Are There Lender Options for New Home Construction?

When buying a new home there is a lot to think about. What area do you want to live in? What schools are important to you for your children? Do you have a realtor? All of these questions get answered as you begin your new home search. However, once you find that new home and it is new construction, the question arises: Do I have to purchase through the builder’s lender? Home builders do offer in house lending. You are usually given a list of lenders whom the builder recommends to use. But are these a good deal? One incentive to using their suggested lender is convenience. It is a one stop shop per say. Because the affiliated lender is intimately familiar with the builder, the two companies can share information which can help to speed up the lending process. Some builders offer substantial incentives from reducing the price of the home to upgrading appliances. However, while builders offer these incentives, they are required by federal law to allow homebuyers to obtain their mortgage from any company they choose. They may be able to insist you seek mortgage pre-approval from one of their affiliates as a type of credit check, but they cannot compel you to borrow money from these lenders. So with that being said, yes you are free to shop around and choose your own lender. According to the National Association of Mortgage Brokers (NAMB), affiliated lenders tend to offer interest rates one-eighth to one-quarter percent higher than what consumers could get from an independent lender. Therefore it would be a good idea to check out different companies just to be sure you are getting the best interest rate. You can also experience less options on the type of mortgage that best fits your needs. There is enormous variety in the types of mortgages available today. Not only can homebuyers choose between a fixed-rate or adjustable-rate loan and select their term and payment options, but they can also explore a number of non-traditional mortgages designed for people with specific needs. A builder's shortlist of partner lenders is unlikely to match the array of mortgages you'll find if you search for your loan independently. Just as you make a careful search for the right house, it's worth taking the time to shop around for the best mortgage. Look at what the builder is offering, but compare it with quotes from at least three outside lenders. By considering all of your options, you'll be able to arrange financing that best suits your needs. Contact Texas Premier Mortgage

today to speak to highly qualified lenders who can work hard to get you the lowest interest rate, and guide you each step of the way for the purchase of your new home.

What is PMI (Private Mortgage Insurance) and Why is it Important?

Private mortgage insurance (PMI) is a type of insurance policy that protects lenders from the risk of default and foreclosure, allowing buyers who are unable to make a significant down payment to obtain mortgage financing at affordable rates. If you purchase a home and put down less than 20%, your lender will minimize its risk by requiring you to buy insurance from a PMI company prior to signing off on the loan. As the borrower, you end up paying the PMI premiums but your lender is the sole beneficiary. If you have monthly PMI, you continue to make PMI payments every month until your PMI is either terminated (when your loan balance is scheduled to reach 78% of the original value of your home); when it is cancelled at your request because your equity in the home reaches 20% of the purchase price or appraised value (your lender will approve a PMI cancellation only if you have adequate equity and have a good payment history); or when you reach the midpoint of the amortization period (a 30-year loan, for example, would reach the midpoint after 15 years). Borrowers usually have to pay PMI when any single loan accounts for more than 80% of the appraised home value. The key word here is “single.” But what if you used two separate mortgage loans

to pay for the house? This is a common strategy used by home buyers who have less than 20% saved up for a down payment. For example, you could use an 80-10-10 mortgage to buy a house, and you wouldn’t have to pay for a PMI policy. Here’s what those numbers represent: • 80 = The first mortgage would cover 80% of the purchase price. • 10 = The second home loan (also called a “purchase money second”) would cover 10% of the price. • 10 = You, as the borrower, would pay the remaining 10% out of pocket as a down payment. In this “piggyback” financing scenario, no single loan accounts for more than 80% of the price. Therefore, you wouldn’t have to pay for PMI protection, even though you are putting less than 20% down on the home purchase. How can you avoid paying PMI? You can avoid paying PMI by making a down payment that is at least 20% of the purchase price of your home. There are many ways to consider but it is also a good idea to talk to someone in the mortgage industry who has knowledge regarding this type of insurance. Contact Steve Head, President and owner of Texas Premier Mortgage at 281-627-4222. Available 7 days a week, he is highly educated on this and many other mortgage concerns you may have.

