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Preferred Properties of Texas

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Loan Estimate

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After applying for a mortgage, you will receive a loan estimate. Lenders must give you a loan estimate within three days of receiving your application.

The loan estimate provides details about the loan that you are requesting. This form was created in 2015.

The information you get with a loan estimate may include the following: Monthly payments, estimated interest rates and total closing costs.

Information about insurance and taxes will be provided. You can also find out how interest rates and payments could change at any given time. You will also be informed about the special features of your loan through this form. It will inform you if your loan has a prepayment penalty. If applicable, the loan estimate will also include negative amortization. Even if your payments are on time, negative amortization can increase your mortgage loan balance.

The description of your loan product will include the negative amortization option.

As the title suggests, this document contains preliminary information that is not final. Although it is an estimate, it can help determine the loan you should apply for and make a commitment to.

Buyers will be provided with a loan estimate that includes prepaid interest, third-party fees and closing costs. The buyer will also receive a detailed estimate payment to get a full picture of the transaction’s costs. It is easy to compare and see the costs of different lenders as all will use the same document.

Lenders cannot hide fees with loan estimates, which can also be a useful comparison tool.

Lenders are required to give you a loan estimate within three business days after you submit your mortgage application. Before they can provide you with a loan estimate, lenders will need some information, such as your legal name, social security number and proof of income. They also require proof of desired property address, price, and loan amount.

You’ll find the following information in the first page and section of a loan estimate:

  • * The term of your loan is usually 30 years. However, other terms may be possible.
    * Product refers to the type of mortgage that you are applying for such as a fixed-rate mortgage or an adjustable-rate mortgage.
    * What loan type is it? For example, is it a conventional or VA loan? It could be an FHA loan or VA loan.
    * A rate lock is when your lender locks down the interest rate on your mortgage and the expiration date.

Information is provided in the second section.

  • * How much you can borrow and how it can be increased
    * The interest rate is a percentage and can be increased.
    * Monthly principal and interest is the monthly mortgage payment, excluding homeowners’ insurance and property taxes.
    * A prepayment penalty is a fee you may have to pay if your loan was not repaid by the due date or you made an additional payment.
    * If there is a balloon payment. This is a lump sum that you must pay at the end your loan term

Information is included in the third and fourth sections.

  • * Payment calculation: Breaking down your monthly mortgage payment, principal and interest, private Mortgage Insurance Premiums, if applicable, as well as escrow amounts
    * Monthly estimated payment
    * Estimated taxes and insurance.
    * Mortgage closing costs estimates
    * Cash to close is the estimated cash amount, which includes closing costs and any other charges you may have upfront

The second page of a loan estimation includes three major elements: loan costs, other charges, and cash to close.

The second page should focus on the origination fees and any fees that you will be charged for items you cannot shop for. These charges vary from one lender to the next, so it is important to compare them. Other charges are not subject to much variation between lenders. You can search for the services needed to close a mortgage. This includes how much they cost. You can’t shop services such as an appraisal or credit check.

The name of the loan officer or lender will be included on page three. This information is useful for comparing loan estimates. The first will show you how much of your loan principal your loan will pay off over the first five year. It’ll also show your annual percentage rate (APR), and total interest percentage.

It’s a great time to review your loan estimate and ask any questions that you may have.

 

Original Blog: https://realtytimes.com/archives/item/1045883-what-is-a-loan-estimate?rtmpage=

Signs You’re About to Make an Offer on the Wrong House

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Buyers today’s housing market can be difficult. Real estate inventory is very limited and home prices are still high. This means that buyers have to make compromises in order to buy a home of their choice.

Flexibleness is one thing, but it’s another. This could mean that you accept a smaller home than you expected or that you have to do some renovations.

There is no such thing as being too compromise when purchasing a home. These signs may indicate that you might not be able to offer on the property you are considering.

If you have a $350,000 home-buying budget, but find the perfect property for $360,000, then it is possible to get a great deal. You might argue that it is worth paying more for a home in such a situation.

