All About VA Loans and How You Can Apply for Them

Do you often hear about VA loans and are you interested in learning what they’re all about? To begin with, a VA loan is a mortgage whose guarantee is given by the United States Department of Veterans Affairs. VA loans are meant to offer long-term financing to veterans who have worked in the American armed services or their spouses whose partners lost their lives in a service-related cause. Those who are eligible for this loan can apply for it. They can go for this loan even when they fail to get private financing. One of the major USP’s of this loan is that a borrower doesn’t have to make a down payment.

Let suppose that you are a resident of Texas. Before you go looking here and there to secure a loan, you must know that VA loans in Texas are made available to eligible and qualified veterans through direct lenders, mortgage brokers and banks. As far as the interest charged on a VA loan, it can be similar to that which is charged in a conventional mortgage.

To secure a VA loan, you need to follow certain steps. First and foremost, you must become pre-qualified to purchase a home or get a loan refinanced. For this, you have to get a pre-approval letter before you make an offer on a home. If you are buying a home and not getting a loan refinanced, you can go for a house whose closing costs don’t exceed 4% of the total amount and can be incorporated in the contract.

For a formal loan application, you will be required to furnish a copy of your purchase contract and there will be other disclosures that will require your signature. In the end, as you show some personal documents, your loan should be approved. Post the approval of your loan, you can go ahead and start closing on your new house. What will happen in the end is that you will again be signing some final loan documents and the purchase transaction as well as the transfer of ownership will be finalized. Then your new home will be all yours.

Why Choose a VA Home Loan?

When it comes to home ownership, everyone wants to put in their best effort to find the best deal. Aspiring home buyers are always on the lookout for ways to make the most out of their investment. This includes obtaining a home mortgage loan at the best possible terms.

For example, VA home loans in Texas are a preferred option for veterans in the region. These mortgages are guaranteed by the US Department of Veterans’ Affairs. VA mortgages are in place to help veterans of the American armed services or their qualifying spouses benefit from long-term financing to buy their own home.

Let’s talk about why a VA loan is the best mortgage option for those who qualify:

One of the best features of a VA loan is that it offers 100% financing. While in the current lending environment, it’s very tough to get a loan without a down payment. These loans help qualifying buyers purchase their home without making a down payment. Some FHA loans come with the lower down payment option of 3.5%, but even this figure may be unattainable for some buyers.

When opting for a VA home loan in Texas, buyers are able to free themselves from having to pay for Private Mortgage Insurance (PMI). This is because VA loans are backed by the federal government. This means huge savings for home buyers, which could amount to 0.5% to 1% of the complete loan amount on an annual basis.

Relaxed credit requirements are another highlight of VA loans. Potential buyers with less than perfect credit scores may qualify for these loans. Most VA lenders ask for a credit score of 620, which is a blessing for military home buyers. Moreover, the interest rates fluctuate based on the market and individual borrowers, and they may even fall below conventional loan rates.

Last but not the least, VA loans come with no prepayment penalty. In some cases, paying off a conventional home loan within the first five years may cause you to incur a prepayment penalty equal to about 6 months of interest. VA loan borrowers don’t have to deal with any such penalty, which makes these loans even more of a lucrative option.

In case you think that you might qualify for a VA loan, get in touch with a reputed lender in your area; someone who has rich experience in this domain. The right guidance from a VA approved lender can take you closer to home ownership.

Determining Eligibility for Texas Veteran’s Home Loans

Texas veterans home loans offer the military veterans in Texas an opportunity to own a home. The best thing about these loans is the fact that veterans don’t need to make a down payment. Also, they can receive up to 103.15% of the sale price of the property as a loan. Out of this 3.15% includes the funding fee that can be financed with the total loan amount. In order to qualify for such loans, veterans need to fulfill certain conditions.

When you choose to apply for a mortgage, the best decision you can make is to consult a respected mortgage company with qualified loan officers who can evaluate your current financial condition, assist you in understanding various loan programs and apply for a loan. They can also assist you in finding a qualified real estate agent.

