How To Submit the Perfect Home Loan Application

Knowing how to submit the perfect home loan application can help you start your home ownership journey off on the right foot. Here are some helpful tips to ensure a smooth loan process. For a Smooth Process: An application is your first step to home ownership! Required documentation will vary, but generally, here is what we will need: YOUR EMPLOYMENT AND INCOME INFORMATION: 2 years employment history including job titles, dates of employment, employer’s address, and phone numbers Letter of explanation of any changes in employment Pay stubs for the most recent 30 days Copies of W-2s for the last 2 years Copies of federal, personal, and business tax returns for previous 2 tax years, including all W-2s, 1099s, K1s, and all schedules. If filing an extension, please provide extension YOUR RESIDENCE INFORMATION: 2 years residence history, including addresses, dates, and phone number for landlord if renting If you currently own a home, please provide the most recent mortgage statement Name and phone number of your homeowners insurance agent BANK & OTHER STATEMENTS: Most recent 2 months or quarterly bank statements for all checking, savings, and investment accounts (all pages, even if blank) Most recent 2 months or quarterly 401K/Retirement statements (all pages, even if blank) Copy of cancelled Earnest Money check when it clears your bank account, along with most recent bank statement showing check clearing Non-payroll deposits—we will need to verify the source and receive explanation for non-payroll deposits to your accounts, including any transfers between accounts (make copy of any check you deposit) IF APPLICABLE TO YOU, THE BELOW ITEMS MAY BE NEEDED: Complete divorce decree and/or separation papers Alimony/child support income; proof of receipt may be required Bankruptcy discharge papers (including filings, discharge, and list of creditors) If receiving Retirement or Social Security income, award letter and proof of receipt may be required If any portion of your down payment or closing costs is coming in the form of a gift, please call us, because the documentation required for gifts is fairly comprehensive Once we pull your credit, we may need a signed letter of explanation and/or documentation for any inquiries and/or derogatory credit VA loan: DD214 and Certificate of Eligibility To access our online application go to https://www.myloanform.com/?action=access.login&m=47

How Much Can I Afford?

How much mortgage money can I qualify to borrow? This is typically the number one question mortgage professionals are asked by new clients. Of critical importance when considering mortgage financing: There is sometimes a difference between what a client ***can*** borrow and what they ***should*** borrow. In other words, what makes for a comfortable long-term mortgage payment? The Quick Answer: If we’re simply considering the financial math, lenders will calculate your Debt-to-Income Ratio and generally allow for 28-31% of your gross income to be used for the new house payment with up to 43% of your gross income to be used for all consumer related debts combined. Sample Mortgage Scenario: Let’s use a gross monthly income of $3000 and a qualifying factor of 30% Debt-to-Income Ratio: $3000 multiplied by .3 (30%) = $900 max monthly mortgage payment This means that your mortgage payment (Principal, Interest, Taxes, Hazard Insurance) cannot exceed $900 a month. “Ballparking” a Qualifying Loan Amount: Simple step: We use a safe average of $7 per month in payment for every $1000 in purchase price so… Step 1) $900 a month divided by $7 = $128.50 Step 2) $128.50 multiplied by 1000 = $128,500 loan amount. Remember, these are average ratios and guidelines set by most lenders for common mortgage programs. Keep in mind, while most consumer debts are listed on a credit report, there are some additional monthly liabilities that may contribute to the overall qualifying percentages as well. Regardless of how your personal income and credit scenarios factor in, it is important to consider your overall budget when trying to determine how much of a mortgage you should qualify for. Other items to consider in your monthly budget: 1. Confirm all debts are taken into account 2. Any private notes or family loans 3. Short-term expenses – medical, auto repairs, travel, emergencies 4. Plan on additional expenses for the home such as water, electric, maintenance, etc… 5. Keep a cushion for savings and financial planning