If your initial budget is $350,000 you should not be willing to increase it to $400,000 or $425,000. This could lead to financial stress.

Your monthly housing costs should not exceed 30% of what you earn. This includes your mortgage payment and property taxes. If you find that you are spending more than your initial home-buying budget, it is best to hold off on the house you are considering and wait for a better deal.

It is common to purchase a home that needs work. There’s a big difference between making minor repairs and cosmetic changes to your home and having to completely gut it, replace major appliances, and upgrading all its electrical wiring. You might end up spending more money and doing more work if you consider the former.

You can renovate a kitchen that you have bought if it is outdated. You might also be able to expand a bathroom if your home has only one bathroom.

No amount of renovations can change the fact that you bought a home in a place you don’t like. If you value being close to a park, or having a walkable neighborhood, you might not be willing to compromise. If you have children and would like to live near a park, don’t offer to buy a house that is more than three miles from the closest one.

Flexibility is key in today’s tight housing market. However, don’t let this flexibility get too far. You might regret buying a home.

The mortgage rates are at their highest levels in many years and they will continue to rise. To get the best rate and minimize fees, it is important to compare rates with different lenders. A small change in your rate can make a huge difference in your monthly payments.

 

Original Blog: https://www.fool.com/the-ascent/mortgages/articles/3-signs-youre-about-to-make-an-offer-on-the-wrong-house/

The Process On Buying A Foreclosure

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Analysts predict that the number of foreclosures may rise. The housing market is healthy, but coronavirus shutdowns have had a significant impact on the economy. Unemployment remains high.

It’s essential to prepare for foreclosure if you are waiting to find a deal. Although many of the elements involved in buying a foreclosure home are the same as buying any other home you can simplify the process by being clear about what to expect.

There are two types of foreclosed houses. There are two types of foreclosed homes: bank-owned and real-estate-owned. In both cases, the lender is the owner of the properties. The main difference is in the stage of foreclosure.

The homeowner of a bank-owned home is in foreclosure. Their lender has taken steps to get them out. Bank-owned properties are often foreclosed and put up for auction. If the home does not sell at auction it is still bank-owned, but it is an REO. REO properties are those that have been at auction but are still not sold. They may be offered to the lender through their REO agents.

Foreclosures are often cheaper than comparable properties in the same area, and can sometimes be significantly more expensive. Many foreclosures sell for a fraction of their market value. A foreclosed house may offer other benefits, including lower interest rates and reduced down payments. You could also avoid closing costs and appraisal fees.

You may be able to find a deal for a distressed property that is not bank-owned.

There is, for example, the pre-foreclosure stage. The lender has informed the borrower that they are in default. However, if the homeowner is able to sell the property, it might be possible to avoid foreclosure proceedings. A lender will take less for a property than the mortgage if it is short-sold. A lender can approve a short sale even if you are in default.

You can also own properties that are government-owned. The federal government is the owner of a property that was purchased with a government-backed mortgage.

If you want to buy a foreclosure, the following are the steps to expect:

  1. Mortgage Preapproval
  2. Find an Agent Experienced in Foreclosures
  3. Make a Competitive Offer
  4. Get an Inspection

A foreclosure home purchase comes with many risks. You may not be aware of hidden costs or problems that exist in a foreclosed home. It can also be slow.

When buying a foreclosure, there is a lot to do. These properties are often difficult to sell because banks tend to take a long time to respond. If they have a lot of foreclosures backlog, they may take months to respond.

This doesn’t mean that buying a foreclosure is a bad idea. These are just some of the hurdles you should be aware of.

 

Original Blog: https://realtytimes.com/archives/item/1039976-what-s-the-process-to-buy-a-foreclosure?rtmpage=

USDA Loans Aren’t Just For Farmers

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You wouldn’t be alone in thinking USDA loans were only for rural farmers.

The program is accessible through the United States Department of Agricultural. The Rural Development (RD), which was initially called the Farmer’s Home Administration, administers the program.

