A Look at Some Mortgage Assistance Programs in Texas

Having their own home; a place where the family members can be themselves without any inhibitions, is every family’s dream. That said, getting approved for a home loan in Texas or any other part of the U.S. can prove to be an uphill task for borrowers with financial difficulties such as an unhealthy credit score, income limitations, and past credit problems. This is where mortgage assistance programs come into picture. From low interest rates to relaxed qualifying norms, these programs come with various benefits and are designed to help borrowers with financial problems. The state of Texas, specially has quite a few mortgage assistance programs that have helped several families realize their dream of owning a house. In this post, we take a look at some mortgage assistance programs in Texas. Read on.

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1. VA Loans

Available to veterans, active duty and reserve members  of the armed forces and surviving spouses of veterans killed on active duty, VA loans come with a number of benefits such as lower interest rates, zero down payment, and zero private mortgage insurance premium. VA loans are backed by the Department of Veteran Affairs and provided by private lenders such as banks and mortgage companies. VA loans can be broadly classified into three categories: purchase loans, interest rate reduction refinance loans, and cash-out refinance loans. Eligibility depends on various criteria such as the borrower’s military service, credit score, and income.

2. FHA Home Loans

Administered by the U.S. Department of Housing and Urban Development, FHA home loans are one of the most popular programs among first time homebuyers who have very little savings. The program has relaxed eligibility criteria such as low down payment ( 3.5 percent of the purchase price), flexible debt to income ratios, and relaxed credit score requirements. The closing costs, too, are lower as compared to other programs. Borrowers, however, have to pay mortgage insurance premiums, which hedges the lender against the losses that may arise if the borrower defaults.

3. USDA Mortgage Loan

USDA mortgage loan is one of the newest kids on the block of mortgage assistance programs. Backed by the United States Department of Agriculture, these loans are provided to rural property buyers and owners. These loans do not require any down payment, and borrowers can roll the closing costs into the loan. The program is designed to help homebuyers from the lower income group and places a restriction on the income limits of the borrower (which cannot exceed 115 percent of the median income for the area). Borrowers must also not have any adequate housing and should be financially sound to afford the payments.

Sum up

These are some of the most popular mortgage assistance programs in Texas. A couple of other mortgage assistance programs worth your consideration are: SETH, and Texas Mortgage Credit Certificate Program. Discuss these programs with your lender and request them to suggest the program with the best home loan rates in Texas.

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Are You a First-Time Homebuyer? Here are 5 Tips You Must Follow

As a first time homebuyer you might be going through mixed emotions. You might be excited and tensed, both at the same time. While the excitement of owning your home would be at its peak, the tension of whether you are making the right decisions would be no less. Whether you are a first time homebuyers planning to buy a home in Texas or anywhere in the US, we list five tips in this post to help you ease the tension and make your home buying process simpler. Let’s take a look.

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1. Assess Your Financial Capability

Before taking up a long-term liability such as a home loan, you need to be sure that you will be able to repay it on time. To be sure, you first need to determine your repayment capability. Evaluate your asset and liabilities, as in pen down your income and your expenses to find out what amount you can spare on a month to month basis for repaying the loan.

2. Review Your Credit Report

Credit score is one of the most important factors that underwriters consider when approving a home loan. It is, therefore, important for you to maintain a healthy credit score. To ensure everything’s okay on the credit front, keep reviewing your credit report on a regular basis. If there are any errors talk to the credit rating agencies and get them fixed before you apply for a home loan.

3. Weigh Different Home Loan Options

There are more than a few home loan programs for homebuyers looking for a home loan. Which home loan should you opt for, is something that you need to determine. You need to start by first listing down the programs that you are eligible for. Once you have listed the programs do a comparative study by weighing the pros and cons of each program and how they affect you, in particular.

4. Get Pre-qualified

Once you have decided which home loan suits you best, you need to get a pre-qualification from the bank. The pre-qualification process involves lenders reviewing your financials to evaluate your repayment capability and determine a pre-approved amount that they can lend you. Though the amount is a ballpark figure, it helps you narrow down your search by giving you an idea of the properties you should be considering.

5. Seek Professional Help

Hiring a professional to help you with your home buying process may cost you a few dollars, but they are worth the spend. You can hire a home buying consultant who can help you with all the aspects of home buying, be it property search, home loan approvals and home inspection. In addition to these aspects, a home buying would also help you consider aspects such as water damage and homeowners association fees, which you may forget, especially if you are a first-time homebuyer.

Conclusion

Home buying is a huge responsibility, and as a homebuyer you need to consider a lot of factors when buying a new home. Now that you have been through this post, we hope you are more confident of buying a new home. If you are a first time home buyer in Texas, we especially recommend seeking professional assistance.