Closing Process Defined

The home buying process is full of paperwork, important dates, contracts, market movements and checklists that can even overwhelm seasoned real estate investors. One of the main reasons to make sure you’re working with a professional real estate buying team is the fact that you get to lean on their combined experience to ensure a smooth and painless closing. Some agents and loan officers can close upwards of 20+ transactions a month. Compared to the 5-7 homes an adult may purchase in his/her lifetime, you can obviously see where it helps to have a few trusted professionals in your corner. The closing process can be argued as the most critical part of a real estate transaction where the most amount of things can go extremely wrong. This is where that professional team will really prove their value. If all of the initial questions, concerns, documents and contingencies were addressed early in the mortgage approval and home shopping process, then you should feel confident about walking into the closing with all bases covered. However, we’ve listed a few bullets, links and frequently asked questions on this page to help highlight a few important topics you may want to be aware of during the closing process. Six Prior-To-Closing Conditions That Can Delay Your Escrow: Even though your lender may have provided a Pre-Approval and/or Mortgage Commitment Letter, there may still be several conditions that could delay a closing. Sometimes buyers and agents let their guard down with the relief of getting closing documents to title, and they forget that there may still be a bunch of work to be done. Prior-to-Closing conditions are items that an underwriter would require after reviewing your file, which could simply be an updated pay-stub, a letter of explanation of recent credit inquiries or more clarification on information found in a tax return. Here is a list of a few Prior-to-Closing conditions you should be aware of: 1. Updated Income/Asset Documentation- You may have supplied your lender with a mountain of documentation, but make sure you continue to save all of your new paystubs and financial statements as you move through the process. Chances are your lender will want updated documents as you get closer to closing. 2. Credit Inquires – If you have had recent inquires on your credit report, a lender may check to see if any new credit has been extended that may not yet actually appear on your report. An inquiry could be for something minor such as a new cell phone, but can also be something that will impact your ability to qualify for the loan such as a car payment or another loan that you co-signed to help out a family member. ……(read more on Credit Inquires) 3. Employment Verification- Your lender will be making sure you are still actively employed in the position that is listed on your loan application, and they will do this more than once in the process. So make sure regular life events, such as maternity leave or a scheduled surgery, have been brought to your loan officer’s attention ahead of time. Once an underwriter starts to uncover surprises, they may hold a file up for a while to do a bunch of unnecessary digging to find out if there are any other issues that the borrower failed to mention. 4. Funds for Closing- Lenders will want to source where every dollar for the transaction is coming from and verify that it has been deposited into your bank account. If funds need to be liquidated from a retirement account or home equity line start the process sooner rather than later. Sometimes lenders will not release all of the funds immediately after a large deposit so it is important to have these in place well ahead of your closing date. The same applies for Gift Funds-make sure the donor is aware of your time frame and is willing to supply the required documentation to your lender. ……(read more on Making Sure Your Cash To Close Comes From Proper Source) 5. Title and Judgment Searches – Typically, title and judgment searches are performed farther along in the mortgage process because they are not ordered until after you receive your mortgage commitment. These searches could reveal judgments against your name or the sellers along with liens against the property you are buying or selling. Sometimes, even an old mortgage appears against the property since it was never properly discharged, or if you have a common name items could appear that are really not yours. Either way, the underwriter and title company will want to be sure that these are cleared up before the closing. ……(read more on Title and Judgment Searches) 6. Homeowners and Flood Insurance Coverage – Lenders want to review your policy several days prior to closing to make sure coverage is sufficient and accurately account for it in your monthly payment. Insurance coverage can sometimes be difficult to obtain depending on your past history with claims, credit, location and type of the property. Items to Bring to Closing Appointment: Your real estate agent and/or mortgage loan officer should be providing you with a final list of documents that need signatures or updated verifications, so the general list of items needed at closing is quite basic: 1. Funds To Close – If you are required to bring in a down payment and/or pay for closing costs to finalize the transaction, you’ll need to bring a certified check from a bank. The escrow company, your agent and loan officer should provide you with a full breakdown of all fees / costs involved in the transaction. While these final numbers may be more accurate than the initial Good Faith Estimated which was provided at the beginning of the application process, there will still be a small buffer amount added by escrow to cover any prepaid interest or other minor changes. If you don’t have to bring in any funds to close, then you might actually be getting a portion of the Earnest Money Deposit back. Keep in mind, it is important to make sure these funds to close come from the proper sources. 2. Proof of Identification – Official Drivers License or State ID card. Passports will work as well. …… Frequently Asked Questions: Q: Does It Matter Which Day of the Month I Close? The date of your closing is all about how you view the money being applied. Pay now or pay later, but it will always be collected. Let’s first look at how mortgage payments are broken down: When you pay your rent for the month, you are actually paying for the right to live in the house for the upcoming month. However, your mortgage payment is broken into four separate components; principle, interest, taxes and insurance (PITI). The principle is paid towards the upcoming month, interest is paid towards the previous month and the taxes and insurance are deposited into an impound account. As far as closing on a particular day of the month to save money on interest payments, it depends on the type of loan program you are using. If you’re more concerned about successfully closing with the least amount of stress, then early to mid month is usually a good time to close. Q: I am refinancing an FHA loan, will it benefit me to close in the beginning of the month? No, in fact FHA refinances should always close at the end of the month because you are responsible for the entire month’s interest. Q: Should I be concerned about the closing date on a conventional loan refinance? Not really, however you can save a couple dollars by closing early in the month, just avoid closing on a Friday because you could be responsible for the interest on two loans over the weekend. Items to Bring to Closing Appointment: Your real estate agent and/or mortgage loan officer should be providing you with a final list of documents that need signatures or updated verifications, so the general list of items needed at closing is quite basic: 1. Funds To Close – If you are required to bring in a down payment and/or pay for closing costs to finalize the transaction, you’ll need to bring a certified check from a bank. The escrow company, your agent and loan officer should provide you with a full breakdown of all fees / costs involved in the transaction. While these final numbers may be more accurate than the initial Good Faith Estimated which was provided at the beginning of the application process, there will still be a small buffer amount added by escrow to cover any prepaid interest or other minor changes. If you don’t have to bring in any funds to close, then you might actually be getting a portion of the Earnest Money Deposit back. Keep in mind, it is important to make sure these funds to close come from the proper sources. 2. Proof of Identification – Official Drivers License or State ID card. Passports will work as well. …… Frequently Asked Questions: Q: Does It Matter Which Day of the Month I Close? The date of your closing is all about how you view the money being applied. Pay now or pay later, but it will always be collected. Let’s first look at how mortgage payments are broken down: When you pay your rent for the month, you are actually paying for the right to live in the house for the upcoming month. However, your mortgage payment is broken into four separate components; principle, interest, taxes and insurance (PITI). The principle is paid towards the upcoming month, interest is paid towards the previous month and the taxes and insurance are deposited into an impound account. As far as closing on a particular day of the month to save money on interest payments, it depends on the type of loan program you are using. If you’re more concerned about successfully closing with the least amount of stress, then early to mid month is usually a good time to close. Q: I am refinancing an FHA loan, will it benefit me to close in the beginning of the month? No, in fact FHA refinances should always close at the end of the month because you are responsible for the entire month’s interest. Q: Should I be concerned about the closing date on a conventional loan refinance? Not really, however you can save a couple dollars by closing early in the month, just avoid closing on a Friday because you could be responsible for the interest on two loans over the weekend. For more information visit TxPremierMortgage.com

Debt to Income Ratio Explained. It is simple, really...

Before a first time buyer, or any home buyer sets out to start viewing properties, getting pre-approved is one of the crucial first steps, but examining your debt-to-income ratio is best done before applying for a home loan. Why is the debt-to-income ratio of 43% such an important percentage and factor? This ratio speaks to a home buyer’s financial capacity not so much in terms of buying a home but capacity to faithfully pay on the mortgage and not go into default – as much a concern for the lender as it should be for the home buyer. For purposes of getting pre-approved for a mortgage, your debt-to-income ratio is calculated simply by adding up all your monthly debt payments and then divide the total by your gross monthly income. This is how mortgage lenders measure a home buyer’s ability to successfully manage monthly mortgage payments and responsible servicing of the debt. An Example of Debt-to-Income Ratio Calculation Let’s say your annual income is $60,000 or $5,000 monthly and the home you’re interested in is $200,000 and for the sake of simplicity, you’re putting down 3.5% as with an FHA loan at 4% interest rate. This ratio speaks to a home buyer’s financial capacity not so much in terms of buying a home but capacity to faithfully pay on the mortgage and not go into default – as much a concern for the lender as it should be for the home buyer. For purposes of getting pre-approved for a mortgage, your debt-to-income ratio is calculated simply by adding up all your monthly debt payments and then divide the total by your gross monthly income. This is how mortgage lenders measure a home buyer’s ability to successfully manage monthly mortgage payments and responsible servicing of the debt. An Example of Debt-to-Income Ratio Calculation Let’s say your annual income is $60,000 or $5,000 monthly and the home you’re interested in is $200,000 and for the sake of simplicity, you’re putting down 3.5% as with an FHA loan at 4% interest rate. The amount you’re financing would be $193,000, add to that, again for simplicity, PMI (private mortgage insurance for loans with less than 20% down) property tax of $14 per $1,000 borrowed (check your target community’s property tax rate) and interest. Your total monthly mortgage payment would total $1,229.89. Now, let’s add $200 for an auto loan, $400 for revolving debt such as credit cards and accounts plus the mortgage of $1229.89. Obviously, there can be a lot more to an individual’s monthly debt than this, but we’re keeping it simple, but this totals $1,829.80. Divide the monthly debt of $1,829.89 by the gross monthly income of $5,000 and you get a debt-to-income ratio of 36%. Congratulations, your debt-to-income ratio is well below the general maximum of 43%. Need more information? Visit txpremiermortgage.com for more explanations!