When working with a loan officer on a home mortgage, they will help you through the requirements process, including proof of service and income. Here are some of the documentation requirements for veterans home loans:

1. Certificate of Release or Discharge (DD214): This form is available for retired veterans, reservists and those serving in the National Guard. The form is proof of discharge from active duty. A loan officer can assist you in filling out this form and submitting it to the lender who can help you get approved for a VA mortgage so you can begin the process of owning a home.

2. Certificate of Eligibility (COE): You will need this when applying for a loan. You can get a COE from the VA or your mortgage company can assist you in obtaining one. This certificate ensures that you meet the minimum VA loan standards.

3. Statement of Service: Active duty service members need to submit this document. This document is evidence of their active service that specifies the start date of their duty and their end date. This contains the signature of a senior officer.

Especially for Texas, there are specific mortgage programs for veterans such as the Texas Veterans Land Program being offered by the Texas Veterans Land Board. A leading company in the state assists you in choosing the best Texas veterans home loans. These experts can help you determine the best and most affordable price range based on interest rates and other costs. This is especially for veterans who have financial constraints. The mortgage company will walk you through the entire process and ensure that you make an informed decision.

Qualified Mortgages and Its Impact on the VA Loan Borrowers

There’s a new type of loan called the ‘Qualified Mortgage’. Most of us have heard of it, especially prospective homebuyers who question the impact that it will have on their home mortgages. For example, retired or active duty military servicemen are speculating about the impact that these changes will have on their ability to get the benefits of a VA home loan.

The financial slowdown of 2008 led to the introduction of numerous stringent rules and regulations. This was done to put restrictions on giving away easy loans and to reduce the possibility of loan defaults. However, such restrictions have made life difficult for borrowers who are looking to buy a home. At the same time, the government has been implementing and modifying new mortgage policies to provide relief to these borrowers, and a Qualified Mortgage is one of them. There are some specific policies that have been implemented by certain U.S states. The perfect example would be the various programs and initiatives being taken by the government in Texas; especially its impact on the veteran home loan in Texas.

What is a Qualified Mortgage?
Qualified mortgages mainly focus on the safety and affordability of prospective homebuyers. During the 2000’s, many lenders provided mortgages to a large number of borrowers who had poor credit scores and who were not in the situation to pay back the loan. These subprime loans were the main reason that contributed to the financial meltdown and led to the collapse of the housing market.

The scenario mentioned above eventually led to the introduction of the qualified mortgage. The qualified mortgage does not have the risky features of other mortgages and it ensures that the borrowers can afford to repay the loans that have been sanctioned. Regulators have also laid down eight credit and underwriting requirements that must be met to obtain Qualified Mortgage status. Mortgage companies can still provide loans that do not meet the standards of a qualified mortgage, but those loans will not get protection as per this regulation.

The Effect on VA home loans
People who are worried about the impact that qualified mortgages will have on VA loans have a reason to smile. The good news is that it will not have much impact on the VA loans. These underwriting guidelines have been followed by most of the lenders over the years. Hence, no additional action needs to be taken to comply with these underwriting requirements.

In fact, VA loan borrowers will get some added advantages as it will limit the costs involved in obtaining a mortgage. It has been estimated that around 92% of the loans that have been taken out meet the requirements of a qualified mortgage. The other 8% of the loans either exceed or have a higher annual percentage rate (APR) than allowed. This shows that the new guidelines will not have much impact on a majority of home loans.

Qualifying For A VA Home Loan in Texas

Despite the Department of Veteran Affairs offering lucrative terms on home loans, not even 12% of military veterans have taken advantage of it. The primary reason for such low participation is that many veterans are unaware of the loan programs and if they qualify. Most have instead opted for loans offered by the Federal Housing Administration (FHA). However, with the sharp increase in mortgage insurance premiums on FHA loans in 2014, the demand for VA loans has risen.

To apply for a VA Loan you will have served in the Army, Navy, Air Force, Marines, National Guard or Coast Guard for a minimum of 90 days. Additionally, for VA Loans in Texas, you must meet the following criteria:

• You are an active military serviceman looking for a permanent change of station (PCS) to Texas
• You are an active military person and already living in Texas
• You had a home in Texas when you entered the military
• You had a home in Texas when you left the military
• Your home has been in Texas for at least a single day
• You intend to use the home as the primary residence

If you satisfy the above criteria, you may be eligible to apply for a VA home loan. If you are retired, be ready with your DD214 Form to apply for the loan. If you are an active military person, a statement of service will be needed to start the application process.


