that allows the process to work smoothly.

However, Mark Calabria, the most recent nominee to become FHFA (Federal Housing Finance Agency) director may decide he doesn’t like government purchasing 30-year fixed mortgages. If the order comes to stop buying those loans, the un-doing of Fannie and Freddie could take place. These two organizations back the majority of all 30-year mortgages out there. When the market becomes far less liquid, the prices either shoot up or those type of loans will no longer be favored. This could push them to extinction over time.

This seems like a huge shift, and it would be, but it is very possible.

So If Not 30-Year, Then What?

If this happens then a likely spike in interest rates would make the current 30-year fixed mortgage loans far less competitive and thus far less appealing. Some think these massive shifts in interest rates or changes in interest could result in a shift to ARMs.

Without the stability and backing that Freddie & Fannie bring to the table, these don’t become the easy access good deals that homeowners have enjoyed in the past, and it makes them scarier investments.

If this situation was to play out, there’s a good chance that 5/1 ARM or 7/1 ARM loans would become about as attractive an option (or an even better option) than any new 30 year rate that would be made available. These could get even better if investment interest in 30-year fixed rate loans dried up after the changes. Banks won’t keep putting out loans that there’s no investment interest in.

While this would be a huge change, it is worth noting that the 30-year fixed mortgage is rare or a huge minority of home loans in many advanced economies like the UK, Ireland, the Netherlands, Canada, South Korea, and Spain. So other options are viable, even if the transition appears to be a bit rough at first glance.

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 Click here to go to the next article in this series.

What Is An Interest Only Mortgage

Interest Only Mortgage Loans

An interest-only mortgage does not decrease the principal loan amount but rather the installments only cover the interest charged on the loan amount every month. This basically means that you will always owe the same amount to your loan provider as you are only paying the interest. Where there is a small niche market for these type of loans, they are not for everyone.

These type of loans are secured by the property that has been purchased. Although there is an option to pay more than the interest, this option is rarely taken. An interest only mortgage is popular due to the fact that it greatly reduces the monthly installment on the mortgage. However, these types of loans do have a bad reputation and are often made out to be high risk. Just like most types of mortgages, this type of property financing option does have both advantages and disadvantages and when used correctly under the right circumstances, can be highly rewarding.

How Does An Interest-Only Mortgage Work?

The principal loan amount is not taken into account when calculating monthly installments. Only the interest charged on the loan will need to be repaid on a monthly basis. For example:

A principle loan of $100,000 bearing 6.5% interest amortized over a 30 year period would result in a monthly repayment of $627 including both the principal and the the interest (P&I). The interest portion of this amount would be $541.50. This would result in a monthly saving of $85 when taking an interest-only loan.

Different Types Of Interest Only Mortgages

Most types of mortgages that provide an interest-only option do not have an unlimited term. In other words, you cannot continue to only pay the interest forever and after a specified period of time, the principal loan amount becomes fully amortized over the remaining term of the loan. For example, a 5/25 mortgage would allow for interest only payments for the first 5 years of the 30 year term and there after the principal loan amount will be amortized over the remaining 25 years of the original term when both interest and principal amount will form part of the monthly repayment.

To give you a better idea of how this works, look at these to popular options:

  • A 30 year mortgage with the option to pay only the 6.5% interest for the first 5 years on a principle loan amount of $200,000 will result in repayments of $1,083 per month for the first 5 years and $1,264 for the remaining 25 years of the term.
  • A 40 year mortgage with the option to pay only the 6.5% interest for the first 10 years on a principle loan amount of $200,000 allows for an interest-only payment in any chosen month within the initial 10 year period and thereafter, installments will be in the amount of $1,264 for the remaining 30 years of the term.

How To Calculate An Interest-Only Payment

It is easy to calculate interest on a mortgage:

  • Multiply the principal loan amount by the interest rate. In the above example, this would be $200,000 multiplied by 6.5 which is $13,000 in interest annually.
  • Divide the annual interest by 12 months and you arrive at your monthly interest payment on your mortgage. $13,000 divided by 12 equals $1083 which is what you will pay in interest on a monthly basis.

How Can You Benefit From A Interest Only Mortgage?

An interest-only loan is ideal for a first-time home buyer. Most new home buyers do not have the available income to afford to repay a conventional mortgage and therefore opt to rent rather than purchase.

The option to pay the interest-only in any given month provides the homeowner with some financial flexibility when it comes to unforeseen circumstances. In other words, the homeowner does not pay only the interest every month but can choose to do so when they need to during a month of financial difficulty or where an emergency has arisen that prevents them from making a full repayment.

Self-employed individuals or commission earners who do not earn a stable monthly income can also benefit from these type of loans. In high earning months, they can pay more towards the principal amount and in low income months, opt to pay only the interest on the mortgage.

What Does It Cost?

Due to the slightly higher risk that a loan provider may run in offering an interest only mortgage, these type of financing options are often a little more expensive than traditional mortgage options. Most often, the difference is as little as 0.5% in the interest charged on the principle amount.

Additional fees and charges may also apply as may a percentage of a point on the principal amount in order to grant the loan.

Misconceptions And Real Risks

The balance owed on the mortgage will never increase as it does with ARM loans. Increasing the balance is referred to as negative amortization and does not apply to interest-only mortgages.

The greatest risk is when it comes to selling a property which has not appreciated in value. If the principle amount has not been reduced due to paying interest-only, the loan amount will not have changed and therefore the full amount will become due. This will mean that the homeowner will run at a loss.

On the other hand, it is important to note that this is a risk that is run when taking out a conventional mortgage. It is rare that a loan will cover the costs of a selling a property that has not appreciated in value. A significant down-payment will reduce the this risk factor on an interest-only mortgage.

A drop in the property market can result in the loss of equity on the property. Once again, the risks associated with a decline in the property market is run by all homeowners whether they opt for an interest-only mortgage or a home loan that is fully amortized.