Explaining the 4 Common Types of Home Loans in Texas

Many people depend on home loans for securing their dream home in Texas or other American states. As there are more than a few home loans in Texas, it can be confusing to find the best loan that offers a lucrative rate of interest and does not burn a hole into your pocket. The blog post discusses the four most sought after home loans in Texas that offer the best home loan rates in Texas. Let’s take a look.

Home Loans in Texas

1. FHA

Originally introduced during the 1930s during the Great Depression, the FHA loan program aims to assist people in buying homes who fall under the limited income bracket. FHA loans are guaranteed by the United States Federal Housing Administration and can be obtained by anybody and not just first time home buyers. Only lenders approved by the FHA can offer loans under this program, to protect the interests of the borrowers. FHA loan comes with a  pre-insurance scheme to cover up for any borrower defaults; however, the borrower needs to bear the premium that reflects as a higher monthly installment.

2. VA

VA loans are offered by the US Department of Veteran Affairs to help military service personnels and their families secure a home. Similar to FHA, only pre-verified lenders may take part in the program. Unlike FHA, veterans are not required to pay an up front down payment to avail a loan under the VA scheme. In most cases, the federal government charges a funding fee that can be up to 3.15 percent of the total loan amount. Approving a VA loan requires a veteran to meet the guidelines laid by the federal government, but this loan is a lucrative option to receive 100 percent financing to buy a home. The maximum sanctioned amount; however, cannot exceed the maximum limit of $625,500.

3. USDA

USDA loans are offered by the United States Department of Agriculture and are meant for rural borrowers who meet certain income criteria. This loan program caters to the needs of rural borrowers who have a moderate income, but are still unable to self-sponsor their home. For availing a USDA loan, the intended property should fall under any of the “rural areas” in the US and not otherwise. To qualify for an USDA loan, the applicant’s income shouldn’t exceed 115 person the median income in the area. Moreover, there is also a capping to the maximum loan entitlement amount to discourage wealthy people from the program. All USDA loans require a zero down payment; however, the repayment period is restricted to 30 years.

4. First Time Homebuyer Mortgage

The First Time Homebuyer Mortgage, commonly known as the Texas Mortgage program is a lucrative loan option for first time homebuyers in Texas. The income requirements in this program vary depending on the location of the property. Similar to Texas Mortgage program, borrowers can get a loan under another program called Texas First Time homebuyer program to buy a property within Texas. This program is beneficial for those homebuyers who can afford a partial down payment, if not full. Both the programs offer competitive interest rates and necessary help on closing costs that comes out to be approximately 5 percent of the total loan amount.

The Bottom Line

Most first time homebuyers go for conventional loans and end up paying higher than required home loan rates in Texas. Applying for any of the loans mentioned in the blog post, helps borrowers save the additional interest they pay when they obtain conventional loans. These loans are pre-insured to cover defaults by borrowers and are backed by respective federal government bodies, they have lower interest rates. Before you apply for any home loan in Texas, it is advisable to consult an expert who can guide you about suitable home loans options after analyzing your monthly income, repaying capability and other required factors.

VA Loans Eligibility Requirements: A Sneak Peek

VA loans are one of the most beneficial home loan programs for veterans, and active military members. Although, VA loans do have their share of pros and cons, their advantages are any day more than the cons. You can secure a home with VA mortgage without the need to pay any down payment, and private mortgage insurance, not to forget the perk of low interest rates when compared to conventional loans. Like any other mortgage program, however, VA home loans have certain eligibility requirements. Let’s discuss a few of these requirements in this brief post.

Income Requirements

The VA has not set a minimum requirement when it comes to the income of VA applicants, however, it expects you to earn at least an amount of income that is sufficient to meet your monthly expenses. VA applicants must have a minimum residual income to ensure they are able to meet their food, medical, transportation, and other basic needs.

Credit and Other Requirements

VA loans also has certain credit and debt-to-income ratio requirements. The reason is that it is not the VA, but a VA-qualified lender who issues the loan, and wants to ensure that the borrowers have a good credit standing. The credit requirement for VA home loan is still much lenient than when you apply for a conventional loan. Most VA lenders expect you to have a minimum credit score of 620. This figure is not fixed and may differ from one VA lender to another.

