Doing things right to get a mortgage loan

On May 12, 2014, the Morning News USA published an article regarding the mortgage interest rates in the US. The write-up mentioned how one of the bigger lenders in the nation has been able to retain mortgage interest rates for a 30 year fixed mortgage.

The current interest rate is offered by the lender for trading standard, long term and 30 year fixed rate mortgage loans at 4.5%, whereas the annual percentage rate is 4.673%. This is just an example that shows a trend in the lending market. These rates may marginally vary from one state to another.

Determining your loan requirement
Before you actually decide to apply for a mortgage, determine how much loan you can afford, and what kind of monthly payment is comfortable for you. There are various loan options that can fulfill your requirement. For example, if you are interested in taking a short term loan, you might opt for a 15 year fixed rate loan. Some borrowers even choose 10 year fixed rate mortgage loans. There are also loans based on adjustable interest rates. However, the loan types that fall under the conventional loan can be difficult for many borrowers to qualify.

The best solution to this issue is to find a lender that can guide you about the more flexible options with lower interest rates and lesser down payment requirements.

Doing these can make your mortgage process easier
Due to several reasons, you may find securing a mortgage loan a little difficult. The reasons could be fluctuating interest rates, low credit score, tight inventories in the housing market, or change in lending regulations. Regardless of the situation in the lending market or borrowers’ limited eligibility for receiving loans, the following tips could be helpful:

Get a Home Appraisal done
Getting the home appraised can give you a clear idea whether the property is overpriced or not. Hence, doing the appraisal soon after the offer of acceptance and letting your lender review it can help you renegotiate the pricing if the home price comes down in the future.

Arranging the Down Payment Early
Consult with your loan officer about making early arrangements for the down payment you need to make. In order to do that, try to put together funds in one or two accounts rather than moving them into several accounts. Thinking ahead will help you buy your chosen home without any difficulties.

When Changing Jobs
If you change jobs when the loan processing is in progress, keep your lender updated about your financial situation. You may have to submit the latest pay stubs and new employer information.

Clear your debts
It is suggested to pay off your debts. Pay taxes, insurance, and credit card bills on time. In the case of credit cards, using up your higher credit limits can affect your credit score. Hence, try keep to your debts as low as possible for a good credit report.

Getting a home mortgage loan is a delicate process, and requires detailed consultations, documentation, and evaluations. Hence, hiring an expert lender will always make life easier for you in terms of practical understanding of the entire process and getting a good home buying deal.

What the First Time Home Buyer in Texas Must Know

In the excitement of realizing their dream, first time home buyers can make some elementary mistakes. The falling housing market since the financial downturn of 2008 has made it even more difficult for them to choose a suitable home loan option as now they need to consider many variables for making the right decision. Some of these include their credit score, current income, type of property they want to buy, and of course mortgage interest rates.

Well, if you have friends and relatives in Texas who are aware of all the loan options and there is no vested interest for suggesting a particular loan, it could resolve your concern. However, it is advisable to learn about your options based on various factors. Before getting to know what your best options could be, let us learn about a few common mistakes the first time home buyer makes so that you avoid making them yourself:

• Unrealistic estimation – Shifting from a rental to your own home entails a new responsibility. Keep in mind that if you wish to buy property, it could be overpriced, and you may end up paying a higher monthly payment. In order to avoid such situations, hire a reputed lender that can weed out such possibilities.

• Choosing the wrong Realtor – First time home buyers need to find a realtor who understands their anxieties and confusions; and has the experience making the process easily understandable. You do not want a pushy realtor to rush you into buying a home that you may regret later. So, do your homework, and also ask your friends and relatives to recommend a realtor who specializes in first time home buying.

• Not checking out all the available loan options – Buying a home for the first time needs sound judgment. Many first time buyers are not aware of the various flexible loan programs, and opt for loans that are more expensive.

• Not understanding the contract – Do not hesitate to get detailed clarification from your realtor regarding the home loan contract. Not understanding even a seemingly simple clause can lead to serious financial or legal complications in the future.

