When it comes to getting a mortgage, the discussion almost always
boils down to credit score. While that’s a great indicator of someone’s
financial stability and habits, is it the only thing mortgage loan officers are
Thankfully for those with bad credit, there are a variety of
factors that go in to the decision of whether or not to give out a mortgage. If
you’re struggling to get a mortgage even though your credit is in good shape,
read on to find what the culprit might be.
Your debt-to-income ratio is one of the most important
factors your lender will check besides your credit score. Debt-to-income ratio
is the discrepancy between how much you owe in debt and how much income you generate.
Your ratio should work out to be 45% or less, so your annual
debt payments should not be more than 45% of your annual income. This figure
shows lenders how capable you are of making future mortgage payments, as well
as whether or not you have too many outstanding debts.
Cash in the Bank
Buying a home comes with many costs you need to pay for on top
of the mortgage, including closing costs, insurance premiums, taxes and home owners
association fees. Your lender will want to see that you have enough money to cover
these expenses for up to six months.
Past Homeownership History
If you’ve previously been a homeowner, the bank will want to
see if you paid that mortgage on time. Having a short sale of foreclosure may
also preclude you from being approved for a certain length of time.
Factors that may prevent you from getting approved also
include applying for a loan that’s more than 2.5 to 3 times your annual salary,
and having a shaky work history. Lenders like to see stability in an applicant,
so being flaky in any areas of your life may turn them off.
Tips for Getting Approved:
Ask someone to cosign
If your profile isn’t as substantial
as you’d like it to be, a cosigner can help strengthen your case for a loan. Be
aware that you’re asking someone to put their credit score on the line, so make
sure you’re able to make all the payments on time and in full. There’s nothing
more guaranteed to destroy a relationship than ruining someone else’s finances.
Be prepared to apply
to have all your necessary documents ready for your mortgage officer. The
faster you can respond to requests for more information, the faster your
request will be approved. An applicant will need their two most recent
paystubs, previous two years’ W-2’s and tax returns, two month’s bank and
investment statements, insurance bill, property tax bill and most recent
Save a 20% down payment
will a large down payment help you get better interest rates and more mortgage
product options, it will show lenders that you’re capable of saving. For people
who are self-employed or have other negative circumstances, a large down
payment can overcome worries from a nervous lender.
Pay down debt
debt-to-income ratio is one of the reasons you’re not being approved for a
mortgage, take time to become debt free before applying for a home loan. If you’ve
been saving for a down payment, use some of that money to pay down your debt.
By elimination some of your debt, you’ll also increase your cash flow and prove
to a potential lender that you have enough money coming in to pay a mortgage.
Look for less than you can afford
people try to buy a house with the maximum amount of money a lender will give
them. Instead, try to apply for a loan that’s less than what you might be
approved for. That way, you’ll have more leeway in your budget and will have a better
ability to repay the loan.
For more information, contact us today!
COVID-19 Mortgage Market Update from Laith Daik/0 Comments/in Uncategorized /by Jessica Lake
Like almost all industries, COVID-19 has had an adverse effect on the mortgage industry. The changes have been happening daily and at a rapid pace. The changes include new processes, procedures, and verification’s required. Some of the major changes have included the appraisal required in some circumstances has been changed to allow an exterior only inspection or a desk review. There are additional verification’s required to confirm the borrower is gainfully employed. The verification’s apply to both W2 wage earners and self-employed individuals. The federal stimulus has both helped and hurt the mortgage business. The Federal government is working closely with industry leaders to help resolve unintended consequences resulting from the stimulus. Many mortgage companies have tightened credit standards making it more difficult to qualify for a mortgage loan. Just this week, Chase Bank one of the largest originators and servicers of mortgage loans implemented an underwriting overlay requiring a minimum credit score of 700 and minimum down payment of 20%. We are hopeful that the market settles and we can start focusing exclusively on assisting our customers.