What Does Title Insurance Protect Me From?

By including title insurance when purchasing property, your title insurer takes on accountability for legal expenses to defend your property title, should it ever be challenged. Many different occurrences can come into play to warrant the need for title insurance. The title company responsible will then take on the legal expenses to defend the property for as long as you are in possession of an interest in the property under the title. If the defense is not successful, you will be reimbursed for any loss of value of the property. Common Things Title Insurance Covers: 1. UNDISCLOSED HEIRS, FORGED DEEDS, MORTGAGE, WILLS, RELEASES AND OTHER DOCUMENTS 2. FALSE IMPRISONMENT OF THE TRUE LAND OWNER 3. DEEDS BY MINORS 4. DOCUMENTS EXECUTED BY A REVOKED OR EXPIRED POWER OF ATTORNEY 5. PROBATE MATTERS 6. FRAUD 7. DEEDS AND WILLS BY PERSON OF UNSOUND MIND 8. CONVEYANCES BY UNDISCLOSED DIVORCED SPOUSES 9. RIGHTS OF DIVORCED PARTIES 10. ADVERSE POSSESSION 11. DEFECTIVE ACKNOWLEDGEMENTS DUE TO IMPROPER OR EXPIRED NOTARIZATION 12. FORFEITURES OF REAL PROPERTY DUE TO CRIMINAL ACTS 13. MISTAKES AND OMISSIONS RESULTING IN IMPROPER ABSTRACTING 14. ERRORS IN TAX RECORDS

Talk the Talk – Know the Mortgage Lingo at Closing

What in the world are they talking about? Many borrowers go through the closing process in a haze, nodding, smiling, and signing through a bunch of noise that sounds like Greek. Even though you may have put your trust in your real estate and mortgage team, it helps to understand some of the terminology so that you can pay attention to specific details that may impact the decisions you need to make. Common Closing Terms / Processes: 1. Docs Sent – Buyers sit on pins and needles through the approval process, waiting to find out if they meet the lender’s qualification requirements (which include items such as total expense to income, maximum loan amounts, loan-to-value ratios, credit, etc). The term “docs sent” generally means you made it!! The lender’s closing department has sent the approved loan paperwork to the closing agent, which is usually an attorney or title company. Keep in mind that there may be some prior to funding conditions the underwriter will need to verify before the deal can be considered fully approved. 2. Docs Signed – Just what it implies. All documentation is signed, including the paperwork between the borrower and the lender which details the terms of the loan, and the contracts between the seller and buyer of the property. This usually occurs at closing in the presence of the closing agent, bank representative, buyer and seller. 3. Funded – Show me some money! The actual funds are transferred from the lender to the closing agent, along with all applicable disclosures. For a home purchase, if the closing occurs in the morning, the funds are generally sent the same day. If the closing occurs in the afternoon, the funds are usually transferred the next day. The timing is different for refinancing transactions due to the right of rescission. This is the right (given automatically by law to the borrower) to back out of the transaction within three days of signing the loan documents. As a result, funds are not transferred until after the rescission period in a refinancing transaction, and are generally received on the fourth day after the paperwork is signed. (Note – Saturdays are counted in the three day period, while Sundays are not). The right of rescission only applies to a property the borrower will live in, not investment properties. 4. Recorded –

Let’s make it official. The recording of the deed transfers title (legal ownership) of the property to the buyer. The title company or the attorney records the transaction in the county register where the property is located, usually immediately after closing. There you have it – an official translation of closing lingo. As with any other important financial transaction, there are many steps, some of which are dictated by law, which must be followed.

