While most people in US continue to relocate to urban areas, there is a vast majority that lives in rural areas. In fact, to encourage and help people secure a home in rural areas, the United States Department of Agriculture (USDA) offers loans to individuals from low and medium income groups. The USDA partners with local lenders to meet the objective of providing affordable housing to people residing in rural areas. USDA loans aim for rural development in Texas and offer multiple benefits as compared to other private and government funded loan programs. Continuing the discussion further, in this post we list five reasons for choosing a USDA loan in Texas. Take a look. 1. No Down Payment While home loans such as the FHA and conventional loans require the borrower to supply a 3.5 to 5 percent down payment, Texas homebuyers can get up to 100 percent financing without spending a penny as down payment. On top of that, you also save a significant amount on the upfront fee required for financing. No matter whether you are a first time or repeat home buyer in Texas with little or no amount to pay a down payment, simply apply for a USDA loan in Texas and save yourself from the burden of paying large down payments. 2. Competitive Interest Rates Most borrowers think about monthly mortgage payments going over the roof when it comes to securing conventional home loans. USDA home loans, on the other hand, are federally backed by the US Department of Agriculture, which is why lenders feel comfortable in lending to people who fulfil the eligibility guidelines. Due to federal backing, borrowers can also expect to get competitive interest rates than conventional loans that doesn’t fluctuate according to credit score, income, and other factors. 3. Flexible Credit Score Requirements Many home buyers fail to qualify for conventional loans due to stringent credit score guidelines. USDA loans don’t require you to have a phenomenal credit score and in most cases, even a 640 credit score would also suffice. Remember that USDA loans in Texas are federally backed and therefore, lenders consider applicants with a blemished credit score provided they meet other eligibility criteria for securing the loan. Even if your credit score is not at par, lenders also accept rent slips, utility bills and cell phone bills to assess suitability. 4. Zero Private Mortgage Insurance Home loans that have a high loan-to-value ratio or low down payments require the borrower to pay an upfront PMI fee, which isn’t applicable to USDA loans. Borrowers only need to pay an upfront premium that insures the lender against borrower defaults, should any situation arises. Nonetheless, the upfront premium is much lesser than PMI costs and can be rolled with the financing and can be closed without putting any money down. That said, the borrower can notice a visible reduction in their monthly mortgage payments. 5. Exclusively for Low and Medium Income Group Individuals The USDA aims for rural development in Texas by providing loans to qualified homebuyers at competitive rates. The USDA hasn’t kept a limit on the maximum amount of the loan, however, there are certain limits on the income requirements of an individual. The rule says that the borrower’s income can’t exceed 115 percent of the area’s median income. You are eligible for any given amount, provided you fulfill the income guidelines and other required criteria. The Bottom Line The USDA home loan program is ideal for those living in rural or suburban areas and wish to purchase their a home in that area. Though funding is available all year around, the USDA processes applications on a first come first serve basis. The approval of loan is based on furnishing of required documents and meeting the eligibility criteria. The best way to increase your odds of getting a loan approved is to consult a mortgage professional to guide you from start to finish.