Russell Hood, an originator of the Meriden-based company Planet Home Lending, stated that about half of those looking for a mortgage through Planet Home Lending don’t know anything about USDA loans.

It is worth taking the time to find out if you are eligible. You might be surprised at who qualifies. USDA loans can offer many advantages over other programs if you’re eligible.

Most people are aware that USDA mortgages are intended for rural residents. Many people think they won’t be eligible because they don’t consider themselves rural residents.

The definition of “rural” can change between different government programs. For USDA loans, however, “rural” can be a surprisingly low standard. It refers to any town, village or city with fewer then 20,000 inhabitants that isn’t located in a Metropolitan Statistical Area. An MSA is defined by the Census Bureau as a group of counties that surround a city with more than 50,000 inhabitants.

There is also some flexibility for fast-growing areas to remain eligible for “rural” status for a period beyond these points.

This means that 97% of America’s land mass is considered “rural” to qualify for a USDA loan. According to a report, 34% of Americans live in an area eligible. Even suburbs outside of major cities like the western part of Olympia, Washington’s capital, and parts Long Island, New York, are eligible.

USDA loans can also be very useful in helping people who otherwise wouldn’t be able to purchase a home. To be eligible for a USDA loan you must be not eligible for a conventional PMI free mortgage. You’d need to pay a minimum of 20% down payment in order to achieve this, which many people don’t find realistic.

One of the greatest benefits of USDA loans is the fact that you don’t have to make any down payments.

If you are eligible, one final reason to consider USDA loans is that they don’t have as much impact on your finances than other government-sponsored mortgage programs. It’s often a better option if the income and property meet the USDA standards.

The upfront funding fee for most government-backed mortgages is usually 1%. This is lower than the 1.4% to 3.6% charge for VA loans, and 1.75% for FHA loan. FHA loans have an additional fee of 0.45% to 1.5%.

USDA loans are often offered at lower rates. This is partly due to the way RD works together with lenders to provide USDA Guaranteed loans. This is a bad term as it does not guarantee you will get a loan. The USDA “guarantees” up to 90% loan amount. In other words, if you default on your loan, the USDA will reimburse your lender up to 90%.

Although this guarantee does not directly benefit you, it can make things more affordable for you. Lenders are almost guaranteed to recoup some costs in one way or another. This means they can pass lower rates on to you. That could result in significantly lower monthly payment with USDA loans.

USDA Direct loans are cheaper than conventional mortgages. The fixed rates for low-income and very low-income buyers were set at 3.25% as of October 2022. This is compared to 6.65% for a conventional loan. The average USDA loan cost $178,400 in 2021. This is $380 less than what you would pay if you borrowed conventionally.

 

Original Blog: https://finance.yahoo.com/news/zero-down-usda-mortgages-arent-100000653.html?guccounter=1&guce_referrer=aHR0cHM6Ly93cmVuZXdzLmNvbS8&guce_referrer_sig=AQAAAEMfd_s6cf9cnjRg0x12RmnucbOROcR906XA3ztVq5J9aer0l4bSUkxUFB1PFtF6tNXBmMtHZDwWjWCjGfjlYJZKBRyn1jXmUAqGA9qW95XW9lRqq1wR2LFGKnvTYJ2r3MZWVV0zD9OAkyxJbok30FkWB5tB8zeonGDjhM1ifUgf

 

How Lenders View and Treat Financial Gifts

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You might consider asking your parents for some help in buying your first home. Lucky you! The biggest hurdle for most homebuyers is securing the funds to pay the down payment and cover closing costs. However, a little financial help can go a long ways in obtaining a financial boost. It is important to understand how lenders treat financial gifts before you apply for a loan. What’s important?

Lenders will need to verify that the financial gift is legitimate. The lender will match what appears on your paycheck slips with deposits verification from your bank statements if you submit your bank statements. Deposits should appear on the dates you receive your pay, i.e. if you are paid on the 15th and 1st. If you receive a financial gift, however, the money will appear in your account. Lenders will need to know the source of this irregular deposit.