If you are a veteran, you deserve all of the benefits a VA Loan has to offer. Contact one of our VA Loan experts today to learn more.

Source: http://davidsongroup.net/mortgagepedia/posts/qualifying-va-home-loan-texas/

More to VA Loans Than Competitive Loan Rates

The advantage of taking out a Veteran Affairs (VA) loan is quite far reaching. The main purpose of this loan is to make life easier for active duty or retired military personnel. That is why lucrative benefits are offered to them through this program, which includes providing a guaranty on loans of up to 100% value of the property that they choose to buy. Even the funding fee from 0% to 3.15% that may be required for this loan can be financed by the Department of Veteran’s Affairs. This mortgage also provides another key benefit of zero down payment. Also, in terms of interest rates, among all the states VA loan rates in Texas are lower due to the support provided by the state.

There are some conditions to fulfil in order to get financing for a home loan under the VA mortgage program. The price of the house should not be more than the reasonable value as assessed by the department. So, the down payment will be waived only if the sale price of the house does not exceed the appraised value. However, unlike the FHA loan offered to other citizens, the veterans are not required to pay monthly insurance premiums.

Some other benefits of taking out VA loans include limiting closing costs, having a provision to allow sellers to pay closing costs, no prepayment penalty for early loan payoff and the guaranty provided by the VA department if borrowers find it difficult to make payments.

We at the Davidson Group can assist you with your VA loan needs. Our experienced loan officers can walk you through your options, and manage the complicated paperwork and official proceedings on your behalf. Over the years, we have helped hundreds of active-duty and retired military professional. We believe our veterans deserve the highest respect.

Source:  http://davidsongroup.net/mortgagepedia/posts/more-va-loans-competitive-loan-rates/

First Time Homebuyers are Better off in Texas

According to research by the National Association of Realtors (NAR), first time homebuyers have not been contributing much to the recovery of the housing market in the U.S. However, certain areas of the West and Midwest are likely to witness a rise in home purchases by the millennial generation. The research conducted by NAR considered the population and job trends in the metropolitan areas across the country to arrive at this conclusion.

The purpose of the research was to determine the most suitable markets for these young homebuyers. The finding of the research is good news if you belong to the millennial generation and are looking to buy your first home in Texas. Among other property markets, Austin is found to be one of the best Texas cities where these potential buyers are likely to purchase their first home. This region is in a better economic state, offers high job growth rates and affordable home prices compared to other metropolitan centers.

This optimism is in sharp contrast to the plight of millennial homebuyers in the other top US cities such as San Francisco and New York. The young populations in these cities are reeling under student debt, limited job prospects, restricted wage growth and tight credit conditions. Anyone looking to buy their first home in Texas needs to know all of their options before taking out a home loan.

Despite Texas being better off than other housing markets in the country, homebuyers need to ensure that they fulfill all the conditions in order to get all of the mortgage benefits. In this way, buyers could become eligible for several convenient loan options and downpayment assistance programs.

Easy loan options for first time homebuyers in Texas
Even first time homebuyers who belong to the low income bracket can buy a home in Texas. They can apply for a Federal Housing Administration (FHA) loan and qualify for a loan with as low as 3.5% down payment. If coming up with this amount of down payment becomes difficult for homebuyers, they can apply for one of the down payment assistance programs that have specifically been designed for Texans.

To learn more about these loan options, contact a credible mortgage firm today. Use any popular web search engine to look for one that offers the assistance of expert loan officers on all kinds of specialty mortgages.

Things you need to know about FHA loans

June brought some good news for the real estate sector in Texas. The sales of pre-owned homes in North Texas had seen the biggest year-over-year gain in 2014. In June of 2014, 9,481 houses were sold in this state, which were the largest single monthly sales ever recorded. Such a thriving housing market is creating a lack of inventory. Hence, home buyers may have to shell out more money to get their desired home due to the increase in property prices. As the market is full of new buyers who want to take advantage of this optimistic trend, the mortgage market is also witnessing a lot of activities. For these buyers, there is a wide variety of home mortgage options available. One of the most popular mortgage options for the first home buyers is an FHA loan.