Texas First time home-buyer bond program
For first time home buyers in Texas, the first time homebuyer bond program can be the best option in terms of suitability. Some important features of this program are:

• Meant for borrowers with low or moderate income, and who look to buy a home for the first time
• 30-year repayable mortgage for home loans with competitive interest rates
• Help in lower down payments and closing costs

 The terms mentioned above make the first time homebuyer bond program a good option for many borrowers. Consult with your lender in detail to find the loan program that is most suitable for you.

What Must you Check Before Applying for a VA Loan?

Did you know that in Texas, the Veteran Affairs (VA) Case Numbers with the digits ‘62-62-6’ need a proof on the individual sewage disposal system from the local health authority? This is applicable in Texas according to the Houston Regional Loan Center. Usually, it is not possible for home-buyers to know such rules unless they consult with a lender that provides specialized residential home mortgage services.

Who is eligible for a VA Loan? This loan program is initiated by the United States Department of Veterans Affairs (VA) for veterans who served in the American armed forces. In case they are deceased due to a service related cause, this loan program helps their families to get long-term financing.

VA loans are not the most cost-effective options due to the fees associated with it. However, this loan program has a key feature that helps veterans and their families get the required financing to buy a home. One of the key aspects of this loan is that borrowers need not make any down payment. It makes homeownership much easier as a shortage of cash reserves doesn’t prevent people from fulfilling their dreams.

VA loans don’t have a mortgage insurance premium included, which helps borrowers save a significant amount of money. The best thing about this loan is said to be the guarantee provided by the government if borrowers failed to pay their mortgage. Apart from it, there is no penalty for paying off the loan early.

Things to know before you apply
Before applying, your lending firm should get you more details about the following aspects of VA loans:

• A loan application for a primary home is likely to get approved before a second home. Second homes such as vacation homes or beach houses that are not occupied full time by the borrower may not get approved easily. The reason being, a second home is considered more of a luxury than a requirement.
• Your credit rating may affect the loan approval process. Though the VA does not enforce a credit score requirement; still a score of at least 620 is what lenders look for.
• Getting pre approval can save time. During pre approval, an underwriter reviews the loan application, and determines the loan amount based on your income, savings and debt ratio. Once the application is pre-approved, it will give leverage to you in terms of negotiating as a cash buyer of loan.
• If you are still in active duty in the armed forces, you need a statement that is signed by your unit commander. You may also need to submit the names and contact details of your past employers.
• A Certificate of Eligibility (COE) and DD Form 214 are a must. These are among the most important documents needed for VA loans. The COE will prove your eligibility to receive this loan. DD Form 214 is the ‘Certificate of Release or Discharge from Active Duty’.
• VA loans are even available to people who have faced bankruptcy. A reputed lender can help you understand how it is possible. Ask your lender for detailed information.

Apart from the information mentioned above, there are numerous other things that you may need to know for making an informed decision. According to the Real Estate Settlement Procedures Act (RESPA), lenders are supposed to provide applicants with information on all closing costs and escrow account practices. Hence, it’s important to choose a reputed lender based on its track record rather than their attractive lending offers.

Opportunities and Support for First Time Home Buyers in Texas

If you qualify as a first time home buyer in Texas, you can get the advantage of the $600 million home-buyer assistance program announced by the Texas Department of Housing & Community Affairs (TDHCA) through securities initiative backed by mortgage. It would be interesting to know that you need not actually buy a home for the first time to qualify for such a loan program. These programs are open to anyone who has not purchased a home in the last three years.

In Texas, eligible first time buyers can get the benefit of lower down payment, low interest rates and income tax credits on their mortgage. In order to check whether you qualify for these programs, look for a reliable lender who can inform you about the income, credit score and other requirements. A program even gives federal income tax credit on mortgage of up to $2000 payments annually to qualified borrowers.

Income eligibility for First time home buyer in Texas
First time home-buyers in Texas need to show their income to qualify for down payment assistance. This is determined by a simple formula based on the home buyer’s family size and what is known as the area median family income. The income limits range from 80% -115% of the area median family income and the variations are based on county in which a particular property is located. If you are a veteran, professional public educator or a first responder, the income limits will be higher.