Lenders want you to be sure that the money in your bank accounts is not from a loan. You will have to repay the loan in either monthly installments or one lump sum. This can impact your ability to repay your mortgage, and at the minimum, increase your debt-to-income ratios.

Family members, qualified non-profits, and life partners are all eligible sources for gift funds. No matter what source you may be, you will need to submit a letter from the donor acknowledging that the funds were a financial gift. You are not expected or required to repay them. You may decide to repay the donor in full or in part if you so choose.

You will need to explain where the funds came from when you receive the gift. Lenders have the right of verifying that the donor is able to pay the gift. They can also expect to be paid back. The donor’s source of gift funds will be noted in the gift letter. Simple ‘from our bank’ will suffice.

If you are hoping to get financial assistance from qualified sources, it is important to know that it is not as easy as saying “it came from my bank account.” The funds will be used for financing the purchase of your new house. You’ll need proof that the funds are yours and not to be repaid.

 

Original blog: https://realtytimes.com/archives/item/1045762-understanding-financial-gifts?rtmpage=

The Most Volatile Mortgage Rates in More Than Three Decades are Causing Struggle with Homebuyers

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A typical house hunter who began looking in July and closed on their home in September saw their potential mortgage rates fluctuate by approximately half a percentage point every four week, according to a new report of Redfin ( Redfin.com), a technology-powered realty brokerage. This is the most volatile period in three months since 1987 when mortgage rates surged after soaring to an all-time high of almost 19% earlier in the decade. The Fed was working to curb severe inflation.

This could be a good deal for a house hunter who is looking to purchase a home worth $500,000:

  • They expected their monthly payment of $3,051 when they began looking in July. This amounts to $1.098million over 30 years, with a 20% downpayment and the 5.7% mortgage interest rate. 435,777 of that total payment is interest.
  • They expected to pay $2,874 per month when they bought their dream home in August. This amounts to $1.035million over 30 years, with a 20% downpayment and a 4.99% mortgage rate. Interest is the largest component of that $372,143 total payment.
  • Their final monthly payment was $3,202 after they had locked in a mortgage rate in September. This amounts to $1.153million over 30 years, with a 20% downpayment and the current 6.29% mortgage interest rate. 490,382 of that total payment is interest.
  • The buyer’s expected total payment fell by $64,000 (5.8%), but then rose by $118,000 (11.4%) between July and August.

Taylor Marr, Redfin’s Deputy Chief Economist, stated that the challenges facing homebuyers today go beyond the declining affordability due to high mortgage rates and high home prices. It is extremely difficult to plan ahead due to the whiplash in mortgage rates that occurs between when homebuyers decide on their budget and when they make an offering.

The Federal Reserve has been increasing interest rates to reduce sky-high inflation, which is why mortgage rates are fluctuating. Last week, the Fed increased interest rates by three quarters of an percentage point to a range between 3% and 3.25%. This was its third major hike in a row. They also predicted that they would reach 4.4% by year’s end. Freddie Mac’s weekly data shows mortgage rates at 6.29%, the highest since 2008. However, a separate daily gauge shows them at 7.08%.

As the Fed tries to reduce inflation, volatility in mortgage rates is likely to continue for the near future. However, mortgage rates should fall within the next 12-18 months if inflation eases, according to Justin Dimler, Redfin’s mortgage company Bay Equity.

Dimler, who is a regional sales manager at Bay Equity Seattle, said that “the good news for those people who can afford to purchase a home” and could refinance to a lower interest rate within a year or so. I advise house hunters who were approved for a loan a few months ago to have their mortgage advisor requalify them. The change in mortgage rates could mean that they are no longer eligible to borrow the same amount.

Refinancing is a possibility for homeowners in the near future, but buyers should be aware of the potential costs.

 

Original Blog:  https://realtytimes.com/real-industry-news-articles/item/1045729-homebuyers-are-grappling-with-the-most-volatile-mortgage-rates-in-over-three-decades?rtmpage=

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