Once the loan officer has this information from you they will run your credit and and make an estimate of approximately home much money you can afford to borrow at the current interest rates.

After this is done you will get a “prequal letter” that will have this amount indicated on it.  Prequal letters are often given to realtors as a a form of good faith because they show that a borrower can in fact afford a house payment of a certain amount.

This way a realtor will know what price range of houses to show a borrower, and they also know that the borrower is working with a loan officer, and thus serious about finding a home.

Another benefit of getting pre-qualified is that it makes you much more desirable to someone who is selling their home. When there are multiple offers on a particular property, a seller will be much more inclined to go with a buyer who has already been pre-qualified, because by having already proved your creditworthiness you are a lesser risk than someone who has not!  It makes perfect sense!

So if you are interested in getting prequalified, or if you have any questions about finding a home in the DFW area don’t hesitate to CONTACT US and we will do everything we can to make it happen.

Believe me, all the different types of loans can be quite intimidating to someone uneducated on the subject.  In fact, most people in America don’t know hardly anything about their financing options.  But don’t worry. That’s to be expected.

BASIC LOAN TYPES

The type of mortgage that the majority of people today will get is know as the traditional fixed rate mortgage, or FRM. Over 70% of homeowners this year will get this type of financing for their new home. The main reason for this is that the FRM offers a much stronger sense of stability over the other types of financing. Whether the life of your loan spans 15 or 30 years, the interest rate of this loan is locked in at origination and will not change, no matter what happens to the economy or the mortgage market.

The other main type of loan is called an Adjustable Rate Mortgage, or ARM loan.  This type has an interest rate that is tied to an index, and can rise or fall depending on the current mortgage market.  In general, if the prevailing market increased during one adjustment period (which is specified when you close the loan) then your interest rate will rise, along with your payment.  Adversely, your payment amount will drop if the market drops.

The main reason some people decide to go with an ARM loan is that it will initially offer you a much lower interest rate, which means your monthly payment will be significantly cheaper.  That dark side is that your interest rate can sky rocket, leaving you with a mortgage payment that can be hard to pay every month.  Luckily, though, when you go to your closing, caps are usually set on how high your rate can go.  Be careful though. Make sure you know what you’re doing before you get setup in one of these loans.

OTHER LOAN TYPES

Payment Option ARMs. You may hear this type of mortgage referred to as a “flexible payment ARM.”  These loans have an interest rate that adjusts every month (like a regular ARM loan) but with no adjustment caps, meaning the sky is the limit.  The draw of these loans is that they allow homeowners to make a very low initial monthly payment, but unfortunately the amount will often jump up over time, and usually quite steeply.

Interest Only Mortgages. This type of loan allows borrowers to pay only the interest portion of their payment for a certain amount of time.  This is a good type of financing for the short term, because the principle of the loan is not paid down, and the outcome  is a lower monthly payment for the homeowner.  That being said, the interest only period doesn’t last forever, and once it expires you can expect your payment to increase due to the fact that you are repaying all of your principle over a shorter period of time.  Basically, the longer your setup your interest only period, the higher your monthly payment will be once it expires.

Balloon Mortgages. At first glance, these types of loans will very much resemble a traditional 30 year fixed rate loan.  The difference being that the term of the loan is almost always much shorter, usually around 5-7 years.  After this time limit is over, the remaining balance must be paid in one single lump sum.  In most cases a borrower will refinance once this point is met, or else pay the entire amount.

Biweekly Mortgages. CLICK HERE to read more about these types of loans.  They can take years off the life of your loan if done correctly.

As always, if you have any questions about the different types of loans, please don’t hesitate to CONTACT US and we will get back to you with an answer ASAP.

- Pate

Here at DFW Mortgage Guide we have numerous loan programs that can be custom-built to fit your situation, whatever it may be. We serve the Dallas Fort Worth area metroplex exclusively, so you know you are dealing with a company that knows the area.

We also work with over 20 lenders and have access to almost any loan program available.  These include:

PERMANENT FINANCING MORTGAGES
We offer a multitude of Mortgage programs for Dallas Fort Worth including conventional fixed rate mortgages, FHA Loans, VA, Jumbo, ARM’s, USDA, Interest Only, investment properties, condominiums, and many more!

HOME IMPROVEMENT MORTGAGES
Whether you are looking to purchase a home that needs improvements, or if you need to do some work on your existing house, we have options available for first and second lien home improvement mortgages.

HOME EQUITY MORTGAGES
We offer Cash-Out Mortgages for primary homes, second homes, and investment homes, as well as interest only HELOCs for primary residencies.

SECOND LIEN MORTGAGES
We also offer stand alone second mortgages and second lien mortgages closed concurring with first lien mortgages.

REFINANCE EXISTING MORTGAGES - If your existing mortgage payment is too high, it may be time for you to refinance.  Interest rates are at all time lows right now, and it is worth taking advantage of if you live in Dallas Fort Worth and want to lower your monthly bill!

FURTHERMORE, we strive every single day to be the absolute best mortgage company in Dallas Fort Worth.  We accomplish this by offering competitive costs, while also providing you a level of customer service that is unmatched.  Please call us at 817-527-3164 to prequalify for FREE and we will happily discuss your situation.  Even if you can’t get a home loan right away we will do everything we can to make sure you can get one in the future.

If you are ready to begin your home search, or if you have any questions about financing, don’t hesitate to CONTACT US and we will get back to you as soon as possible!