The Federal Housing Administration or FHA loan program has specifically been designed for home buyers with low to moderate income. This loan is more lenient in terms of eligibility criteria such as credit score, borrowers’ income and outstanding debt. This program also allows a down payment of 3.5 percent, which seems generous considering the larger down payment requirement for conventional mortgages. In those mortgages, customers are expected to pay a significant amount of an upfront fee in addition to the monthly premium, which poses challenges to many borrowers.

FHA loans provide relief to home buyers who do not meet the typical eligibility criteria for traditional mortgages. With such benefits of this mortgage program, even the home mortgage lenders in Texas are ready to provide financing to buy a property.

Here are some of the features of an FHA loan:
Easier to get: In earlier times going for a home loan caused home buyers to go through confusion and taxing paperwork. However, things have changed now, and with a more streamlined application process and underwriting, mortgages get approved with quick turnaround time.

Limits of the loan: There is no specific maximum limit for an FHA loan. Instead, it is set according to different states, and it is based on the specific market condition.

Credit Score: FHA loans work in a different way than a traditional loan works when it comes to credit score requirements. There is no minimum requirement for the loan, and a homebuyer can still be eligible even if he has faced bankruptcy.

Available for all income groups: Though FHA loans are mainly sought by lower and medium income groups, there is no such restriction. If borrowers can prove their ability to pay, they can apply for this loan even if they belong to the high income bracket.

Mortgage processes can be complex and buyers better seek assistance from mortgage experts. They may need the services of a reputed home mortgage company to know more about FHA loans or any other suitable loan option. Such a company not only makes your work easier by finding the best mortgage option for you, it also provides assistance for a hassle-free loan application process.

Home Mortgage Lenders: How to Make the Best Choice?

In the current market scenario, you can get a lot of options to obtain mortgage loans as a home buyer. Other than the conventional ways of taking out loans from banks and other financial institutes, you can also select a reputed lending firm. In fact, hiring a lending firm will be much more convenient for you. A firm can provide customized solutions to your financial requirements, based on your affordability. You can look out for the right home mortgage lender in Texas when you decide to buy a home there.

What are the different sources available for mortgage loans?

Lender: A lender usually assigns a loan officer who works as a mediator between borrowers and the lending firm. These officers act as the sales person who helps understanding the terms and conditions of various loan programs

Banks/Financial institutes: These are traditional financial institutions that offer mortgage loans on the similar ground as a lender. However, their lending rules are much stringent, and thus loan rejection is much higher. Real estate agency: A real estate agency offers various property options to homebuyers. It works as an intermediary between buyers and sellers. Though their main objective is to assist sellers in selling their properties at the highest possible prices.

In terms of a mortgage, with so many options available, it becomes confusing for homebuyers to make the best choice.

Depending upon your needs and affordability, a lender can help you get an ideal loan option that is likely to be satisfactory.

Tips to find a knowledgeable and trustworthy mortgage lender

• Get recommendations from the people you trust: You can always ask friends and relatives for suggestions, especially from those who have recently obtained a loan. However, you need to cross-check the references to ensure selecting the best lender that matches with your need.

• Observe the first-time response of lenders: You may get to know a lot from the initial response of a lender. The traits of a professional lender are prompt responses, friendly and courteous behavior, keenness to educate and explain processes to borrowers and answering all the queries.

• Check out reviews and credentials: Online reviews are good indicators of the customer experiences of working with a lender. You can also check the lender’s credentials to ensure it possess the required experience and skills.

• Do your homework: Do a thorough online research to avoid being misled by non-reliable sources.

The steps mentioned above can help you get a suitable lender that can help you find an ideal home mortgage loan.

Are you a first time home buyer?

Most people dream of owning a home of their own and spent years saving in order to do so. If you have a similar dream, then you should consider various factors including your monthly income, savings, and budgeting before purchasing a new home. If you are serious about buying your first home, start your process by exploring financing options such a mortgage rates and programs. Buying a new home requires research, guidance and adherence to guidelines and rules.