Our team at Texas Loan Star has been working tirelessly to adapt new processes and procedures with goal of continuing to serve our customers and business partners- realtors, bankers, builders, financial planners, and CPA’s to name a few. Thankfully, all loan products that Texas Loan Star provides are still available at this time. Conventional, FHA, VA, Jumbo, Portfolio, Renovation, Refinance, Cash-Out and Construction loans. Rates are still at an all-time low. Our average close time for purchases is 30 days and for refinances are averaging 45 days. Lending requirements are changing daily but we are keeping up and informing our borrowers so they are aware and have clear expectations. We are anticipating low rates for the foreseeable future which should help keep buyers in the market. If anyone has other questions, don’t hesitate to reach out. We are all in this together! We are #YourHomeTeam.
President of Texas Loan Star
Setting the Right Expectations for House Hunting/0 Comments/in Uncategorized /by Jessica Lake
Buying your next home is an exciting prospect. Sometimes we can get swept away with the features we want in our new homes. So, let’s bring things back to reality and think about what you NEED your new home to have. Check out the tips below to help keep you on track when you start house hunting.
Create a Budget
One important thing to do before you start is to find out how much you can spend on a house. Once you figure this budget out, you can use a mortgage calculator to better understand your mortgage monthly payments (see Texas Loan Star for more information).
Using some kind of budgeting program will help give you a clear picture of how your mortgage payment fits into your monthly expenses. You’ll want to make sure you have plenty of money left over at the end of the month for savings, improvements, and m other miscellaneous items.
Prioritize what you need, what you want and what you can live without
Sit down and think about what your new house absolutely must have. We’re not talking about a bathroom, kitchen or bedroom either. Those are fairly standard for the vast majority of homes. Think about whether you need to be closer to work to have a better work-life balance. Is the house close to a good school? We’re talking about essentials – things you cannot live without.
Next think about what you want your new home to have that your current home doesn’t have. Think of these as upgrades.
Cut out the what can you live without
The pie-in-the sky stuff, like your own personal basement bowling alley, would be nice; however, you can probably continue to live perfectly fine without it. Is it worth it to spend thousands of dollars more on those luxury items when you could use that money elsewhere?
Take your list and start house hunting
Make a plan with your real estate agent and start looking at homes online to see what homes are out there and compare them with all of the items on your list. This will help you see if you can get everything on your list within your budget. If you can’t find a home you can afford with everything you want, it’s time to re-evaluate.
Re-Evaluate your list
Look back at your list and see where you can cut. Remember, you can always change things like flooring, carpet, paint, cabinets and appliances.
An updated, ready-to-use kitchen, for example, would be great, but maybe you can use the money you save on a lower priced house to update the kitchen later. You might even save money by doing the work yourself.
Finding the right home might take a little time. Preparing ahead of time, knowing what you really want in a house and having the right expectations makes the process easier and less stressful. Good luck!
Call Texas Loan Star at 713-802-0606 for more information!
The Benefits of a VA Home Loan/0 Comments/in Blog /by Jessica Lake
Since its inception in 1944, the VA home loan has been used by more than 20 million Americans to get a mortgage. This program has some great advantages.
VA Home Loan Basics
Insured by the Department of Veterans Affairs (VA), VA home loans are available to our nation’s military vets, eligible active duty service members and qualified surviving spouses.
The program is very attractive for several reasons. To begin with, there’s a great deal of flexibility. You can get a VA-backed fixed-rate mortgage with a term of 15, 20, or 30 years.
VA loans are the only program that doesn’t require a down payment. This can save you money upfront. And whether you put down 1% or 20%, you won’t have to pay private mortgage insurance on your VA loan. This can save you thousands over the life of the loan.
Under the VA programs, you can refinance up to 120% of your home’s value. That could mean extra money in your pocket to put toward home improvements, a college education or whatever you choose. The VA also offers a streamline refinance program, which means there’s less hassle with documentation than on a comparable conventional loan.
How Do I Qualify?
Call us today for more information on how to get a VA home loan!