Weighing the Pros and Cons of Different Home Loans in Texas

Many first time homebuyers in Texas and other parts in the US rely on a home loan to secure their dream home. Though there is no dearth of home loan programs in Texas, choosing the one that best suits your requirement may not be easy, because as a first time buyer you may lack the knowledge and expertise to differentiate between different home loans. While some home loans may not require you to pay a down payment, others may offer lucrative interest rates. If you are confused about which home loan to pick, in this post we discuss the available loan options in Texas along with their pros and cons. Let’s take a look.

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1. VA Loan

The VA loan program is a federally backed housing program, guaranteed by the Department of Veteran Affairs. The program aims at assisting veterans of the American Armed services or their spouses in cases wherein the veteran dies of a service related cause to buy a first home or refinance a property. Goes without saying, the program being guaranteed by a federal body offers many benefits; however, you must learn the pros and cons before filing for a VA loan.

Pros

  • Zero down payment
  • Zero Private Mortgage Insurance (PMI)
  • Zero prepayment penalty
  • No minimum credit score requirements
  • Can be effectively used for purchasing a first home or refinancing
  • A nominal allowable debt-to-income ratio
  • Entertains bankruptcy and foreclosure cases

Cons

  • Requires an upfront funding fee
  • Only meant to purchase primary residences and not holiday homes
  • Loan limits and overlays

2. USDA Loan

USDA loans are offered under the USDA Rural Development Guaranteed Housing Loan Program. The program assists eligible applicants, mainly people with low to moderate income in securing their dream home in the rural regions of Texas and elsewhere in the US.

Pros

  • Upto cent percent financing
  • No restrictions on lot size or seller contributions
  • No prepayment penalty
  • Provision of gift funds to cover closing costs
  • Ideal for both purchase or refinance

Cons

  • Income restrictions depending on the median salary of people living in that area
  • Monthly Private Mortgage Insurance for Lifetime
  • Buyer is expected to occupy the home as primary residence
  • Only single families are eligible
  • Up to 3 weeks more processing time than other home loans
  • Strict guidelines on debt to income ratio and credit score

3. FHA Loan

Started during the great depression in the 1930s, the FHA loan program is one of the most affordable loan programs for low income groups to secure a home in Texas or elsewhere in the US. Under the FHA loan program, a loan always originates from a FHA approved lender to protect the interests of the homebuyer.

Pros

  • A minimum down payment of 3.5 percent of the total value of home
  • Seller can pay the entire amount of closing costs
  • Competitive interest rates than conventional loans
  • Offers flexibility when it comes to credit score and past financial record
  • Larger allowable income to debt ratios

Cons

  • Requires an upfront loan fee to be rolled with the loan amount
  • Lifetime MIP
  • Strict loan limits depending on the region

4. Conventional Loans

Conventional loans, as the name suggests, are offered by private lenders. A conventional loan can either be a fixed rate loan or a jumbo mortgage. For a fixed rate loan, the interest rates doesn’t fluctuate that much and therefore, it’s quite easy to predict the final amount that a person will pay at the end of the tenure. A jumbo loan, on the other hand, has a much higher rate of interest than fixed term mortgages. The reason, there are no minimum credit requirements to secure this type of loan, which is a risky proposition for many lenders. All in all, going for a conventional loan has its share of pros and cons.

Pros

  • A nominal down payment, usually lying in the range of 3-5 percent
  • PMI drops after some time
  • Lower monthly PMIs than FHA

Cons

  • Stringent credit score and debt to ratio requirements
  • Interest rates are more than federally backed counterparts such as VA, FHA and USDA
  • Seller can only pay a maximum of 6 percent in closing costs

Wrapping Up

Once you decide which loan type is best for you, the job is only half done. Securing any type of loan requires the applicant to meet guidelines specific to the loan program and complete necessary paperwork. Applying for a home loan, especially for the first time is a challenge for many. To get clarity on the process and increase your odds of your loan application going through, you must consult a Texas Home loan and Mortgage company. Mortgage companies have dedicated loan officers who can help you in each aspect of the home loan process from the start to finish.

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.

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 Common Mistakes First Time Home Buyers Must Avoid

Buying your first home can be both mentally and physically exhausting. Starting from selecting the ideal location, to understanding the mortgage market to decide when to apply for a home loan, the challenges are many. As a first time homebuyer, you may be alien to a lot of nitty gritties involved in the home buying process. Though it’s advisable to hire a home loan consultant who can walk you through the process,  there are some mistakes that you can avoid on your own. In this blog post, we discuss four common mistakes that homebuyers make. Let’s take a look and make sure you don’t end up committing any of these mistakes. Let’s take a look

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1.Not Researching the Home Loan Programs

There are various home loan programs designed for the first-time home buyers. Talk to a loan officer and ask them about the available home loans in Texas. The Texas Mortgage Program, TMP 79 or My Texas Home Program, for instance, is one of the loans available to you if you are a Texas resident looking for a home in the city. Make sure you do a thorough research because If you don’t, chances are you may end up selecting a loan that’s too costly.