Mortgage rules vary from one state to another across the United States. Some states even offer specific mortgage programs for home buyers in those states. For example, a first time home buyer in Texas can get financing through Texas Bond Programs.

Apart from opting for the right mortgage program, by chalking out a plan, potential home buyers can accomplish their dream to become homeowners.

Work to Improving Your Credit Score
When you contact a mortgage company for mortgage loan approval, your credit score will be checked at first. In fact, your credit score plays a vital role in determining if you are eligible for the loan or not, what type of loan, and rates. Hence, before you talk with a lender, it’s better to check your credit score by getting the credit report yourself. You can order credit reports from AnnualCreditReport.com. It is a free service, authorized by the federal government. After you know your status, you can then work to clarify any errors or can pay off any outstanding debts negatively affecting your score.

Save well in advance
Typically, you need to pay between 5% and 30% as down payment to get competitive rates on mortgage loan. For this, you may have to work towards building up your savings. To do this, you may need to cut out all unnecessary expenses from your monthly budget.

Finding a reputed real estate agent
This step takes time as finding a reputed real estate agent can be difficult. Ask friends, family members, research references for a reputed real estate agent. A good way to verify the credibility about the agent is to explore the internet.

Secure a pre-approved loan
Once you know how much loan you can afford, only then you can begin to research and shop for a home that fits your requirements. You will need to thoroughly understand the types of loan options available to you, and compare rates and other aspects conventional and non-conventional loans.

Find the Home of Your Dreams
You can take the onus of looking around and finding a home yourself, but that could be a difficult task. It is advised to read and research online about a house by checking reliable databases.

Once you find a dream home, talk with a reputed mortgage company that can provide flexibility in terms of mortgage options and loan processing assistance.

Home buying requires discipline and patience. A reputed mortgage company can assist you with guidance on mortgage programs, application, and securing a loan, making the home owning process easier for you.

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.

Loan Assistance Programs for the First Time Home Buyer in Texas

When you are a first time home buyer, various loan assistance programs are available that can enable you to afford your dream home. It can be difficult for potential homebuyers to find out various loan programs available. Even when a suitable loan program is identified, knowing the eligibility criteria and following the procedure can be difficult. That is why it is always a good idea to hire a reputed lending firm. Consulting with a loan officer can resolve many doubts and you get a loan that is best to fulfill your financial needs.

A highly experienced loan officer not only helps you find the ideal loan assistance program, he/she will also ensure that the processing of your loan is expedited. Some loan assistance programs include annual tax credits and down payment assistance programs for first time home buyers.

Annual tax credit for eligible home buyers in Texas
You can reduce your federal tax liability by $2000 per year with a Texas Mortgage Credit Certificate. This is an annual tax credit program designed for home loan borrowers in Texas. If you fulfill certain income, home mortgage loan criteria, you can get up to a $2000 tax credit annually. However, the condition is that the home you bought should be your primary residence.

This mortgage credit program is meant for veterans, first time home buyers and low income home buyers. If you fulfill all the criteria mentioned above, a Mortgage Credit Certificate will be given that entitles you for tax relief. The certificate can get 40% off for you on the annual interest that you pay on mortgage as a tax credit on Federal Tax return. This relief is available for your mortgage term or as long as the home is not your primary residence. Down payment assistance programs for Texas

Homebuyers can get down payment assistance and closing cost assistance for buying an existing home in Dallas, Texas. It is offered by the City of Dallas Housing Department. Eligible borrowers can get a down payment assistance of $8500 in the form of a loan, but without any obligation to pay interest. The loan balance needs to be repaid only in the case of the following three situations:

1. When you sell the home
2. If you transfer the deed
3. When you stop using the home as your primary residence

Besides using the funds for down payment, you can also use up to $4000 towards closing costs. Alternatively, $1500 of the loan can be used for minor repairs by complying with the City’s Minimum Housing Standards.

The loan assistance programs mentioned above are not easy to obtain as there are several procedures to follow that frustrate homebuyers. You need services of a capable lending firm to expedite the loan processing for you. At the beginning, they will tell you about all the financing options available, and the one that suits you best after assessing your current financial condition and affordability. Their expert guidance can surely help you get a loan approved in a hassle-free way.

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.