4 Tips to Help Sell Your Home Fast!/0 Comments/in Uncategorized /by Jessica Lake
Some for-sale homes sell quickly. Others languish on the market for weeks or even months. If you need to move in a hurry, you might wonder how to see your home fast. Here are four tips on how to sell your home fast:
The surest way to sell your home quickly is to set an asking price that’s low enough to make your home attractive to buyers, but not so low that the price looks like a deceptive and deliberate ploy. If your asking price is reasonable, you should get multiple bids, which usually will settle around your homes true market value. Price too high and buyers will stay away, leaving you with a stale listing, slow selling home and multiple price reductions.
Always use recent sale prices of comparable homes, called “comps” to set your asking price because buyers will use this data to make their offers. Buyers don’t care home much you paid to buy your home, how much you owe on your mortgage, how much your home was worth during the last housing boom, how much you’ve spent to maintain and improve your home, or how much you need to buy your next home.
Buyers want to imagine themselves moving in and living in your home as if it were theirs. If your home is full of your stuff, buyers don’t have the space, mentally or physically, to imagine where they’ll put their own furniture and belongings. Make that space for them by removing anything of yours that might be a distraction, and clean, clean, clean your home so buyers’ wont picture themselves scrubbing up your mess after the home becomes theirs
If you have a little money to spencer and a week or so to prepare your home, the best investments your can make are a fresh coat of paint, inside and out, and a professional stager who will arrange your furnishings and home accessories to show your home in a way that will appeal to as many buyers as possible. Stagers also can bring in neutral looking artwork, artificial plants, accent tables, linens, throw pillows and other items to make your home look nicer than other homes on the market. Other good investments are professional carpet cleaning, fresh grout for bathroom and kitchen tiles, and colorful flowers planted in front of your home.
Some homeowners are tempted to try to sell their home by themselves as a for-sale-by-owner, or FSBO. Few do so successfully. Work with your Realtor to come up with a marketing plan designed to sell your home fast. Explain that you have a short time frame and need quick results, and ask how soon you can expect to receive offers and close your sale. Your Realtor can help you price your home, make required disclosures to buyers, respond quickly to buyers’ agents, show your home buyers and negotiate a price, terms and closing date that fit your needs. Be honest about your home’s condition in online photos (or work to improve the look), so buyers won’t be disappointed when they see your home in person.
By using these four tips, your home has a better chance at selling fast!
I Have a Great Credit Score: So Why Can’t I Get a Mortgage?/0 Comments/in Uncategorized /by Jessica Lake
When it comes to getting a mortgage, the discussion almost always boils down to credit score. While that’s a great indicator of someone’s financial stability and habits, is it the only thing mortgage loan officers are worried about?
Thankfully for those with bad credit, there are a variety of factors that go in to the decision of whether or not to give out a mortgage. If you’re struggling to get a mortgage even though your credit is in good shape, read on to find what the culprit might be.
Your debt-to-income ratio is one of the most important factors your lender will check besides your credit score. Debt-to-income ratio is the discrepancy between how much you owe in debt and how much income you generate.
Your ratio should work out to be 45% or less, so your annual debt payments should not be more than 45% of your annual income. This figure shows lenders how capable you are of making future mortgage payments, as well as whether or not you have too many outstanding debts.
Cash in the Bank
Buying a home comes with many costs you need to pay for on top of the mortgage, including closing costs, insurance premiums, taxes and home owners association fees. Your lender will want to see that you have enough money to cover these expenses for up to six months.
Past Homeownership History
If you’ve previously been a homeowner, the bank will want to see if you paid that mortgage on time. Having a short sale of foreclosure may also preclude you from being approved for a certain length of time.
Factors that may prevent you from getting approved also include applying for a loan that’s more than 2.5 to 3 times your annual salary, and having a shaky work history. Lenders like to see stability in an applicant, so being flaky in any areas of your life may turn them off.
Tips for Getting Approved:
Ask someone to cosign
If your profile isn’t as substantial as you’d like it to be, a cosigner can help strengthen your case for a loan. Be aware that you’re asking someone to put their credit score on the line, so make sure you’re able to make all the payments on time and in full. There’s nothing more guaranteed to destroy a relationship than ruining someone else’s finances.