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Getting home loan approval could be a long and exhausting process. Many factors including your income stability, existing loans and monthly outflows, and even your educational qualification affect your eligibility of getting a home loan. Besides these, credit score is one of the determining factors when it comes to your loan approval. Although banks and lenders may not factor in your credit score in case of a VA loan and other special types of loan, if they do, it might delay the loan approval process and make it more difficult. If you have a bad credit score, this post will give you four ways to get a home loan with a bad credit score. Read on. 1. Negotiate the Rate Individuals with a bad credit score tend get loan approval at a high interest rate. Your need for a loan determines whether you will accept the interest rate or not. You can either convince the lender to grant you a loan at a higher interest rate or for a shorter tenure or leverage a healthy credit history to negotiate the interest rate and the tenure. 2. Add a Guarantor One way to get approval for a home loan is by introducing a personal guarantor. If you have a guarantor who has a healthy credit score, a lender may be inclined to approve your home loan, despite your bad credit score. A guarantor can be anyone from your friends or family to a financing firm. 3. Leverage a Clean Track of Repayment A clean track record of repayment of other existing loans can help a great deal in getting the home loan. Many banks offer pre-approved loans if you have a clean track loan repayment history. In the same way, if you have been repaying your other loans or dues on time and can display a clean track record, you can use this as a leverage to request for a higher home loan amount. 4. Offer Interim Security A bank or lender approves your home loan based on the type of property you buy and that property acts as a primary security. If you have a bad credit score, yet want to increase the loan amount, you can offer another asset as an additional interim security. Loan and Mortgage Experts in Texas Getting home loan on a bad credit score can be a difficult task for anyone. The four ways mentioned in this blog post may help you get an approval on your home loan sooner, and with lesser hassles. If you are looking for a home loan in Texas or nearby areas, you will find trusted loan and mortgage experts and firms such as Service First Mortgage - The Davidson Group, who will help you get any type of loans from simple home loans to VA home loans, even with a bad credit score. VA appraisal is an important part of the VA home loan approval process. When you sign up for a VA home loan, a VA-approved lender requires a VA appraiser to assess the property’s value and ensure that the home qualifies the Minimum Property Requirements (MPRs). The Department of Veterans Affairs established MPRs to ensure that the service members buy homes that are structurally safe, sanitary, and fit on various other similar parameters. If you plan to purchase a home through a VA home loan, it is important for your property to qualify the MRPs to ensure your health and safety. Continuing the discussion further, there are some major problems that may cause hindrance in getting you a VA appraisal. Let’s have a look at a few of them. 1. Inefficient Heating System A home to pass the VA appraisal must include a safe, acceptable, and efficient heating system. It should provide sufficient amount of heat to maintain a home’s temperature above 50 degrees Fahrenheit. Homes that have wood-burning stoves as the primary heating source must have another heating system to maintain an adequate temperature inside home. 2. Dilapidated Roof A roof is the first line of defense that protects the residents from harsh weather conditions and therefore must always be in a good shape. During the VA home loan process, the VA appraisers, sent by the VA approved lenders, inspect the condition of the roof. If there are holes, cracks, or any other defect in the roof, your property will not qualify for the VA appraisal. 3. Inadequate Mechanical Systems An inadequate mechanical system is another reason that can create an obstacle in getting approval for VA appraisal. VA appraisers inspect whether the home has electric and plumbing systems in safe and good working condition or not. The mechanical systems must have considerable future life and should not pose major issues for the residents. 4. Pest Problems To get VA approval, a termite and pest inspection is run on the property. Properties with prior fungus growth, termites, and other pest control issues must get them treated and then re-evaluated to get clearance from VA appraisers. In most states of the US, VA home buyers are not allowed to pay for the cost of a termite inspection. 5. Health or Safety Hazards Any type of health or safety hazard found can fail your property for VA appraisal. The appraisers will inspect the property as well the nearby area to look for health hazards such as polluted water, nuclear waste, waste disposal from the nearby factories or areas. The Bottom LineThe Department of Veterans Affairs has established some strict rules and high standards to appraise a veteran’s prospective home. Home loans from VA-approved lenders isn’t going to pass until the property qualifies all the given requirements. Property agents may look at it as a small and arbitrary process, but these precautionary measures ensure the health and safety of the veteran members and their families. 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. 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. As a first time home buyer the experience of buying a home can be both exciting and nerve-wracking for you. The excitement of buying a new house, whereas the anxiety about it being a major financial decision of your life. Owing to the excitement and the anxiety involved in the process, chances are that you may make a few rookie mistakes. You can, however, avoid these mistakes by doing a little financial homework. Here’s a list of points you must consider when buying a home. Let’s begin.