Assembling Your Home Buying Team – Knowing The Players

Buying a new home is literally a team sport since there are so many tasks, important timelines, documents and responsibilities that all need special care and attention. Besides working with a professional team that you trust, it’s important that the individual players have the ability to effectively communicate and execute on important decisions together as well. Real Estate Agent – A Realtor® is a licensed agent that belongs to the National Association of Realtors®, which means they are pledged to a strict Code of Ethics and Standards of Practice. A few of the important roles your agent performs: Determine your home buying needs Define your property search criteria – neighborhoods, school districts, local amenities… Provide insight on market trends and property values Negotiate purchase contracts Pay attention to due-diligence periods and other important timelines Articulate inspection and appraisal reports Professionally estimate fair market value on listings A common misconception of many First-Time Home Buyers is that hiring a real estate agent will end up costing more money. However, the typical arrangement in a purchase transaction is for the seller to cover the buyer’s agent commission. In some cases where a new home developer or For Sale By Owner is listing a property and offering a lower price to deal direct, it is still a good idea to have an agent in your corner to protect your financial and investment interests. Considering that some buyers may see 5-7 real estate transactions in a lifetime, compared to an agent that closes the same amount in a month, it is obvious to see that there is a big advantage to having the ability to rely on that experience when your home and security is on the line. Mortgage Professional - A mortgage professional (loan officer, mortgage planner, loan consultant, etc.) is the glue that holds the entire transaction together (biased comment). In addition to establishing the purchase price and monthly payment a borrower can qualify for, the mortgage team will also need to communicate with all of the other players on the home buying team throughout the entire process. To highlight a few details your mortgage team is paying attention to: Initial pre-qualification to determine purchase price / loan amount Explain all loan program options that may fit your investment goals Collecting / organizing loan approval documents Watching economic indicators that influence daily rate changes Locking rates Communicating with title / escrow officers Submitting loan package to underwriting departments Updating disclosure / GFE paperwork within proper time frames Following funding through the final recording Tracking inspections, insurance and other lending requirements Post closing rate / program monitoring (although that might just be us) Insurance Agent - The lender in any mortgage transaction will require a homeowner’s insurance policy (hazard insurance). This policy protects the property in the case of fire, theft or other damage (except flood or earthquake, those are separate policies and may be optional). If it is determined that the property that you want to purchase is in a flood zone, flood insurance is not optional, it is mandatory. The flood zone determination will be done with a “flood certification” from a third-party provider. Title and Escrow - It is possible to have a title company and an escrow officer work for different companies. Also, some states use closing attorneys and there are still a few states where they use abstract of title instead of title insurance. In most purchase transactions, the seller has the option of choosing the title company. The title and escrow officers are often thought of as the same role, but in reality are quite different positions. The title officer takes care of all issues that have to do with the title (also referred to as the deed) of the property. The lender may require a title insurance policy guaranteeing that the title is clear of all liens except those being filed by the lender. Escrow takes care of receiving, signing, and notarizing the final loan documentation, as well as collecting the other paperwork associated with the home sale. The escrow officer is a neutral third party that makes sure no money is transferred until all conditions for each side are met. The money management of an escrow company include: Real estate commissions Funds to mortgage company Homeowner’s Insurance Premiums Property Taxes HOA Dues and other third-party fees Finally, the escrow officer will see that you are properly recorded as the new owner with the county. Home Inspector - When you have found the home that you like, it is a wise idea to have a professional take a look at the home to see if there are any issues with the property that could be a problem in the future. Even though some buyers have an “Uncle Joe” who has owed several homes and knows what to look for, a certified Home Inspector can be money well spent. They will look at the functionality of the home to make sure the electrical, plumbing and physical aspects of the home are strong, which will help the buyer make an educated decision about following through with the purchase, or renegotiating certain aspects of the contract. Keep in mind, the home inspector and appraiser have different jobs. An appraiser determines value, while the inspector looks for structural problems, defects or maintenance issues. The inspector is doing this strictly for the buyer’s sake. The lender is not concerned if a faucet has a minor leak as long as the property is worth the sales price. Therefore, the lender generally does not require an inspection unless the purchase contract requires one. So, an inspection is not required, but it is recommended. As a matter of fact, one of the forms in an FHA application package is one that says “For Your Protection: Get a Home Inspection.” Appraiser - While the appraiser is typically never seen by the home buyer, an appraisal is obviously an important component of a home purchase transaction. The appraiser will conduct an analysis of the property to determine the current market value. The bank will always require an appraisal, and in some cases need a second opinion of value if the program guidelines or loan amount require it. Appraisers compare the sales prices of similar properties sold in the neighborhood and surrounding areas with the subject property. This can be a very tricky process, especially if there are few properties to choose from, or if there is an overwhelming amount of foreclosures and short sale listings. Now, since two homes are rarely identical, the appraiser has the difficult job of trying to compare apples to apples; sometimes red delicious to yellow delicious, or sometimes Fuji to Winesap. When done, the estimate of value is given. If that value is below the purchase price, then negotiation may take place. If it is at or above the purchase price, we are ready to go forward.

What You Need To Know About Gift Funds

The "Donor" of the gift must be a family member, fiancé or domestic partner. They must prove they have the ability to provide you with the gift by providing a copy of their bank statement, a copy of the canceled gift check and/or a signed letter from their bank saying the funds are available. The "Gift Letter" is a form we will provide. The donor will need to complete it with basic information and a signed statement that the funds are a gift with no expectation of repayment. The "Transfer" must be documented carefully. Make a copy of the gift check and deposit slip or of confirmation of the wire transfer. Deposit the gift in the account you're already using for verification of funds to close. DO NOT combine this deposit with any other incidental deposits. Provide either an online update or the next account statement to show that the deposit cleared into the account. Some programs allow for the entire down payment to be in the form of a gift. Others may require that you have at least 5% of the purchase price from your own funds. As these rules can vary or change at any time, never hesitate to consult with us for the specifics as they relate to your transaction. While the documentation requirements may seem excessive at times, please remember that the underwriters are simply following the rules to assure that your down payment is not borrowed and that any allowable gift funds are coming from acceptable sources. And remember, if you have any questions about the mortgage process, just ask! Call 281-907-6401 or visit www.txpremiermortgage.com TODAY!

Calculating The Net Benefit Of A Refinance Transaction

Calculating the net benefit of refinancing can be a challenging task if you do not understand what to calculate. We are going to focus on the net benefits of refinancing from the standpoint of lowering your interest rate. Although there are several reasons to refinance, lowering your mortgage rate to save on interest payments over the term of the loan is the most popular. Calculating the actual savings can be a tricky chore unless you know the difference between cash flow savings and interest savings. If your refinance objective is to only save on the interest by lowering your rate, then the interest savings should be done with the calculations below. Calculating Interest Savings: (Loan Amount x Interest Rate) / Months in year = Interest paid per month ($200,000 x 6% or .06) / 12 = $1,000.00 *Remember to do the calculation in the parentheses first* We now know that you are paying $1,000.00 per month in interest. You should take the new interest rate you are getting with your refinance and calculate what your new interest payment will be. ($200,000 x 5% or .05) / 12 = $833.34 Now we need to find out the difference between the two interest rates. Current Interest Payment – Proposed Interest Payment = Interest Savings $1,000.00 – $833.34 = $166.66 Now you have figured out that by dropping your interest rate 1% on $200,000 you will be saving $166.66 per month or about $2,000 per year. Awesome! Anyone would want to save $2,000 per year, where do I sign… right? Not so fast, you’ll want to calculate the break-even point to find out how you will benefit after your closing costs. Net Benefit Formula (Break-Even): (Closing Costs – Escrows) / Interest Savings = Month of Break-Even ($6,000 – $1,000) / $166.66 = 30 Months In other words, it will take 30 months for you to recoup the cost of your refinance. If you plan to keep your mortgage for at least 30 months then you might want to consider this deal. Okay, now we can calculate your net benefit for refinancing with one more calculation. (Monthly Savings * Months you plan to keep mortgage) – (Closing Costs –Escrows) = Net Savings ($166.66 * 120 months) – ($6,000 – $1,000) = $14,999.20 If you kept the mortgage for 120 months (10 years) you would save $15,000. Okay, now you can find out where to sign. Calculating the net benefits of a refinance is crucial in determining if it is strategic for you to refinance. Keep in mind that each mortgage is slightly different and you may need to adjust calculations accordingly. …… Frequently Asked Questions: Q: I heard that I should only refinance if I drop 1% on my mortgage is that true? Some people say ½% , 1% to never. Every mortgage is different. For Example: A no cost loan can have a 1 month break-even point with only a .25% drop in interest rate. Now that you know how to calculate your net benefit, you are able to figure out what may be beneficial for your situation. Q: Why can’t I just compare my current payment to the proposed payment and figure out my net benefit? You could just compare just the two payments if you wanted to find out your cash flow savings, but the current and proposed loans may have two different amortizations. Let’s assume you currently have a 15 year mortgage and you’re comparing it to a 30 year mortgage. If both loans have the same interest rate and loan amount but the amortization is different, your interest savings per month would be $0. However, you are going to show a cash flow savings with the 30 year mortgage because of the longer amortization.

