First time homebuyers in Texas and elsewhere often commit rookie mistakes that cost them hundreds to thousands of dollars. Though there are several first time homebuyer programs in Texas, homeowners need to do their homework before finalizing their dream home. Having said that, the blog post lists five most common home buying mistakes that can easily be avoided. Let’s take a look.
1. Skipping Mortgage Pre-Qualification Many first time homebuyers in Texas do not factor their monthly income and credit score that lenders perceive as one of the criteria to determine suitability before granting a loan amount. Most of the time, homebuyers place an offer to the seller to buy a home and later on, come to know the sanctioned loan amount is way below their expectations. The only way to avoid such a situation is to go for a mortgage qualification and ensure the loan is “pre-approved” before committing to buy a home. 2. Overlooking Additional Expenses Being a tenant and a homeowner are entirely different. As a homeowner, you are not only responsible for the monthly mortgage payments, but also need to have a buffer for additional expenses such as property taxes, maintenance and repair costs that are a possibility. You need to factor each and every expense that goes from your pocket once you are the homeowner. Plan your current and projected income to be assured that you can save for future commitments after paying for your mortgage payments and additional expenses. 3. Rushing for Renovations Though renovations enhance the value of any home, homebuyers should not straightaway go for costly renovations. As you are expected to pay recurring mortgage payments, it’s better to hold renovation plans until a sizable amount of loan is already paid off. Even if you plan to renovate, strike a balance between value and appeal to prevent renovation costs going over the roof that may impact your regular finances. 4. Clinging to a Long Term Loan No doubt long term loans may allow you to make comfortable monthly payments, you end up paying a lot more than the actual amount due to higher interest rates. What you should try is to repay the loan as soon as possible to avoid unnecessary financial pressure in future. For that to happen, solid financial planning needs to be in place. Plan your monthly expenses wisely and ensure you have sufficient balance to invest in retirement funds and other saving plans. Take professional help if required. 5. Choosing the Wrong Loan Program When you are to buy a home, there are plenty of first time home buyer programs in Texas that offer lucrative interest rates and assistance. The only challenge is to get the most suitable loan that complements your monthly income, personal preferences or has the most lucrative home mortgage rates in Texas. Take professional help to decide what type of loan suits your requirements and is aligned to your financial condition. The Bottom Line Before going for any first time home buyer programs in Texas, every home buyer must weigh the pros and cons of every program. Each program is designed keeping in mind specific interests of people and therefore, home buyers need to understand what program works in their financial interest. Compare different loan programs, seek professional help to understand the finer lines of each one and finally, select the program aligned to your financials and long-term goals.
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If you need financial assistance to construct or repair a home in a rural or suburban area in Texas, the USDA loans is an ideal option. Offered to raise the standard of living of people with low to moderate income, the USDA rural development loan program allows borrowers to finance up to 100 percent of their potential house. Like other loan programs, USDA home loans have certain requirements that applicants must meet to ensure they qualify for them. Here’s a sneak peek into the USDA loan amount, income, and property requirements. Loan Amount Limit One of the biggest advantages that USDA loans offer is that these loans don’t have a cap on the maximum loan amount. This allows applicants to consider more property types including town homes and those that are part of gated communities - till the time these houses fall under the eligible USDA area. USDA lenders decide what loan amount to approve after evaluating your credit score, debt-to-income ratio, assets, income, and previous mortgage history, if any. Income limit Although there’s no limit on the loan amount, the USDA rural development mortgage, in Texas, Florida, or anywhere else, has certain income limits. Put simply, your income must not exceed 115 percent of the county’s median income where you live. To calculate the total income, the underwriter will take into account your gross, and income from all the members who’ll be living with you in the house. In addition, they’ll consider the income of any co-applicants, if any. You can click here to check the USDA income requirements for your county. Location Requirements Under this requirement, the home you’re planning to buy or build must be in an area whose population falls below the figure of 10,000. If the government has declared the area as a place that lacks serious mortgage credit, then its population must be less than 20,000, for you to own a home there through the USDA. The good news is that many small towns and metropolitan suburbs come under the eligible areas, which is why it would be correct to say that USDA loan location requirements are quite liberal. Property Requirements To ensure the house you buy has safe living conditions, the USDA lays down certain property requirements. The first, of course, is that the property must be structurally sound and hygienic. Other requirements include:
In addition to the above requirements, the applicant and their family must not have any residential property in their name, when applying for a USDA loan. They must also be in a condition to afford the mortgage payment. To learn about these and other such requirements in detail, and make an informed decision about buying a USDA loan in Texas or elsewhere, speak to a loan banking officer or contact a USDA approved lender. VA home loans, like other mortgage programs, include a closing cost. The difference is that you are not obliged to bear all of the VA loan closing costs. You can always request your VA lender to pay for some or all of the closing costs, including the allowable fees such as origination and the appraisal fee. In fact, the VA does not set any limit on the amount of closing costs an applicant can negotiate with their VA lender for settlement. To provide some more information on the topic, here’s a list of the common VA loan-related closing costs you need to know. Origination Fee The origination fee is the fee that a lender charges when you enter into a loan agreement. It’s required to process and underwrite the VA home loan. VA lenders can choose to charge you a flat 1 percent origination fee that’s 1 percent of your total loan amount. Alternately, they can charge a host of other fees until the amount doesn’t exceed the 1 percent of your home loan. Appraisal Fee The VA appraisal fee is another allowable fee for VA home loan buyers in Texas, Florida, or any state. The VA decides the fees that typically comes around $425. You can check the maximum allowable appraisal fee for your state by visiting the website of The Department of Veteran Affairs. Discount Points Discount point(s) is an interest amount that you pay in advance to the lender. It’s a kind of provision to help you lower your loan’s rate of interest. One discount point means 1 percent of your total loan amount. This means, if your total loan amount is $3,00,000, then 1 discount point would be $3,000. The more points you pay to the lender, the lower will be your interest rate. Pest and Septic Inspection Fees The pest and septic inspection fees are applicable in all but nine states. The VA lender or seller pays the fees in most cases. Buyers, however, may have to bear any repair costs related to septic or pest issues. Title Insurance Fee Title insurance is there to protect from any financial loss if there comes a titling issue such as a boundary dispute or a lien, after the closing of the property. Although VA home loan borrowers aren't required to buy the title insurance, most owners go for it, for peace of mind. There are two title insurance - one for the lender, and the other for the owner. In many states including Illinois, the lender typically pays one-time premium for your title insurance. Credit Report Fee In addition to the above loan-related closing costs, some VA lenders may also charge a fee to access your credit information. According to the VA, this fee should not be more than $50. Conclusion Closing costs also includes non-loan fees such as recording, survey fee, home warranty fee, and home owners association or HOA fee. Learning about them on your own may not be easy for everyone. That’s why it is advisable to consult a loan banking officer, who can help you understand the prerequisites to obtain a VA home loan. A loan officer can also help negotiate the closing costs with your VA lender. |
AuthorDarrick encourages readers to post issues that need immediate attention in terms of home buying; such interactions will enhance reader engagement and provide a road-map for others Archives
November 2017
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