1.Organize Your Financial DocumentsWhen applying for mortgages, it is important for the homebuyers to furnish income and tax documents. Some of the documents Texas home loan and mortgage companies require include bank statements of past two months, tax returns, and two recent pay stubs. To make the process easy and less time consuming, make sure you organize your financial documents beforehand. 2.Find a Financial AgentA financial agent can help you through inspections, price, negotiations and financing. When it comes to home-buying, bargaining skills are key. It is, therefore, advisable to ask sale agents for sale-to-list-price ratios for worthy deals. 3.Get Your Credit Pre-ApprovedGetting your credit pre-checked and approved gives you an edge with the sellers looking for quick and smooth deal. Some lenders also provide underwritten pre-approval committing to fund the loan and this is almost as good as cash. 4.Calculate your Monthly CostsIt, undoubtedly, takes immense effort to scrape off the down payment. But, even if you scrounge up a down payment, calculate if you can comfortably endure the total costs of owning a home – including taxes, insurance, fixed costs, and mortgage. 5.Consider ForeclosureDid you know that foreclosed homes often sell at discounts? To get hold on any such deal contact a financial agent who specializes in foreclosures. You must, however, act fast when you come across a foreclosure deal as there are others wanting to grab the offer, too. 6.Get Government-Backed LoansGovernment loan programs offer multiple benefits to the first time home buyers. Texas Mortgage Programs, for instance, offers first time homebuyers in Texas more competitive rates and down payment assistance. Going for government-backed loans can definitely provide you a range of benefits. Check it out for more details. 7.Compare Mortgage Options Understanding the multiple mortgage options are important for better deals. For instance, Federal Housing Administration loans offer better rates for those with less-than-pristine credit. But, it is significant to understand the tradeoffs: with an FHA loan, you need to pay an extra 1.75% of the total purchase price plus annual insurance for the life of the loan. The Bottom LineAs a first time home buyer you must take all the necessary precautions to ensure that you don’t end up making the wrong decision. Do all the research that’s required, talk to friends and family, go online and read about first hand experiences of home buyers. All in all, make sure that you don’t leave a single stone unturned, as this may be one of the biggest financial decisions of your life. The process of foreclosure moves quickly and you could find yourself on the street within days, if you don’t know how to fight the process. In some states, such as Texas, it can take only 27 days for a lender or the bank to repossess your house. Foreclosure is applicable on all types of loans including FHA, conventional and USDA home loans. If necessary steps aren’t taken, you can find yourself losing your home, if you have missed your loan payments . There are a few things you can do to help ensure you keep your home and hold off foreclosure.
Negotiating with your Lender The first thing to do when you fall behind on your loan payments, or are unable to further pay what is due, is to approach your lender. Try to negotiate on the terms of the loan and your payment. Assess your current financial situation and prepare a plan to manage your monthly payments. Modification in the loan If you are unable to make payments on your home loan, one of the ways to stop losing your house, is by persuading your lender to modify your loan. Contact your lender and find out if you are eligible for a loan modification that can make your payments manageable. You can find a suitable buyer, for instance, and work with your lender to modify the assumption/lease clause. You can get this clause deleted and allow another buyer to assume the loan. The down payment from this short sale can help you pay off your outstanding past due loan balance. Declaring BankruptcyIf nothing works out in your favor, declaring bankruptcy is one of the moves which will stop foreclosure. The federal law prohibits any mortgage lender to collect your loan payments, which will save your property from a foreclosure. Bankruptcy, however, just buys you more time to recover financially. You can workout some agreement with your lender, so that your house does not go on sale. ConclusionFollow the guidelines mentioned above to avoid losing your house. You can apply for another loan to refinance your existing one. If your house is in a rural area in Texas or nearby areas, you can find many trusted lending companies to find a loan officer to apply for a USDA home loan in Texas. 11/18/2016 0 Comments A Brief Guide to VA Funding FeeAlthough VA home loans are an economical loan type for U.S. veterans, they involve a funding fee that veterans have to pay when they take a VA loan or refinance it. The amount of VA funding fee the applicant may have to bear depends on numerous factors that include the borrower’s service type, whether they have previously secured a VA loan, and more. Through this blog post, you’ll learn about the VA funding fee - primarily how much of funding fee you need to pay - based on your service type.