Where Does My Earnest Money Go?

Where Does My Earnest Money Go? If I give my real estate agent a $5000 Earnest Money Deposit check… Where does that money go? A basic and very obvious question that most First-Time home Buyers ask once their purchase contract gets accepted. According to Wikipedia: Earnest Money – an earnest payment (sometimes called earnest money or simply earnest, or alternatively a good-faith deposit) is a deposit towards the purchase of real estate or publicly tendered government contract made by a buyer or registered contractor to demonstrate that he/she is serious (earnest) about wanting to complete the purchase. When a buyer makes an offer to buy residential real estate, he/she generally signs a contract and pays a sum acceptable to the seller by way of earnest money. The amount varies enormously, depending upon local custom and the state of the local market at the time of contract negotiations. An Earnest Money Deposit (EMD) is simply held by a third-party escrow company according to the terms of the executed purchase contract. For example, there may be a contingency period for appraisal, loan approval, property inspection or approval of HOA documents. In most cases, the Earnest Money held by the escrow company is credited towards the home buyer’s down payment and/or closing costs. *It’s important to keep in mind that the EMD may actually be cashed at the time escrow is opened, so make sure your funds are from the proper sources. The Process: Earnest Money is submitted to an escrow company with the accepted purchase contract At the close of escrow, the EMD is credited towards the down payment and / or closing costs If there are no closing costs or down payment, the EMD is refunded back to the buyer Who Doesn’t Get Your Earnest Money: Selling Real Estate Agent – A conflict of interest Sellers – Too risky Buying Agent – They shouldn’t have your money in their account

First-Time Home Buyer Credit Checklist

Getting a new mortgage for a First-Time Home Buyer can be a little overwhelming with all of the important details, guidelines and potential speed bumps. Since there are so many rules and steps to follow, here is a simple list of Do’s and Don’ts to keep in mind throughout the mortgage approval process: DO: Continue working at your current job Stay current on all your accounts Keep making your house or rent payments Keep your insurance payments current Continue to maintain your credit as usual Call us if you have any questions DON’T: Make any major purchases (Car, Boat, Jet Ski, Home Theater…) Apply for new credit Open new credit cards Transfer any balances from one credit or bank acct to another Pay off any charge-off accts or collections Take out furniture loans Close any credit cards Max out your credit cards Consolidate credit debt Basically, while you are in the process of getting a new mortgage, keep your financial status as stable as possible until the loan is funded and recorded. Any number of minor changes could easily raise a red flag or cause a negative impact on a credit score that may result in a denied loan. Most importantly, check with your loan officer on even the simplest questions to make sure your loan approval is successful.

Do I Need To Sell My Home Before I Can Qualify For A New Mortgage On Another Property?

Although every situation is unique, it is not uncommon for homebuyers to qualify for a mortgage on a new home while still living in their primary residence. Perhaps you are outgrowing your current house, or have been forced to relocate due to a job transfer? Regardless of the motivation for keeping one property while purchasing another, let’s address this question with the mortgage approval in mind: So, Do I Have To Sell? Yes. No. Maybe. It depends. Welcome to the wonderful world of mortgage lending. Only in this industry can one simple question elicit four answers…and all of them may be right. If you are in a financial position where you qualify to afford both your current residence and the proposed payment on your new house, then the simple answer is No! Qualifying based on your Debt-to-Income Ratio is one thing, but remember to budget for the additional expenses of maintaining multiple properties. Everything from mortgage payments, increased property taxes and hazard insurance to unexpected repairs should be factored into your final decision. What If I Rent My Current Property? This scenario presents the “maybe” and the “it depends” answers to the question. If you’re not quite qualified to carry both mortgages, you may have to rent the other property in order to offset the mortgage payment. In that scenario, the lender will typically only count 75% of the monthly rent you are proposing to receive. So if you are going to receive $1000 a month in rent and your current payment is $1500, the lender is going to factor in an additional $750 of monthly liabilities in your overall Debt-to-Income Ratios. Another detail that can present a huge hurdle is the reserve requirement and equity ratio most lenders have. In some cases, if you are going to rent out your current home, you will need to have at least 25% equity in order to offset your payment with the proposed rent you will receive. Without that hefty amount of equity, you will have to qualify to afford BOTH mortgage payments. You will also need some significant cash in the bank. Generally, lenders will require six months reserve on the old property, as well as six month reserves on the new property. For example, if you have a $1500 payment on your old house and are buying a home with a $2000 monthly payment, you will need over $21,000 in the bank. Keep in mind, this reserve requirement is incremental to your down payment on the new property. What If I Can’t Qualify Based On Both Mortgage Payments? This answer is pretty straightforward, and doesn’t require a financial calculator to figure out. If you are in this situation, then you will have to sell your current home before buying a new one. If you aren’t sure of the value of the home or how your local market is performing, give us a ring and we’ll happily refer you to a great real estate agent that is in tune with property values in your neighborhood. As you can tell, purchasing one home while living in another can be a very complicated transaction. Please contact us at anytime so we can review your specific situation and suggest the proper action plan.

What is a Mortgage?