Be prepared to apply
It helps to have all your necessary documents ready for your mortgage officer. The faster you can respond to requests for more information, the faster your request will be approved. An applicant will need their two most recent paystubs, previous two years’ W-2’s and tax returns, two month’s bank and investment statements, insurance bill, property tax bill and most recent mortgage statement.
Save a 20% down payment
Not only will a large down payment help you get better interest rates and more mortgage product options, it will show lenders that you’re capable of saving. For people who are self-employed or have other negative circumstances, a large down payment can overcome worries from a nervous lender.
Pay down debt
If your debt-to-income ratio is one of the reasons you’re not being approved for a mortgage, take time to become debt free before applying for a home loan. If you’ve been saving for a down payment, use some of that money to pay down your debt. By elimination some of your debt, you’ll also increase your cash flow and prove to a potential lender that you have enough money coming in to pay a mortgage.
Look for less than you can afford
Many people try to buy a house with the maximum amount of money a lender will give them. Instead, try to apply for a loan that’s less than what you might be approved for. That way, you’ll have more leeway in your budget and will have a better ability to repay the loan.
For more information, contact us today!
Conditional Approval vs. Pre-Approval?/0 Comments/in Blog /by Jessica Lake
What you inquire about qualifying for a home loan, you’ll likely hear the term “conditionally approved” but might not be sure what that means or how it differs from a pre-approval. A conditionally approved loan is closer to closing than a pre-approved one but it comes with a few conditions, usually concerning documentation and income, that must be met before a client can be pre-approved to close.
A conditional approval occurs once the client has provided the necessary documentation to get their loan set up, such as supplying the following documentation:
All this information is required before the loan is completely approved.
Conditional Approval vs. Pre-Approval
People often confuse conditional approval and pre-approval when talking about mortgages. Loans are pre-approved by a lender who has reviewed your income and credit information. Your information must be verified and approved before a final decision can be made.
The pre-approval is based on what the client tells the banker and their credit report information. Conditional approval differs from pre-approval in that the loan may not have been reviewed by an underwriter when pre-approved. After your information is reviewed, you’ll receive a pre-approval letter stating your eligibility for a loan up to a specified amount.
Conditional approval comes after pre-approval and involves going a little deeper. An underwriter conducts a strict documentation review before your loan is conditionally approved. This documentation is reviewed by an underwriter, and provided the client’s information matches up with what was initially stated to the mortgage lender, they are conditionally approved. This means the loan is moving forward, but there are or may be additional conditions that will need to be met in order to finalize and close the loan. If the conditions aren’t met, the client might not be able to close on the loan.
Conditions on a Conditional Approval
There are a few common conditions attached to a conditional home loan approval. Additional documentation, such as pay stubs, paperwork for business income and tax documentation, is often required for final approval. This might also include written verification of employment from your employer or additional asset statements, depending on what’s needed for your loan.
Conditional approval can also require purchase agreement addendums. Title verification, an appraisal, an inspection and home owners insurance are usually needed to verify the market price of the home, the loan-to-value ratio and other details. This can also include confirmation that there are no unexpected liens or judgements on the home.
Denial of a Conditionally Approved Loan
Clients with a conditional approval for a home loan are at risk for denial if they fail to meet any of the conditions laid out by the lender.
Here are a few reasons why a client might be denied:
Call us today for more information or if you want to start the process to get pre-approved!
Millennial Home Buyer Must Haves/0 Comments/in Blog /by Jessica Lake
Many millennials are now entering the real estate market and have different needs than the generations before them. Here are some home buyer must-haves that may surprise you about this generation.
Location, Location, Location
Some things remain the same across all generations; the importance of location. Research has shown that millennials generally want to live close to work and things to do. This is a huge deciding factor for them when choosing a home.
You would think that urban areas would accommodate this request more than the suburbs, but this may not be 100% true. Those between the ages of 25-34 are actually less likely to live in urban areas. This illustrates that an urban lifestyle may not always be the perfect fit for this generation.
