Answers From Mortgage Companies in Houston
HomeStart is in a unique position to help you obtain the best mortgage option due to the many different lending institutions with whom we are licensed. You will typically have more than one option for which you qualify. Your loan officer will advise you throughout the complicated loan process with ease and comfort. Most banks will typically only offer one option for which you qualify and many times require more rigorous conditions to be met for essentially the same type of loan.
HomeStart has relationships with many lending institutions allowing us to offer you a vast amount of mortgage options. Our experienced staff knows exactly how to match individuals to the programs that best suite them and will explain each option in depth. Our customer service is second to none.
We will typically need:
a. Authorization to pull credit;
b. Last two year’s taxes (all schedules);
c. Last two month’s banks statements;
d. Last month’s pay stubs;
e. SS # and copy of driver’s license;
f. Sales contract (if avail);
g. Signed RESPA disclosures;
h. A variety of NO or LOW documentation loans are available for self employed buyers.
Don’t be fooled. Remember the saying “If it sounds too good to be true it probably is”? What they are quoting you is just their fees but are failing to disclose all other closing costs which many times can be in the thousands of dollars such as title costs, insurance premiums, appraisal, survey, and if you are escrowing the required reserves just to name a few.
Many things affect your ability to qualify for various different mortgage options. For instance your employment stability, average cash balance in the bank, the amount of down payment, previous rent/mortgage history, amount of credit lines, income, debt levels, type of home you are planning on buying, whether it is for primary residence or investment and credit score.
Many individual items affect your credit score. Simply put, the more or less owed and the more or fewer late payments you have on your credit history the will lower or higher your credit score. Specifically your credit score is made up of the following categories:
a. 35% your track record on prior loans;
b. 30% current amount of debt;
c. 15% duration of your credit history;
d. 10% recent efforts to obtain credit;
e. 10% mix of debt.
A fixed rate mortgage’s interest rate is fixed for the life of the loan. For example, a 15 yr. fixed mortgage with a 5.75% rate will still have the same rate in 15yrs. An Adjustable Rate Mortgage’s (ARM) interest rate is fixed for a period and varies after the initial period. For example a 5yr ARM will have an interest rate fixed for the first 5yrs and then will vary based on the prevailing market rate.
This entirely depends on your goals and expectations of your future. If you want to keep your out-of-pocket costs down then you should probably consider a 95% or 100% loan. In addition, you might want to consider a non-escrow loan option. If you are trying to decide between a FIXED vs. an ARM mortgage the answer depends on your holding period and the savings you can attain during the introductory period compared to the security of having a higher but fixed interest rate. In addition, it also depends on whether you are buying a primary home vs. an investment home. Most investors are looking to maximize their cashflow, in which case they would opt for the ARM (which provides a lower interest rate) vs. a Fixed rate mortgage. Call your HomeStart loan officer for a free consultation today!
Interest rate is important but many times too much emphasis is put on this item. Other important things to consider are total closing costs, escrows, prepayment penalties, variable vs. fixed rates, required time to underwrite that particular mortgage at a specific rate, required insurance, Private mortgage insurance (PMI), allowable seller concessions, etc. Ask us for more information and items that pertain specially to your situation.
Escrow is an account that is held in trust for the benefit of the lender on your behalf. In other words, an account is set up to ensure that your taxes and insurance is paid timely and never falls into default. By setting up an escrow account you pay your taxes and insurance on a monthly basis along with your mortgage payment. The benefit is that you only make one payment. The disadvantage is that you must provide approximately 3months of reserves at closing.
In most cases the answer is yes. Typically if your loan amount is less than 80% of the purchase price you can elect not to escrow. In some cases with a 100% financing you can also elect to not escrow but you must qualify for 80/20 financing or a combo loan. We do recommend however, if this is the first home you are buying, that you elect to escrow your taxes and insurance to avoid falling behind on the payments and placing your home at risk.
PMI is Private mortgage insurance. PMI is an insurance required on some loans to insure the lender is protected in case of default on your mortgage. The charge depends on the loan amount, your credit and the loan-to-value. This insurance protects the lender not you. It’s required on almost all loans above an 80% loan-to-value. There are some ways to avoid this charge. Ask to see if you qualify.
Typical closing costs range between 3% to 6% of your total loan amount. Many things affect this total. Some fees such as attorney fees are fixed in nature while others such as the owner’s title policy’s vary with your loan amount. Ask your HomeStart loan officer for a Good Faith Estimate or “GFE” on your loan application to gain an idea into what could be your closing costs.
Total closing costs include (but not limited to): Loan origination, Real estate commissions, application fee , credit fee, underwriting fees, funding fees, 1yr of Hazard insurance policy (possibly flood insurance if in flood plain), Owner Title policy, Lender Title policy, Tax reserves, Pro-ration of taxes, Insurance reserves, Hazard Insurance reserves, Attorney’s fees, document preparation fee, Deed preparation, Escrow fee, Appraisal, Survey, recording fees, Pre-paid interest, Courier fees, HOA transfer fees.
NO. In the state of Texas it is customary that the SELLER pays for all Real estate commissions, owner’s Title policy, pro-ration of taxes, any unpaid HOA dues, ½ of the escrow fee and preparation fee for Deed. In some cases, the SELLER may also pay for the survey and appraisal and may even contribute to the BUYER’s closing costs by providing concessions which are over and above the fees previously listed.
Mortgage rates actually follow the bond market, not the Fed-funds rate. The interest rate on a 30-year fixed-rate mortgage tracks the yield on the 10-year Treasury note. Lenders typically set their base mortgage rate around two percentage points higher than the 10-year bond yield. Rates on adjustable-rate mortgages are tied to yields on two-, three- and five-year Treasury’s. These short-term loans are more sensitive to Fed rate movements, and those with the shortest maturities see the greatest impact when short-term rates rise and fall.