VA Loan Limits

Most VA home loan borrowers, as per the current VA rules, can borrow a home loan of up to $424,100. This figure can increase, if you live in an expensive region. Find the VA loan limit for your city and state here.

There’s More!

VA home loans have many other requirements. You have the minimum property requirements, for instance, where in the home you are considering to purchase must be hygienic, safely accessible from the road, and meet other requirements the VA has set. VA loan applicants are also required to pay a funding fee that may range from 0 to 3.15 percent of the total loan amount. By speaking to a loan banking officer, you can learn about VA loan limits in your county, property, and other requirements.

5 Ways to Speed Up Your Texas Home Loan Approval Process

Whether you’re applying for the Texas home loan for the first time or you’re a regular investor, the home loan approval process can be a little overwhelming. The home loan approval process takes up a lot of time as it involves a lot of formalities, rules, and regulations. Without proper knowledge, information, and guidance, the home loan seekers may commit mistakes, which may extend the process longer than it’s supposed to be. To speed up your Texas home loan approval process, you need to be proactive and careful of every step that you take. Continuing the discussion further, here are a few ways, which will help you speed up your home loan approval process.

Home Loan Approval Process

1. Research Beforehand

Research before you apply for a home loan. This is not just to speed up the home loan process but also other loans that you intend to apply in future. A thorough research will help you get an idea of what you’re getting into and what to expect. An extensive research about home loan will also give you an overview of the process and about the qualifying criteria, payment options, home loan prerequisites, and other special privileges and options that may help you get a special advantage.

2. Keep No Secrets

The home loan approval process involves rigorous examination of documents, credit score, and other relevant information and details. The home loan lenders have years of experience in the field and know a lot of ways to uncover any sort of information that you may have hidden from them. To avoid negative consequences, keep no secrets from the home loan lenders. Full disclosure beforehand will save your time and give you and your lender the chance to find a solution to the problem.

3. Be Proactive with Documentation

Another way you can speed up your home loan approval process is by applying in the bank you have your salary account. Since you know the bank well and even for your bank you’re a known personality, it will be easy and much more comfortable for both to communicate and take the process forward. Also, since you already have an account with the bank, them they will have your credit history, bank transaction reports to judge if you’re capable of repaying the loan or not.

4. Keep a Tab on Your Credit Score

Your credit score plays an important role in getting you a home loan approval. Home loan lenders consider your credit score to determine the interest rate on which they should lend you the money. Some people apply for the home loan approval process without reading their credit report. They don’t have a clue about their credit score until they apply for home loan. Knowing your credit score before you apply for the home loan helps you to know where you stand and if required raise your score and get favorable interest rates and loan terms. To avoid surprises, take care of your credit score at least six months before you apply for home loan.

5. Apply to the Bank Where You Have Your Account

Another way you can speed up your home loan approval process is by applying in the bank you have your salary account. Since you know the bank well and even for you bank you’re a known personality, it will be easy and much more comfortable for both to communicate and take the process forward. Also, since you already have an account with the bank, them they will have credit history, bank transaction reports to judge if you’re capable of repaying the loan or not.

The Bottom Line

Besides the points listed in the blog, be polite and amicable. It is the lender’s duty to cross-examine every detail relevant to the home loan process. To do so, they will ask you a lot of questions and ask you to present documents related to your background and financial status. Throughout the process,be patient and provide the lenders all the info they require. The more you cooperate, the faster your loan will be processed.

4 Lesser Known Facts About Texas Veterans Land Loans

The Texas veterans land loan program, first introduced in 1949 aims at assisting Texas veterans to secure a land in Texas. In the beginning days of the program, veterans could borrow only $10,000 with up to 40 years to repay the loan. The Veteran land loan program went through multiple modifications over the years and many facts that were true then, hold no relevance today. Having said that, the blog post discusses lesser known facts about the Texas veterans land loans program every veteran must know.

1. One Day Texas Residency is Good Enough to Apply

Yes, that’s true! Previously, veterans were supposed to begin military duty within Texas borders  to be eligible for the VLB program. Many guidelines have changed since then and as per the latest guidelines, any veteran or military member who is a Texas resident even for a day, served 90 days continuously on active duty and is honorably discharged is eligible to apply under the Texas Veteran Land Board (VLB) program.