2. Splurging on a Home

As a buyer, you definitely want a home that has almost all the amenities to offer, but it’s also vital to keep the costs minimal. If you haste to purchase, you may end up making an unwise decision. Usually, the lenders determine your affordability based on your credit report, but sometimes lenders offer loan larger than you can afford. While you may not mind a bigger loan at first and would splurge it on buying a bigger house, you will feel the pain once the installments start affecting your disposable income and complicate your financial goals.

3. Neglecting Home Inspection

Buying a home without a thorough home inspection can be very risky as there may be some serious problems with the plumbing, wiring, foundation, or the roofing of that house. Hiring a professional for home inspection services helps identify if there are any problems. Remember, if you skip the process of home inspection, you’re the one who is solely responsible for all the issues that arise after the deal is closed, and the seller can’t be blamed for anything that goes wrong.

4. Not Consulting an Expert

Most buyers rely on the advice of a friend or someone in the family when buying a home. While their experience counts and their advice matters, you cannot afford to not consult a real estate expert. An expert can help you with the information on current market trend in terms of property rates, home loan rates, and more. Consulting an expert may seem like an added cost,but chances are high that an expert will be able to help you strike a better deal.

Wrapping Up

Buying a house can end up to be a nerve-racking process, especially if you are a first-time home-buyer. No matter how planned your efforts are, chances are that you might miss out on a few critical points. To make the process less tedious and minimize the chances of making a big mistake, it’s advisable to hire a Texas home loan expert who can guide you through the entire process.

5 Must-Consider Elements Before You get a Home Loan

Despite the growing trend towards renting, almost everyone dreams to own a house at some point of time in their life. However, homeownership is a big responsibility and clearly one of the biggest financial decisions for an Average Joe, due to which it becomes important to consider all options before taking a home loan, be it in Texas, or any other state. These considerations range from the loan type to your credit score, property location, and more. Let’s briefly study five of them through this blog post.

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1. Loan Type

Deciding the type of loan involves considering various elements. First you need to decide between a fixed and a floating loan. A fixed loan, as per the name, involves a fixed interest throughout the mortgage, which is usually 1-2.5 percent more than the floating home loan rate. The interest rate in a floating loan, on the other hand, depends on the market conditions. Again, you have different loan type options such as conventional, USDA, VA, FHA, and more. It’s important that you first learn about these options. Only then will you be able to select a loan program optimal for your needs. For instance, if you are a veteran, the VA home loan may be the most economical loan type for you.

2. Eligibility

There are several factors that may affect your mortgage approval, beginning from your financial strength to the type of home you wish to purchase. Then there’s your credit score that may play a big factor, especially if you are securing a mortgage such as a conventional loan that the government does not support. Remember, what type of home and where you wish to purchase can greatly affect your loan approval, as the property taxes and maintenance fees varies with every house type.

3. Miscellaneous Charges

Interest rates are not the only charges to incur when you purchase a home loan. A mortgage comes with many other fees, including mortgage insurance, funding fee, and closing costs such as appraisal fee, and more. Then there’s the processing fees, services costs, payment and foreclosure charges. Analyzing all these expenses is a must for every home buyer to ensure they can bear all these expenses, without hurting their budget.

4. Hiring a Banking Officer

Like finding a trustable lender, seeking the help of a professional loan banking officer is also important, especially for first-time homebuyers. Being expert in their fields, these professionals can not only help you select the optimal loan type, but also learn about elements such as funding fee and closing costs, which may be difficult to comprehend otherwise. In certain situations, say, for instance, if you opt for a VA loan program, a loan banking officer can also help you negotiate the funding fee and closing costs with the lender.

5. House Location

What location your potential house is in can also influence your loan type. For instance, if you plan to own a house in a rural area, then the USDA home loan may be a favorable mortgage plan, if you qualify for it. If you’ve always been an urban nester, however, you’d, without saying, wish to purchase a house in the city, which may again influence the loan amount. So, better consider your options well, and select a home at an ideal location, which does not involve an investment that disrupts your financial budget.

Conclusion

The thought of owning a home can be a proud moment for any home buyer, however, realizing the dream is not as easy as it sounds. You must be financially and mentally ready to take the home loan. In addition, it’s important that you choose the right loan type and a reputable lender.