Mortgage Payments You’re probably curious why we’ve created an entire section about mortgage payments. However, since a mortgage payment is one of the major side affects of purchasing real estate with a home loan financing program, we thought it would be important to highlight a couple topics and related articles about mortgage payments that may impact your monthly budget. Mortgage Payment Basics: Just in case your first mortgage payment comes due before you get your first payment coupon in the mail, there should actually be a temporary payment coupon included with your closing documents. Your mortgage payment is generally due at the beginning of the month, and most lenders start assessing late fees on the 15th. It is extremely important to remain under 30 days late on a mortgage payment, especially within the first 8-12 months of closing on a new loan. When you receive your first mortgage bill, there will be a few numbers that add up to your total payment: Principal – This is the portion that goes towards paying down your balance. An Amortization Schedule will break down the exact amount of each payment that is being applied to the principal and interest. Interest – The interest payment is essentially the amount you’re paying the bank over time to borrow the principal balance. Depending on which loan program, interest rate and closing cost scenario you chose, the amount of interest due every month may vary. Taxes - Real Estate Taxes can either be included (Impounded) in your monthly payment (PITI), or paid by the homeowner separately. Certain government loan programs or high Loan-to-Value (LTV) mortgages require that taxes and insurance be included with the total mortgage payment. Either way, it’s important to make sure you ask your loan officer and/or closing agent during the final loan docs signing to clearly explain what’s included in your monthly mortgage payment. Insurance – This is your hazard insurance (Fire), which protects your home and belongings. While there are many ways to save money on your property insurance, it’s important to know and trust your insurance agent so that you can be fully aware of what’s covered in your policy. Some homeowners shopping strictly on price may unknowingly leave valuable personal items without protection just to save an extra $15-$19 a month. Mortgage Insurance – This can come in a few different forms, depending on whether you have an FHA loan, VA, Conventional, Jumbo… Mortgage insurance is in addition to hazard insurance, and completely unrelated. A lender will require a borrower to pay mortgage insurance on a property with a Loan-to-Value greater than 80%. The main purpose of mortgage insurance is to protect from foreclosure losses if the borrower fails to meet the monthly payment obligations. FHA has mandatory Mortgage Insurance, but in a different form. VA loans have a separate Funding Fee to help protect their interests.

What is my Home Worth??

What Do Appraisers Look For When Determining A Property’s Value? Most people are surprised to learn what appraisers actually look at when determining the value of a real estate property. A common misconception homeowners generally have is that the value of their home is determined after the appraiser has completed their physical property inspection. However, the appraiser actually already has a good idea of the property’s value by the time they have scheduled an appointment to stop by the property. The good news is that you don’t have to worry so much about pushing back an appointment a few days just to “clean things up” in order to help influence the value of your property. While a clean house will certainly make it easier for the appraiser to notice improvements, the only time you should be concerned about “clutter” is if it is damaging to the dwelling. The Key Components Addressed In An Appraisal The Site: Location, view, topography, lot size, utilities, zoning, external factors, highest and best use, landscaping features… Design: Quality of construction, finish work, fixed appliances and any defining features Condition: Age, deterioration, renovations, upgrades, added features Health & Safety: Structural integrity, code compliance Size: Above grade and below grade improvements Neighborhood: Is the property conforming to the neighborhood? Functional Utility: Is the property functional as built – style and use? Parking: Garages, Carports, Shops, etc.. Other: Curb appeal, lot size, & conforming to the neighborhood are obvious to the appraiser when they drive down into the neighborhood pull up in front of your home. When entering your home, they are going to look at the overall design, condition, finish work, upgrades, any defining features, functional utility, square footage, number of rooms and health and safety items. Be sure to have all carbon monoxide and smoke detectors in working condition. Since the appraisal provides half the weight in any credit decision involving the security of real estate, the appraisal should be done by a qualified, licensed appraiser whom is familiar with your neighborhood, and the type of home you are buying, selling or refinancing. We hope you found this information helpful. For more information about our company please visit www.txpremiermortgage.com, or give us a call at 281-907-6401 and we would be happy to assist you!

Be an All Star Player- Hit a Home Run With Your Mortgage

Mortgage Rates Change All Day, Every Day. Mortgage bond prices-- similar to stock prices -- are random. They can't be predicted with any sort of certainty, and they change from minute-to-minute. Facts like this are big deal to people like you and me because mortgage bonds are the basis of everyday mortgage rates -- from conforming to FHA. Mortgage rates are in constant flux. As a real-life illustration, mortgage rates changed every 4 hours and change last month. It makes life tough for people looking to shop for the lowest mortgage rates possible. Mostly because it can take more than 4 hours to do your shopping (and do it right). Shopping lenders is always a good idea. You never know which bank will have the lowest rates, or lowest fees, or widest selection of programs. But, when it comes to physically lock your rate; to find the best possible mortgage rate that you can with the lowest set of closing costs, you're going to need more than just "good shopping skills". You're going to need good luck. Mortgage rates can change at any time, and often do. While you're shopping for a loan, for example, rates could be rising. And not just by an eighth-percent here and there. I'm talking big jumps. There have been a half-dozen days in the past year on which conforming mortgage rates rose 0.375. There have also been days when rates have dropped by as much. It reminds us of an important Mortgage Rate Axiom: You can't shop for good luck. • Some days, mortgage rates happen to rise • Some days, mortgage rates happen to fall • Some days, mortgage rates do nothing And then, there are the days when mortgage rates do all three. You're at the market's mercy and the market is merciless. Want Good Mortgage Rate Luck? Do Good Research. Since you can't shop for good luck in mortgages, you can at least shop for good information. Talk with multiple loan officers well before you have a need to lock-in, and gather as much data as possible -- about yourself, about your home, and the process, and about the mortgage market drivers. Then, after having these conversations, two things will happen. First, you'll get a very close approximation of your final closing costs and rates. This is important for comparison's sake. You need to know which lender is consistently in the ballgame, and which lender never is. Second, you'll get a feel for the loan officers to whom you're talking. Who's a professional, who's a hack, and who fails to return a phone call. Then, when it is time to lock-in, you won't have to screw around with the shopping process. You'll already know your "A List" of lenders and can choose the one that gives the best combination of rates and fees at that given moment. Just make sure, though, that when you shop for rates, you do it the right way. Let your lender pull your credit for pete's sake. It's not going to harm your score and your lenders need to know this stuff. If you're in the market for a mortgage, or know you'll need one soon, start your shopping here. Get a rate quote based on your parameters, and follow-up for more information. Oh, and do it with some other lenders, too. The trick to getting low mortgage rates is to do a fair amount of research, to pick a "good" lender, and to have a little luck. You can make it happen. You just have to start strong. Give us a call so we can help you! Find out more on our website here.