2. The Land Belongs to the Veteran at the Closing

Since the introduction of the VLB program, the state of Texas used to hold the financed land until the entire loan is successfully repaid by the veteran borrower. This particular rule kept many borrowers from enjoying the equity benefits built over time and therefore program administrators sensed the need for a change. Under current guidelines, the land belongs to the veteran at the time of closing and Texas government holds the first lien until the loan is paid off.

3. VLB Loan Benefits Can be Availed More than Once in a Lifetime

If veterans repay an existing VLB loan, they can secure another VLB loan for an unlimited number of times in their lifetime. In other words, as long as a veteran clears the first VLB loan, they would find no difficulty in securing the next VLB loan. On top of that, veterans can always have one active loan at the same time under the VLB sub-loan programs namely land, home and home improvement.

4. The Minimum Land Size Required is One acre

Under the VLB program, veterans can buy a land that is at least one acre in size; however, the total value of the land must not exceed $125,000 as per the latest norms. Goes without saying that the land must be located within Texas boundaries and  minimum 5 percent is required as down payment. Among all the veteran programs so far, VLB requires the least down payment that makes it one of the most lucrative programs in the state.

Wrapping It Up

During the initial days of the VLB program, veterans were supposed to repay the loan within 40 years; however, the rule is no longer applicable. Today, veterans can pay the loan within 30 years with no penalty on early payments, that means more savings on interest. The entire process from application to loan closing takes close to 30 days, but the entire process requires a veteran to fulfill a number of eligibility requirements and submit multiple documents that may be confusing. Instead of relying on DIY approach, veterans can seek assistance from leading loan officers and mortgage firms in Texas for hassle-free loan filing and sanction process.

4 Dos and Don’ts for First Time Home Buyers of Texas

It is difficult, especially for first time home buyers, to find a house that meets all their requirements. From selecting a right location to choosing an appropriate home loan program – the complete process of purchasing a home presents some or the other challenges, which may at some point baffle you. In bafflement, many first time home buyers end up committing silly mistakes that may cost them in the longer run. If you too are the first time home buyer in Texas, read this blog post to learn a few dos and don’ts that will save from the pitfalls and select the right home for you in Texas.

first time home buyers

1. Do Save for the Down Payment

One of the most common mistakes that most first home buyers make is they begin saving for the down payment after they start hunting for their house. Buying a house is a big investment for which the sooner you save the better. Save at least 20 percent of your future home’s worth to evade paying for a private mortgage insurance.

2. Don’t Rush into a Decision

Buying a house is a big investment, therefore, it is advisable for the first time home owners to not rush into any decision during the complete home buying process. Whether searching for a locality or selecting the best mortgage rate – take things slow. Carefully calculate the pros and cons of each first time home buyer programs. Make sure to look at all the factors before making a final decision.

3. Do Consult a Professional

When buying a property or a house, the first time buyers may not know everything or miss certain things that may cost them a lot in future. To avoid missing out on an important information or step when purchasing a house, you must consult a professional to help you guide through the entire process. The professional have more experience and knowledge of the trade and therefore can help you better in making sure that you buy your home at best deals.

4. Don’t Spend All Your Money

When purchasing a house, it is advisable to spend less than you can afford. You may get home loan for more than what you require, however, spending all your money into purchasing the house may not be a wise decision. Spend an amount which you can afford. Smaller mortgage means lower payments, which you can more comfortable afford to pay.

Conclusion

These are some of the dos and don’ts of the first time home buyers. Buying a house can be a great experience provided the purchasing process runs smooth and without any pitfalls. The points given in this blog post help to avoid stumble into little troubles. To avoid bigger troubles, gather information and educate yourself beforehand about things that matters. Also, consult a professional on various home loan programs for first time home buyers to ensure that you take an informed decision.

4 Things You Must Know Before Obtaining a VA Home Loan with Bad Credit

The VA home loan program is a way through which many veterans fulfill their new home dreams. When applying for VA home loan, credit score plays an important role in determining the eligibility of an applicant. The best part about VA loans is that in case you have a bad credit score, it’s not a dead end for you. You can still get a VA loan. Many people have a few common doubts in connection with obtaining a VA home loan with bad credit. In this blog post, we have tried to clarify the doubts that most borrowers have. Read on.