Automation is the way of the future. It allows for millennials to free up more time to do the things they want to do. When it comes to house hunting, they prefer almost everything to be automated.
Millennial buyers are interested in smart homes with the most advanced technology. This generation is the most digitally engaged, therefore, they want wireless thermostats, smart security systems, wireless speakers, Wi-Fi cooking ranges, smart locks and eco-friendly automated light and shade controls.
In the past, Gen-Xers were looking for fixer uppers. HGTV was leading the charge with encouraging home buyers to buy a house and fix it up. With their busy lifestyles most millennials are now choosing to go against that norm. They want something that is move-in ready and something that doesn’t require a lot of maintenance. They generally would rather spend their time with friends or traveling than work on their home.
Social Media Presence
Not surprisingly, millennials do a fair amount of their shopping online and house hunting is no different. They’re more likely to browse the web than visit homes they want to buy. They can see everything they need right from their comforts of the couch. If you want to sell your house to a millennial, it may help to have a dominant social media presence in order to get their attention. If you think just a few photos will fly, you’re mistaken. They need to see every room of the house.
Quality of Life
Millennials are slowly changing the housing market. Many desire some different criteria than past generations. Their priorities, to the way they shop, are different now more than ever. True value for them lies in the quality of life. They don’t want to give up their lifestyle to have their dream home.
If you’re interested in selling your property to this generation, get a realtor that can post your house on social media accounts, help you make your house move-in ready with what is on trend for millennials, and make sure it is in the ideal location for food and social activities.
How to Negotiate the Best Price on a Home (With Your Realtor)/0 Comments/in Blog /by Jessica Lake
It takes a keen understanding of the home buying process to be good at negotiating. Be sure you have it down before you make any offers on homes. Especially, with the market heating up for Summer. Or better yet, rely on your real estate agent to do the negotiating for you, but you should always be part of the process. Realtors are professionals in the housing market and have the best tools for you to use when looking for a new home. Here are some tools and information the best negotiators use:
CMAs – Comparable Market Analysis
Once you’ve found a home you want to buy, the first step in negotiation is to assess the fair value. CMAs show what similar properties in the area have sold for. Your real state agent will have access to CMAs and can share them with you.
Generally, CMAs list houses in a particular location that are currently on the market, have sales pending, have expired from the market, or have sold. It is the “sold” properties you need to look at because the list price and the offer aren’t necessarily the best indicators of what the house will sell for. There can be a big discrepancy between those two figures.
The CMA often gives you general information about the houses being compared: number of bedrooms and baths, square footage, the listing price and the sold price. Make sure you focus on houses similar to the one you’ve selected – both in description and location. The more recent the data, the better.
Once you have the CMA, drive by all of the properties listed in the sold column. Condition has a lot to do with the ultimate selling prices of a house. Does the home in which you’re interested shine above or fall below those sold? Make a realistic comparison of condition and discuss with your realtor, then adjust your thinking up or down according to what you see.
Does the house you’ve chosen have more or fewer amenities than comparable homes? Although amenities won’t affect the value as much as location or overall condition, they can be a factor. Be wary, though. An outdoor hot tub, for example, may have been a major motivating factor in your choice of a house, but it won’t add much to the value of the property when you resell.
A good negotiator gathers as much information as possible on the house and the sellers. The owner’s reason for selling is at the top of the list. Does he or she have to sell? Want to sell? Just throwing in on the market at a high price to see if it’ll move? If your agent representing you in the transaction is a buyer’s agent, they can try to secure this information for you. If you’re working with an agent representing the seller, they typically can’t disclose this information without the seller’s consent.
Great negotiators always prepare themselves. The most important factor is your frame of mind. Never let emotions override common sense during negotiations. Set a realistic limit and stick to it. If the price isn’t to your liking or is outside your budget, you must always be willing to walk away. In addition to your emotional frame of mind, your finances should be in order. An offer carries more weight if there are no dangling financial problems and if you’re pre-approved for a mortgage.
