In March of 2013, www.dallasnews.com published an update on how various banks and mortgage companies are lining up in Texas due to the growth potential in home lending! Texas is one of the few states that are showing signs of recovery after the housing bubble burst in the US. The lending market is thriving, various mortgage companies are opening offices, and loan officers/underwriters are getting hired to create a new line of business to serve customers. Why the Lending Market in Texas is thriving The home mortgage market is showing encouraging trends in Texas because of low interest rates, reduced foreclosures, and increasing demand for new homes. Both lenders and borrowers want to take advantage of the situation; dealings in residential mortgage are showing an upward swing. The biggest reason for this upward trending in home mortgages is the buyers’ inability to pay cash for a home. A mortgage loan provides them the opportunity to own their dream home despite the restriction of having low cash reserves. Buyers can afford a home and pay monthly installments for the duration a loan is taken. The Texas lending market is competitive, and that makes things difficult for home buyers to choose the right lender that fulfills their requirements. Choosing a lender in Texas When potential home buyers look to buy their first home in Texas or in its surrounding regions, they need to make a wise decision to capitalize on the promising mortgage market. For this big investment, there are numerous factors that need to be considered including buyers’ budget, property price, interest rate, credit score, and feasibility to repay the loan. A reputed lending firm focuses first on the buyers’ needs and accordingly provides the right solution in terms of eligibility, suitable loan options, and the approval process. Understanding the basics of home mortgage loans Regardless of which lender you select for a home mortgage loan in Texas, you need to know some fundamentals of the mortgage process. Knowing these basics will always help you understand the required steps including the things-to-do in order to qualify for a loan. Principal Amount – It is the amount of money borrowed from a lender for a mortgage deal. This is the actual sum to be paid to the seller for a property. However, it may cover more if a loan includes the closing charges as well. The principal sum reduces as monthly payments are made. Loan Term - This is the time frame for which an entire mortgage loan needs to be paid. Depending on the affordability and convenience of borrowers, they can take out a loan on short-term (10 year term) or longer term (30 years) basis. One of the flip sides of short-term loans is that these loans have larger monthly payments. If a borrower is not in a good situation in terms of monthly income, then a lender may suggest a flexible loan program with low down payment and long-term loan repayment. Interest Rates - This is the interest a borrower needs to pay in addition to the principal amount. The rate depends on the type of loan (fixed or adjustable rate), and the current rate in the market. It is incorporated with the monthly installments a borrower pays. Closing charges – It’s a combination of fees and payments for services that borrowers need to incur to meet mortgage loan requirements. Typically, these costs are listed in the lender's Good Faith Estimate (GFE). Besides knowing the above terminologies, it is important to do some homework before choosing the right lending firm that can provide perfect solutions to financial woes with their market knowledge, flexibility and customer-centric approach.
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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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