VA home loan

1. Minimum Credit Score

If a veteran fails to repay the loan, the Department of Veterans Affairs looks after the VA loan program and guarantees a portion of a loan. They, however, do not issue a loan and has no minimum credit score requirement. It is the lender who looks after the loan eligibility and approval process. Many lenders have credit score benchmarks and don’t approve VA financing if the applicant doesn’t have the minimum credit score, which is usually 620. A less than stellar credit score, however, doesn’t mean that the applicant won’t get the loan, as some lenders may approve the loan application despite a low credit score.

2. Credit Score and Loan Rate Correlation

A veteran may get a VA loan in spite of a low credit score, but at a higher than usual interest rate. The correlation between credit scores and loans is simple – lower the credit score, higher the loan interest rate. To improve their low credit scores, it is imperative for veterans to know the reason behind it. Before applying for a loan, knowing the reason will help them to take appropriate credit repair measures, which may improve their credit score and get better negotiation on the loan interest rate.

3. Maximum Loan Amount

The maximum value of VA home loan that a lender approves differs from one area to another. Certain places have $400,000 as the maximum loan amount limit. Whereas at other places, the lenders approve loans of up to $600,000. The maximum amount of loan a borrower may get depends on various factors such as the place and area where they are planning to buy a house and their financial profile.

4. Bankruptcy or Foreclosure Conditions

Even if you have bankruptcy or foreclosure in your credit history, VA guarantee on your home loan is possible. The condition for this to happen is that your bankruptcy or foreclosure has to be at least two years old after filing for VA loan. Also, if the bankruptcy is due to circumstances beyond their control, such as medical bills, there will be no negative impact on the borrower’s credit score.

Conclusion

Besides knowing about the listed information, borrowers must also know the VA eligibility criteria, exception, and other such information. Before you apply for a VA home loan, research and understand all the necessary information related to the VA home loans. If you have a bad credit score and wish to obtain a VA home loan, consult a loan advisor as they are experienced and have extensive knowledge about the intricacies of VA home loan.

Different Home Loan Options in Texas

There are several home loan options available for borrowers who want to purchase a residential property in Texas. Since there are so many choices available in the market, choosing the right home loan option can be a daunting task. Seeking an expert’s assistance is, therefore, advisable when making such a big investment. However, before seeking an expert’s assistance, borrowers must at least have the basic knowledge of the different home loans available for them. Taking this conversation further, in this blog post we briefly introduce you to the different types of home loans available in the US.

home-loan

VA Loan

VA loan is exclusively a veteran’s home loan as it is only for veterans, active duty officers and spouses of veterans (under special circumstances). The benefit of VA loan is that it has no down payment or monthly insurance premium. It also has one time VA funding fee, which can be financed into the loan.

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FHA Loan

Federal Housing Administration or FHA loan is for all citizens of US. This type of home loan is not just for purchasing a property but also for home maintenance. The FHA home loans are further categorized into different loan programs that caters the needs of senior citizens, first-time home buyers, and others.This type of home loan has a low down payment requirement and requires the borrowers to pay mortgage insurance up front for every month.

fha

Conventional Loan

Conventional loan is another home loan option that borrowers may consider to choose. Unlike FHA, VA, or USDA loans, the conventional loans are not insured by the federal government. The down payment of this type of loan is usually five percent. As compared to government subsidized loan types, these types of loans require higher credit scores and debt-to-income ratios. Regarding the condition of the home, conventional loans do not have restrictive requirements whereas FHA and VA loans have.

The house in human hands

USDA Loan

USDA loans are supported by the United States Department of Agriculture. It is part of the USDA loan program or USDA Rural Development Guaranteed Housing Loan Program. This type of loan is available for citizens with little income who wish to buy a house or property in a rural area. Similar to the VA loan, this loan also has zero percent down payment and competitive rates.

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Conclusion

These were the different types of home loan options for borrowers. Out of the list, VA loan is a more preferred option for borrowers as it is more profitable to them. The loan is not only beneficial for buying a new property but also for refinancing the existing property. The loan does not require a down payment and also has a low credit score requirement. When making an investment as big as purchasing a home, it is advisable to seek an expert assistance to make an informed choice.