General Factors that Determine the Fee Depending on the loan amount, the VA funding fee may vary from 1.25 to 3.33 percent of the total loan amount. The amount is usually higher in case of refinancing. Other factors that determine the VA funding fee include:
As mentioned earlier in the blog, the VA funding fee is different for military personnel with different service types. Reservists and National Guard members pay slightly more VA funding fee than regular military members. Here’s a brief breakdown of the fee according to their service types. Regular Military Members
Reserve or National Guard Members
The above funding fee--both for regular and reserve members--is applicable if the applicant is securing the loan for the first time. If, however, they are taking the loan for the second time, they have to pay more funding fee. Who is Exempted? The VA allows certain veteran applicants to exempt the fee. These include:
Conclusion Regardless the VA loan amount, VA home loan applicants can choose to finance the VA funding fee with the loan amount, instead of paying it in cash. A VA approved lender can provide with more detailed information on these elements to help ensure your home-purchase journey remains hassle-free. In addition, a professional banking officer can always help you with more information on closings costs and if you qualify to exempt them. Before you say yes to your broker or even think of applying for a loan, it is important to understand your current financial status. As you will be paying a substantial amount of money towards loan installments, you must have a clear understanding of your budget and how much you can afford to pay. No matter the type of home and neighborhood you choose for your home, it is a bad deal if your mortgage payments eat up more than half of your income. This post discusses several factors that you must consider before investing in a new home. 1. The Amount you can Afford The debt-to-income ratio is there for a reason. Most lenders use debt-to-income ratio to measure the borrower's ability to manage monthly mortgage payments and repay debts. Different loan programs have different debt-to-income ratios as criteria to set borrower’s mortgage limit. Where the Federal Housing Administration (FHA) uses 43 percent debt-to-income ratio as a guideline for approving mortgages, USDA limits the ratio to 41 percent, provided the borrower has a credit score over 660 and stable employment. In short, all your cumulative expenses such as mortgage installments, property tax, and life insurance, among other household expenses, shouldn’t be equal to or more than the debt-to-income ratio required by different loan programs. 2. Daily Expenses Besides Debt Your expenses don’t come to a halt with the purchase of a home. You will realize that you now have other expenses added to your lists such as home decor, contemporary furniture pieces, and what not. In addition, you will be inviting friends over for house parties, take weekend getaways every month if not every week, or maybe hire a personal trainer. Though none of these are substantial expenses, they can be the driving factor behind delayed payments of obligations such as the electricity bills, if you have bought a home based on debt-to-income ratio alone. Before you commit to specific mortgage payments, it is wise to subtract the cost of your most expensive hobbies or any other leisure expenses and then decide whether the remaining amount supports your home buying decision. 3. Down Payment Per Se It makes sense to make 20 percent downpayment than paying private mortgage insurance (PMI). PMI is a risk-management tool that protects lenders against loss if a borrower defaults on the loan. A PMI may cost you $50 to $100 per month, sometimes less or even more. If you are not comfortable making a 20 percent down payment, you can pursue FHA and USDA loan program options. While FHA requires minimum 3.5 percent downpayment, USDA minimum downpayment requirement is just 2 percent. 4. The Right Time to Buy Home The best time to invest in a property or buy a home is off-season. If you are not sure about what you are going to do for next 10 years, or your stay at the current location, it is not the right time to buy a home. In addition, you can consult with your broker as to the time they think it wise to invest. Lastly, if you plan to stay for long, say more than 10 years, then no time is good or bad. Conclusion No doubt, affordability should be your number one criteria to decide whether you are ready to buy a home, and you should consider privileges associated with several loan programs for first time home buyers. There are several loan programs such as USDA rural development in Texas, that offer additional loan benefits to homebuyers planning to invest in a property in the rural areas. To learn more about the pros and cons of USDA loans or any other loan program, consult a loan specialist. A loan professional is well placed to guide you through the mortgage process, helping you identify your long term ability to repay the loan. |
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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