How Obtaining a Pre-Approval Helps You

Many buyers get frustrated when their Realtor asks if they have been pre-approved. They think, “all I want to do is look at houses, we can worry about the pre-approval later.” We understand your frustration, but let us help explain why the pre-approval process is so important. A preapproval is different from a prequalification. With a prequalification, the lender relies on information provided by the buyer to estimate how much the borrower could qualify for. With a preapproval, the lender verifies the borrower's information and documentation to determine exactly how much it would be willing to lend to that borrower. The documents to get preapproved are the same documents that you would need to get a mortgage. • Pay stubs. • Last 2 years' W-2s. • Last 2 federal returns. • Two months' worth of bank statements of all types of accounts. • Your credit report. A preapproval is not a loan commitment, but it helps speed up the underwriting and loan approval process. A Pre-approval Letter shows that you can buy a house. Unless you plan on buying a house for cash, you will need some sort of financing. If you cannot obtain the financing, say hasta luego to the idea of buying a home, for now. There is not much more that is frustrating (to buyers and Realtors alike) than to look at houses for several days only to find out that you cannot obtain financing to buy one. Therefore, we usually ask for a pre-approval so we can both have reassurance that you can buy a house. Second, a Pre-approval Letter helps define your search. It lets you know what you can spend, so it saves time and energy from searching for houses that you cannot afford. Think of the emotional drain of finding the house of your dreams and then the bank says that you cannot afford it. We would rather you not look at those houses that you cannot afford. If you can only afford a $100,000 house, we need to make sure you are only looking in that price range. If you look at too many houses outside of your price range, you will not enjoy the houses in your price range as much. A Ford Focus never looks as good after you drive a Lamborghini. Having the letter allows you to have more leverage in negotiations with the seller Having a pre-approval letter really makes your offer look good to the seller of the house. They are more willing to negotiate with someone who is pre-approved than someone who isn’t. Plus, if there are multiple offers on a house, yours will be ranked higher due to the fact that you are already pre-approved. It is less risky for the seller than looking at an offer from someone who isn’t. A Pre-approval letter is better than being pre-qualified. Many banks will give you an informal estimate of what you can afford, and this is known as pre-qualification. It is not a statement of fact, but rather an opinion. Make sure you get an official Pre-Approval letter. This is a statement of fact, and will hold a lot more weight than a pre-qualification letter. It takes more work to get pre-approved, but it will save you a lot of time in the long run. We hope this gives you a few reasons why it is so important to get pre-approved. If you have a hard time starting the pre-approval process, give us a call at 281-907-6401, and visit us at TxPremierMortgage.com, and we can help lead you in the right direction. Most of our pre-approvals can be given to you within the same day as long as all information is provided by you upfront.

Texas Premier Mortgage - Mortgage Blog - The Woodlands, Texas: What is the Job of a Mortgage Underwriter?

Texas Premier Mortgage - Mortgage Blog - The Woodlands, Texas: What is the Job of a Mortgage Underwriter?: Here’s some Q&A with regard to the home loan approval process: “What do underwriters do?” Once you actually apply for a home loan, your...

What is the Job of a Mortgage Underwriter?

Here’s some Q&A with regard to the home loan approval process: “What do underwriters do?” Once you actually apply for a home loan, your mortgage application will be organized by a loan processor and then sent along to a loan underwriter, who will determine if you qualify for a mortgage. The underwriter can be your best friend or your worst enemy, so it’s important to put your best foot forward. The expression, “you’ve only got one chance to make a first impression” comes to mind here. Trust me, you’ll want to get it right the first time to avoid going down the bureaucratic rabbit hole. Put simply, the underwriter’s job is to approve, suspend, or decline your mortgage application. If the loan is approved, you’ll receive a list of “conditions” which must be met before you receive your loan documents. So in essence, it’s really a conditional loan approval. If the loan is suspended, you’ll need to supply additional information or documentation to move it to approved status. If the loan is declined, you’ll more than likely need to apply elsewhere, with another bank or mortgage lender. Now you may be wondering how underwriters determine the outcome of your mortgage application? Well, there are the “three C’s of underwriting,” otherwise known as credit reputation, capacity, and collateral. Credit reputation has to do with your credit history, including past foreclosures, bankruptcies, judgments, and basically measures your willingness to pay your debts. If you’ve had previous mortgage delinquencies or even non-housing related delinquencies, these will need to be taken into account. Typically these items will be reflected in your three-digit credit score, which can actually eliminate you without any further underwriting necessary if you fall below a certain threshold. Your history supporting significant amounts of debt is also important; if the most you’ve ever financed has been a plasma TV, the underwriter may think twice about approving your six-figure loan application. Capacity deals with a borrower’s actual ability to repay a loan, using things like debt-to-income ratio, salary, cash reserves, loan program and more. This covers whether the loan is interest-only, an adjustable-rate mortgage or a fixed-rate mortgage, cash-out refinance or simply rate and term. The underwriter wants to know that you can repay the mortgage you’re applying for before granting approval. If you’ve had previous mortgage delinquencies or even non-housing related delinquencies, these will need to be taken into account. Typically these items will be reflected in your three-digit credit score, which can actually eliminate you without any further underwriting necessary if you fall below a certain threshold. Your history supporting significant amounts of debt is also important; if the most you’ve ever financed has been a plasma TV, the underwriter may think twice about approving your six-figure loan application. Capacity deals with a borrower’s actual ability to repay a loan, using things like debt-to-income ratio, salary, cash reserves, loan program and more. This covers whether the loan is interest-only, an adjustable-rate mortgage or a fixed-rate mortgage, cash-out refinance or simply rate and term. The underwriter wants to know that you can repay the mortgage you’re applying for before granting approval. Mortgage Underwriter FAQ. Do underwriters work for the bank/lender? Yes, underwriters are employees of banks, lenders, and mortgage bankers. They work on the operational side of things, making loan decisions after the sales team brings the loan in the door. Why do underwriters take so long? Hmm…I don’t know, because they’re approving a six-figure loan amount, or seven, to a complete stranger. The actual underwriting might not take that long, but the amount of available underwriters (humans) might be low. So you could just be in the queue. A clean loan file will get approved faster and with fewer conditions so get it right before the underwriter even sees it. Do underwriters verify employment? While employment is generally verified nowadays when you take out a mortgage, it might not be the underwriter verifying it. Instead, the loan processor may obtain the verification of employment (VOE). Many use the “The Work Number,” an independent third-party employment verification company now owned by credit bureau Equifax. Have more questions? Give us a call at 281-907-6401, or visit us online at TxPremierMortgage.com.

