Know your options amidst the Boom in the Texas housing market

The home buying market in many parts of Texas is booming, limiting options for first time home buyers. Home prices rose by nearly 10% in 2013 in Texas, and the trend continues today. Properties are selling very quickly, many over the asking price with multiple bids driving prices even further upwards.

In the current scenario, home buyers have to make buying decisions quickly, while some others are left too afraid to take the risk. The last recession left such an impact on buyers that many have become tentative to invest in home buying, despite good credit scores. These buyers could benefit from learning about the various state and federal home loan assistance programs. In fact, there is more assistance available now than ever before.

Home finance options for first time home buyers in Texas
Some home loan programs make home buying easy for the Texas first time home buyer include:

Texas First Time Home buyer Program or Bond Program – This program gives a home mortgage to a qualified borrower at a competitive interest rate. Assistance for down payments and closing costs are also a part of this program. A person with low or moderate income can apply for this program.

Texas Mortgage Program or TMP-79 – This program offers home loan mortgages to Texas home buyers at a lower interest rate than other programs, as well as lower down payment and closing cost assistance.

Texas Department of Housing and Community Affairs (TDHCA) – If making a down payment is a problem, the “My First Texas Home” program can help you with down payment assistance. Borrowers with a credit score of 640 or higher with a total debt-to-income ratio of less than 45%, and a price which falls under the stipulated income and purchase price limit (county wise) are eligible for this program.

Assistance by the Texas State Affordable Housing Corporation (TSAHC) – The assistance from TSAHC for home buyers in Texas also aims at lowering their down payment and closing cost burden. However, interest rates offered by them are on the higher side.

To make sure that there are no regrets after you buy your first home in Texas, you need to consult a reputed mortgage company. In this way, the market conditions, pressure sales tactics or other reasons won’t affect your home buying process. Find a reliable mortgage company that will guide you in every step. Such a company can advise you on the most favorable government assistance options.

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.