Make a realistic offer. Nothing offends a seller more than a low-ball offer on a house that is fairly priced. Often, negotiations will stop, rarely to be revived again.
Call us today to get pre-qualified so you are prepared to negotiate on a home!
6 Things to Know Before Applying for a Home Loan/0 Comments/in Blog /by Jessica Lake
There are some thing to keep in mind to ensure that your home buying process is simple. Here are six tips to help you feel confident when applying for a new home loan.
1.Pay All Your Bills on Time
When Applying for a home loan, it’s important you have good credit history, which includes paying all your bills on time, every time. A late payment may negatively affect your credit score and that can play a part in whether you’re approved financing and ultimately, the rate and term you may receive. Even after your home loan closes, it’s still important to pay your bills on time.
2. Be Wary of Employment Changes
A stable employment history is important when preparing to buy a new home. After all, you have to show that you have the stability and continuity of income to repay the loan.
Requirements may vary based on the type of employment you have, but for most salaried borrowers, there is no specific time on the job required. Generally, lenders will request to review at minimum a two-year work history.
3. Do You Own Research
With so many home loan options available, it may be difficult to determine the ones that’s right for you. While your lender will work with you to find the best option, it’s important that you learn the basics about fixed-rate and adjustable rate loans.
4. See What You Can Afford
After you’ve taken the time to do your own research, it’s time to see how much you can afford to spend on a home. For example, most budgets call for earmarking 28% of your post-tax income for a house payment, including your homeowner’s insurance and property tax.
5. A Few Things to Consider
What options are available in rates, points and fees (and yes, there’s more than one rate).
Hold off on opening any new accounts.
If you’re looking for a new home, there’s a good chance you’re going to be looking to furnish and decorate it as well. While that “5% discount on all furniture purchases” credit offer may look good at the moment, it’s best to put off opening any new credit accounts or lines of credit until after your loan has closed. Taking on more debt could impact the type of loan you receive or change the one already in process.
6. Hold Off on Closing Any Existing Accounts
Each item on your credit report contributes to your credit history or the record of your responsible repayment of debts. The longer your credit history, especially with a good payment record, the better. When applying for a new home loan, don’t close any existing accounts, even if they have a $0 balance.
Following these tips may help set you up for a success with a smooth home buying experience. Call us today with any questions you have! 713-802-0606
What to Expect After Listing Your Home for Sale?/0 Comments/in Blog /by Jessica Lake
Knowing what to expect when your house goes up for sale can be half the battle of getting through the transaction. Most people are a bit excited when they put their house on the market. Hopefully, they are moving up to a better home or off to new challenges in another city.
Here’s a look at what you can expect once you sign a listing agreement:
Out of the gate
The first thing your agent will likely do is place your home in the local Multiple Listing Service (MLS). This notifies all other agents in the area that your home is for sale. Soon, a for-sale sign will appear in the yard and a lockbox will be attached to your house, most likely on the front door. The lockbox allows local agents access to the house when you aren’t home. It may seem a bit unsettling, but it’s important to allow agents to show your home when you are away, especially in a slower market. If you don’t have a lockbox, many agents will put you at the bottom of their clients list of homes to see because it’s a headache to track down your agent, who must track you down to find out when you’ll be around, which may not fit into the buyer’s schedule.
Your agent will want to have a couple of open houses as soon as possible, which is why it’s not recommended to list your house until everything is ready for a good showing. This means you’ll likely be swamped with last-minute touch-ups and clean-ups to get the house ready.
It is best if you are not present during open houses because buyers want the freedom to peek into closets and make comments. That’s difficult for most people to do it you are present. When potential buyers come for a viewing, try to step outside while they tour your house.
Keeping your house in tip-top shape, especially if you have kids and pets, is one of the more difficult parts of selling your home. But remember, buyers will walk into your house and try to imagine themselves living there.
Most people don’t have the vision to look past toys scattered throughout the house, dirty dishes in the sink or pet food spilled on the floor. It doesn’t matter that they probably live the same way.