Lesser Restriction for areas of economic distress
The first time home buyer program is for those who have not owned a home in the last three years. This criterion is flexible for buyers in areas of chronic economic distress. In these areas, the criteria for home buyers are less stringent.

Types of properties available for first time buyers
Before considering various properties that are available, a first time buyer needs to prove the following:
1. Should be living in Texas
2. Should buy a property to use it as their primary residence.
You can choose to finance a single family home, condominium and even duplex properties. To get a home loan on a duplex property, it should have been first occupied as a residential property five years prior to the closing date, and you intend to live in one section of the property.

Eligibility for borrowers
In order to get the benefits of the first time home buyer loan program, borrowers need to choose a reputed lender, meet some essential qualification criteria, and pay the required fees. The home buyers need to have credit score of 580 to be eligible for the Mortgage Credit Certificate program designed to give them tax benefits. To get the benefit of the down payment assistance program, borrowers need to have a credit score of 640.

For buying your first home in Texas, an expert lending firm can assist you the best. Else it could be difficult to comprehend the relevant terms and conditions to receive the loan approval.

Buying your First Home? Check out the types of Loans you can get

Do you think that it’s time to realize your dream of buying your first home?

It’s the dream that every American has, but low cash reserves and a strict lending market make things difficult. Especially, when the economy has been low and is hardly showing signs of recovery.

There are recent updates on stricter loan requirements for 2014. These new rules will be more tied to the borrowers’ debt-to-income ratio.

Types of Loans to explore
Despite all the odds stacked against borrowers, you needn’t put off your plans just yet. There are various loan options available that will fit your requirements. But prior to that, let’s know about the major loan types and their eligibilities.

Usually, there are two major types of home loans, conventional and government.

1. Conventional Home Loans

Conventional loans are given by banks, private lenders or mortgage companies. The interest rates of these loans are based on the current market trend. The following types of loans are available:

Fixed-rate Mortgage: In this type of loan, the rate of interest remains fixed. Borrowers pay a fixed mortgage amount as repayment on a monthly basis, and the interest rates don’t vary with the changing market rates. However, the interest rates of this loan are comparatively higher than FHA, VA or USDA. Also, the guidelines are more stringent in terms of debt-to-income ratio and credit score.

Adjustable-rate Mortgage (ARM): An adjustable-rate mortgage initially offers a fixed interest rate, and later the rates become adjustable based on the current interest rates in the market. However, the rate during the adjustable period is uncertain, and borrowers may end up paying steep interest on their loans due to market adjustments.

Other or Jumbo Mortgages: Borrowers who don’t have good credit scores can get these types of loans. Such loans have a higher credit limit than the more typical ones. At the same time, jumbo loans have more risks involved because if borrowers default in payment, they will have a significantly higher amount payable than on other loans. Hence, these loans require a higher down payment.

2. Government Home Loans

These loans are guaranteed by the government for people who find it difficult to obtain conventional loans due to strict eligibility issues. Various types of these loans are mentioned below:

Federal Housing Administration (FHA) Loan: This is a program initiated by the U.S Federal Housing Administration (FHA). The objective of this program is to help more families and individuals with low income to afford home loans. Interest rates of these loans are lower than the conventional loans. However, total interest rates and fees are higher in FHA loans.

Veteran Affairs (VA) Loan: VA loans are offered by the US Department of Veteran Affairs to veterans of armed services, or to their families, for obtaining long-term financing. It’s a good option for borrowers who are not eligible to receive private financing, as they can buy a home without making a down payment.

USDA Loan:

This loan program is offered by the US Department of Agriculture (USDA). These loans are guaranteed by the Government and no down payment needs to be made. USDA loans are structured to be repaid over a period of 30 years.

Getting a home loan is an important step towards fulfilling a lifelong dream. Hence, you need to do your own research to find a lender that has extensive knowledge and expertise to guide you in every step. Despite borrowers not meeting eligibility criteria for conventional lending, a reputed lender can educate and assist them in getting home loans through a structured process.