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...