Gettting a Texas Mortgage & Qualifying
Without a doubt, the Houston real estate market is going to be considerably different from what you find in Plano or San Antonio. However, the basics of shopping around for a mortgage are similar. Your goal should be to locate the correct loan for your situation with the best value as far as interest rates and fees.
If you just started to learn about mortgages, finding and analyzing low-rate home loans including refinance a Texas first mortgage might be complex with Texas' unique rules about refinancing. Are you are that the lowest mortgage rate may not alway be the best offer. One reason why is because the points charged may be very high. Remember that the annual percentage rate (APR) provides you a quick way to compare loan quotes from mortgage lenders.
Texas Home Loan Refinance
A Texas cash-out refinance loan 1 is referred to as a Section 50(a)(6) loan. With this type of loan, you refinance your current home loan while also accessing equity from your home's value up to 80-percent of the value. It may be advantageous as you might get a lower interest rate, shorter loan term, and saving money.
Many lenders do not offer a Texas refinance with cash-out. Some restrict their maximum loan to value from 70-80. Our loan specialist can do this with either traditional income documentation or using bank statements instead of tax returns.
The most common type of home mortgages are conforming loans backed by Fannie Mae or Freddie Mac. These loans offer the best rates and terms to borrowers with high credit scores and can come in with a considerable down payment. They allow credit scores minimums of 620 and down payments as low as 3 percent. Borrowers with lower credit scores should count on paying higher interest rates and higher down payments.
Conforming mortgages in the state of Texas all have the same limit. Texas doesn't have any designated high-cost areas or counties with higher mortgage limits like those in California. Although residents of Houston, know River Oaks and adjacent communities would fit that designation as do residents in Austin's Westlake neighborhood. Borrowers may have to put more money down to avoid paying private mortgage insurance (PMI) or inquire about a jumbo loan with no "MI". Once your home equity hits 22 percent from your normal payment and amortization of the mortgage you can apply to have it removed or just refinance.
Texas FHA Loans
If you're a first-time homebuyer with low funds for a down payment, you'll probably, at a minimum, want to look into FHA loans. Texas FHA loan requirements are less stringent on borrower credit scores and history than a conventional loan. Another appealing feature of FHA loan are 3.5 percent down payment of the contract price (or appraised value whichever is less), so you don't need to have a considerable amount of cash available to be approved.
Borrowers with lower credit scores and smaller down payments often get better mortgage rates using an FHA loan than the interest rates on conventional loans. Borrowers seeking to buy a two-family, three or four family home can still do so with 3.5-percent using an FHA loan. This is not allowed with a conventional fannie or freddie mac loan.
The negative condition with a Texas FHA loan is the significant upfront fee for mortgage insurance. There's an additional cost for monthly mortgage insurance premium as well for borrowers for the life of the loan. However, this easily can be removed by doing a refinance once you sufficient equity.
Adjustable Rate Mortgages
Most Texas borrowers who buy a home or refinance their home loan choose a fixed-rate mortgage, where the interest rate remains the same throughout the term of the loan. At the same time, for some people an adjustable-rate mortgage (ARM) can be a far better choice.
If you choose an ARM, the rate changes after some time, moving in correlation with the underlying market. Borrowers pick it because it initially offers a lower interest rate than a fixed-rate mortgage. The majority of ARMs begin with a fixed rate for three, five, seven, or ten years, then readjust for the remaining term. These type of loans are normally discussed among industry professionals as a 5/1, 7/1, 10/1 ARM, with the first number indicating the number of years the rate is fixed, and the second how often the rate changes following that period.
ARMs are normally a good option for borrowers who know for sure they are moving or will refinance in a few years, so a 30-year fixed-rate doesn't make sense. Although lately, the difference in interest rate between a 5/1 ARM and a 30-year fixed has been just .25% on many loans. The payment difference is minimal for a conforming loan but for a loan over 1 or 2 million it could be a substantial difference.
Home equity loans often have low closing costs and, depending on the amount borrowed, can be paid off more rapidly than first mortgage debt. Relative to home purchase or refinance mortgages, home equity loans generally have higher interest rates.
1. Fannie Mae rules on Texas cash out refinance - https://www.fanniemae.com/content/guide/selling/b5/4.1/02.html
This is not a commitment to lend. Not all borrowers will be eligible. All loans are subject to credit approval.
Texas Mortgage Disclosure
Pursuant to the requirements of section 157.007 of the Mortgage Banker Registration and Residential Mortgage Loan Originator Act, Chapter 157, Texas Finance Code, you are hereby notified of the following: Consumers wishing to file a complaint against a Mortgage Banker or a licensed Mortgage Banker Residential Mortgage Loan Originator should complete and send a complaint form to the Texas Department of Savings and Mortgage Lending, 2601 N Lamar, Suite 201, Austin, TX 78705. Complaint forms and instructions may be downloaded and printed from the department's website at www.sml.texas.gov. A toll-free consumer hotline is available at 1-877-276-5550. The department maintains a recovery fund to make payments of certain actual out of pocket damages sustained by borrowers caused by acts of a licensed mortgage banker residential mortgage loan originator. A written application for reimbursement from the recovery fund must be filed with and investigated by the department prior to the payment of a claim. For more information about the recovery fund, please consult the department's website at www.sml.texas.gov.
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