The Woodlands Mortgage Expert: What is Debt To Income- DTI?

Debt-to-Income (DTI) is a lending term which describes a person's monthly debt load as compared to their monthly gross income. Mortgage lenders use Debt-to-Income to determine whether a mortgage applicant can maintain payments a given property. DTI is used for all purchase mortgages and for most refinance transactions. It can be used to answer the question "How Much Home Can I Afford?" Debt-to-Income does not indicate the willingness of a person to make their monthly mortgage payment. It only measures a mortgage payment's economic burden on a household. Most mortgage guidelines enforce a maximum Debt-to-Income limit. How do lenders calculate monthly income? Mortgage lenders calculate income a little bit differently from how you may expect. There's more than just the "take-home" pay to consider, for example. Lenders perform special math for bonus income; give credit for certain itemized tax deductions; and apply specific guidelines to part-time work. The simplest income calculations are applied to W-2 employees who receive no bonus and make no itemized deductions. For W-2 employees, if you're paid twice monthly, your lender will take your last two pay stubs, add your gross income, and use this sum as your monthly household income. If you receive bonus income, your lender will look for a two-history and will average your annual bonus as a monthly figure to add to your mortgage application. For self-employed borrowers and applicants who own more than 25% of a business, calculating income is a bit more involved. To calculate income for a self-employed borrower, mortgage lenders will typically add the adjusted gross income as shown on the two most recent years' federal tax returns, then add certain claimed depreciation to that bottom-line figure. Next, the sum will be divided by 24 months to find your monthly household income. Income which is not shown on tax returns or not yet claimed cannot be used for mortgage qualification purposes. In addition, all mortgage applicants are eligible to use regular, ongoing disbursements for purposes of padding their mortgage income. Pension disbursements and annuities may be claimed so long as they will continue for at least another 36 months, as can social security and disability payments from the federal government. As always, our qualified mortgage loan officers are always a step ahead of you and ready to assist you at anytime. Give us a call 281-907-6401 or visit our website at TxPremierMortgage.com for more information.

10 Mortgage Mistakes You Should Avoid

Here is a list of the top 10 mortgage mistakes individuals should avoid if planning on financing a new home purchase or refinancing an existing mortgage. Anything on this list should be avoided at all costs to ensure your credit score is as high as possible and that you don’t run into any qualification problems when it comes time to get that sparkling new mortgage. Otherwise you could end up with a higher-than-necessary mortgage rate, or simply get declined! 1. While this may be a no-brainer, it still reigns supreme. Avoid bankruptcy and foreclosure. Either could keep you out of the mortgage game for several years for obvious reasons. Also avoid mortgage lates. Even if your credit score is up to snuff, late mortgage payments that show up on your credit report can disqualify you with many banks and lenders. Makes sense doesn’t it? 2. Not locking your mortgage rate. If you fail to (or forget to) lock the interest rate on your mortgage, it could go up. A lot. Yes, you have the choice to lock or float, but make sure you understand both options and keep an eye on interest rates before and during the home loan process. [See the latest mortgage rates from dozens of lenders, updated daily.] 3. Listing your property on the MLS and then attempting to refinance that same property within six months (or longer). Lenders don’t love the idea of giving you a loan on something you don’t actually want, or tried to get rid of just months before. [See more common refinance mistakes if you already own a home.] 4. Applying for a mortgage with charge offs and collections, especially medical collections, on your credit report (many consumers have these, often in error, and they can easily be removed via credit bureau disputes. They crush your FICO score!). Regularly review your credit report to ensure there are no surprises long before you begin the mortgage process. Put simply, a low credit score will lead to a much higher mortgage rate, and even disqualification if it drives your monthly mortgage payment high enough. Also steer clear of credit counseling. (Even if it doesn’t lower your credit score, many banks won’t lend to borrowers who have used these services in the recent past.) 5. Not figuring out how much you can afford well before beginning your property search. You should get pre-qualified or pre-approved before you even start looking at homes. Once you know how much home you can afford based on your salary and assets, you can properly assess the situation. Otherwise you could just be wasting your time and setting yourself up for disappointment. 6. Opening new credit cards or making excessive charges on existing credit lines before and during the loan application process. This can hurt your credit score and increase your debt load, which could lead to disqualification. See debt-to-income ratio for more on that. You can buy your new leather couch and big-screen TV once the loan is funded and closed. 7. Attempting to get a mortgage with less than two years consecutive employment in the same occupation or field (unless you’re a recent grad with proof of future income). You must prove to lenders that you will actually continue to make the money you’re currently making to obtain a mortgage. 8. Trying to get a mortgage without documented 12-month housing history or your own verifiable assets that cover at least two months of your proposed mortgage payment, including taxes and insurance. Yes, lenders want to know that you paid your rent on time previously and have enough in your bank account to cover future payments. Oh, and the money needs to be in your account, not under your mattress. 9. Not establishing your credit history. You generally need at least three credit tradelines (that show up on your credit report) with a minimum two-year history on each. Yes, credit is the root of all evil, but also a necessary one in the mortgage world, that is, unless you plan to pay for your expensive house with cash… 10. Not shopping around. If you don’t take the time to comparison shop, as you would any other product you buy, like a big-screen TV or a car, you’re doing yourself a major disservice. Put in the hours to ensure to find the right bank to work with and snag the best deal. Bonus tip: Don’t forget to compare different loan products, such as fixed-rate mortgages vs. ARMs, and conventional loans vs. FHA loans. Both have their pros and cons, and should be carefully considered before applying for a mortgage. There is no one-size-fits-all approach folks. For more information contact one of our senior loan officers who can help you through the mortgage loan process!