What Lenders Look for When You Want A Loan

In order to avoid the perception of bias (based on discrimination) most banks and lenders these days use  creditworthiness to determine if you qualify for a home loan.  Of course, that doesn't mean having a good credit score automatically gets you a loan.  It is, in fact, a big piece of the puzzle, but to get a totally clear approval you will need several other things in order as well.  Here they are: TOTAL DEBT CANNOT BE TOO EXCESSIVE When a loan officer runs your information to get you pre-approved, one of the first things they get from your credit report are your total debts and anything else you are obligated to pay each month.  They then factor this with your proposed monthly PITI payment (Principle, Interest, Taxes, Insurance) to get what is known as the "Debt-To-Income" ratio.  This ratio represents how much you will be paying each month compared to how much money you actually bring in.  Your total payments (including credit cards, student loans, car payments etc.) should not exceed more than thirty-six percent of your income. APPRAISAL When you get a loan, the note itself is secured by the actual property you buy.  This means that if you don't ...

Second Chance for USDA Rural Development Loans?

Considered to be one of the only remaining options for 100% home financing, the USDA Rural Development Loan has recently been targeted as a dying commodity.  In fact, just last month the USDA reported that the funding for their Guaranteed Loan Program would likely be exhausted by the end of April.  This was unfortunate news, considering that while they aren't necessarily for everyone in DFW, these loans provided many people on the outskirts of the Metroplex with an option for 0% down payment and no mortgage insurance. Fortunately, though, there may be new life being breathed into the program as we speak.  Just earlier this week, Shelley Moore Capito (R-W.Va) introduced a new bill that would keep the Rural Housing loan guarantee program afloat, at least for a little while.  Capito, who is the Ranking Republican Member of the House Financial Services Subcommittee on Housing and Community Opportunity, introduced the legislation (called H.R. 5003, The Rural Housing Improvement Act) to the House Financial Services Committee on Wednesday.  The bill is being introduced in an effort to ensure that responsible families in rural communities continue to have access to the credit market ...

USDA Rural Development Loans Offer 100% Financing For Surrounding Areas of DFW

Over the past several years, the Government and the Mortgage Industry as a whole has continuously tightened the rules and regulations when it comes to buying a home.  It has gotten to the point where even people with stellar credit and a solid borrowing history still need a hefty down payment before they can purchase a new house. Fortunately though, there is a new program available from the United States Department of Agriculture that offers 100% financing for people that live (or are looking to live) in rural areas. Why would they do this?  Is it too good to be true?  Well, long story short, the government offers the option of “zero money down” so that people who live in rural areas (who may have always been renters) can finally have access to affordable mortgages. Consequently, this type of loan is often the best scenario for people who live in the country and want to find a place they can call home.  Another amazing feature of this loan is that 100% of repairs that ...

All About Private Mortgage Insurance (PMI)

If you find yourself in the market for a new home, it is obvious that you will need some money available to use as a down payment when you get to closing. As far as the industry goes, there is an age old adage that says a new home buyer should have at least 20% in reserves to pay when they get their new home. But why 20%? Isn't that a tad high? Well, the reason for this is Private Mortgage Insurance, or PMI, and if it ends up that you are unable to make a down payment of at least 20% of the sale price, you'll be required to obtain private mortgage insurance from your lender. But what is PMI, and why are you paying for it? In the most basic sense, PMI protects the lender in the event that you default on your mortgage. Unfortunately though, it doesn't protect you from anything. How much you will pay in PMI charges will vary depending on the size of your loan, the size of your down payment, and even the lender you use. Generally, the charge is equal to about one-half of one percent.

Closing Costs Explained

When it comes to purchasing a house there is one thing that will shock a first-time home buyer more than anything, and that is the total cost associated with closing a loan. To be totally honest, closing costs can be quite earth-shaking to someone who isn't ready. If you are planning to buy a house anytime soon it is strongly recommended that you get your budget in order ahead of time.  If you would like us to review your situation and give you an estimate of what closing costs you may encounter, please feel free to contact us.  If not, feel free to read the rest of the article! Continued: Some of these closing costs are charged by the mortgage company itself, while others are payable to various parties. Here's a little breakdown on some of the fees you may be charged, and who's getting your money. One of the first fees you're going to run into is the Application Fee. This is charged when you fill out your initial application (the 1003) and is non-refundable. This covers the costs your lender pays in regard to paperwork, or maybe ...