Your Mortgage Lender, Your Strongest Link

When you are in the market to buy a new home, several factors come to mind. First and foremost you need to figure out your home buying budget. Next,

find an area in which you would like to live in. Whether it be in the city, suburbs, or country, there is a place for everyone to find their perfect fit. Once you have your area picked out, you begin your search. Websites such as har.com offer you a vast array of choices as well as multiple sites out there. Make a list of your "must haves" that will help you with your search. Narrow it down to your favorite two or three. Find a local realtor on realtor.com, or har.com to help you with your search. Ask friends, neighbors who they have used in the past or if they can refer you to someone. You will also need a mortgage lender. They are your strongest link between your realtor and your financial institution granting you the money for your loan. When shopping for a mortgage lender make sure they have been in business for at least five years, and you will want someone who has experience with the mortgage field. At Texas Premier Mortgage, we provide top notch customer service and treat our clients as if they were our own family. That is why it is important to find a mortgage broker who knows the ends and outs of the mortgage process, and who constantly educates themselves with the latest and greatest up to date mortgage information possible. Our communication goes beyond the normal "9-5" persona you may find with other lenders or when dealing with a bank. A member of the Better Business Bureau since 2010 A+ rating, and the winner of the 2014 BBB Excellence award, we strive to provide the utmost excellence when helping our clients obtain their home buying goal. Steve Head, President of Texas Premier Mortgage since 2006, has vast experience and knowledge to help be your strongest link in the home buying process. He knows all the current up to date mortgage news, has the experience most new loan originators lack, and has lived in The Woodlands, TX area for most of his life. Therefore he knows the area very well, and can help assist you with any questions you may have. Contact Steve Head with Texas Premier Mortgage today at 281-627-4222, or email at steve@txpremiermortgage.com. Let us help you by becoming Your Mortgage Lender, Your Strongest Link.

What helps to determine mortgage rates?

One of the most important aspects to successfully obtaining a mortgage is securing a low interest rate. After all, the lower the rate, the lower the payment each month. Unfortunately, many homeowners tend to just go along with whatever their bank or mortgage broker offers, often without researching mortgage lender rates or inquiring about how it all works. Whether you’re interested in rates or not, it’s wise to get a better understanding of how mortgage rates move and why. To put it in perspective, a change in rate of a mere .125% (eighth percent) or .25% (quarter percent) could mean thousands of dollars in savings or costs annually. And even more over the entire term of the loan. So what can determine the mortgage rates? 1. Treasury Bonds. The 10-year Treasury bond yield is said to be the best indicator to determine whether mortgage rates will rise or fall. Typically, when bond rates (also known as the bond yield) go up, interest rates go up as well. And vice versa. Investors turn to bonds as a safe investment when the economic outlook is poor. When purchases of bonds increase, the associated yield falls, and so do mortgage rates. But when the economy is expected to do well, investors jump into stocks, forcing bond prices lower and pushing the yield (and mortgage rates) higher. 2. Economic activity. As a rule of thumb, bad economic news brings with it lower mortgage rates, and good economic news forces rates higher. Remember, if things aren’t looking too hot, investors will sell stocks and turn to bonds, and that means lower yields and interest rates. If the stock market is rising, mortgage rates probably will be too, seeing that both climb on positive economic news. And don’t forget the Fed. When they release “Fed Minutes” or change the Federal Funds Rate, mortgage rates

can swing up or down depending on what their report indicates about the economy. Generally, a growing economy (inflation) leads to higher mortgage rates and a slowing economy leads to lower mortgage rates. Inflation also greatly impacts mortgage rates. If inflation fears are strong, interest rates will rise to curb the money supply, but in times when there is little risk of inflation, mortgage rates will most likely fall. 3. Freddie Mac’s weekly mortgage rate survey. Freddie Mac’s average mortgage rates are updated weekly every Thursday morning. Since 1971, Freddie Mac has conducted a weekly survey of mortgage rates. These are averages gathered from banks throughout the nation for conventional (non-government) conforming mortgages with an LTV ratio of 80 percent. The numbers are based on quotes offered to “prime” borrowers, meaning best-case pricing for the most part. As you can see, 30-year fixed mortgage rates are the most expensive relative to the 15-year fixed and select adjustable-rate mortgages. This is the case because the 30-year fixed rate never changes, and it’s offered for a full three decades. So you pay a premium for the stability and lack of risk. Rates on the 15-year fixed are significantly cheaper, but you get half the time to pay it off, meaning larger monthly payments. Rates on ARMs are discounted at the outset because you only get a limited fixed period before they become adjustable, at which point they generally rise. For more information and further explanation contact Steve Head, President of Texas Premier Mortgage at 281-907-6401 ext. 100.