The Benefits of a VA Home Loan

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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?

  • You have to use a VA-approved lender.
  • You must meet military requirements for eligibility.
  • Your lender will need a copy of your DD-214 document from the military.
  • You’ll need to obtain a certificate of eligibility from the VA.
  • Your credit score must be 620 or higher to qualify for the program.
  • Call us today for more information on how to get a VA home loan!

Call us today for more information on how to get a VA home loan!

Conditional Approval vs. Pre-Approval?

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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:

  • Employment and income verification
  • Pay stubs
  • Tax returns
  • Bank statements
  • Debt obligations (credit cards/other loans)
  • Utility bills
  • Asset statements

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:

  • The underwriter is unable to verify the data provided by the client
  • The home the client is trying to purchase has an unexpected lien.
  • The client has a judgment on their record
  • The home inspection or property appraisal came in with unexpected issues
  • The client experienced a decrease in income
  • The client had negative entries on their credit report

Call us today for more information or if you want to start the process to get pre-approved!

Millennial Home Buyer Must Haves

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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.

Technology

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.

Low Maintenance

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)

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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.

Condition

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.

Extra Amenities

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.

Motivation

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.

Preparation

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.

Realism

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

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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?

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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.

Open house

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.

Neat freak
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.

What’s a Closing Disclosure and Why is it Important?

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Imagine that you’re nearing the closing of your home loan. And what a process it has been. Pre-approvals, house hunting, income verification, inspections, appraisals and so much more. For some, the amount of paperwork feels daunting. But if you’ve prepared a bit ahead of time, you’ll keep a cooler head while your eyes stay on the prize of the American Dream.

Closing a home loan can be a whirlwind activity, with a frenzy of dozens of documents to be signed and verified, and instructions of each one coming in from lenders and lawyers with the verbal rapidity of an auctioneer.

Each document is significant, based on its own role in the loan package. A prime example is the Closing Disclosure. There are numerous documents spread between real estate agents, lenders and appraisers but the Closing Disclosure is one of the big dogs you’ll encounter when it comes to closing day.

This is not to be confused with the Loan Estimate, a three-page document covering general information about the loan and property. While not part of closing documentation, the Loan Estimate breaks down you closing costs into a detailed explanation of origination charges (to cover lender expenses), third-party charges like taxes and homeowner’s insurance, and the estimated amount of cash needed at closing.

So, what exactly is the Closing Disclosure? It technically covers the same points as the Loan Estimate, but includes additional information regarding the escrow component of you loan. To understand the Closing Disclosure is to know what escrow is. Escrow is money that your mortgage lender puts into a separate account that pays your future property taxes and insurance costs. It’s common to have escrow with a mortgage, but isn’t always necessarily required.

The most important thing to be aware of is to receive and sign it three days before closing, which is required as part of the new Dodd-Frank guidelines. If it is not signed and returned to the lender within that time frame, the closing will be delayed.

And this is quite probably the most significant part of the Closing Disclosure. It’s one thing to understand the terms outlined in it-which should be pretty familiar because you’ve likely discussed this already with your real estate agent-but it’s just as important to understand the details as it is to promptly sign it. The last thing anyone wants or needs is a surprise delay arising at the closing.

Understanding the terms of the Closing Disclosure will help lessen your concerns before going to the closing.

Hopefully, a seamless home loan closing is a reality when you understand the Closing Disclosure (and what funds will be necessary to bring to the closing).

For more information, contact our office today!

How To Improve Your Financial Fitness

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Did you know financial fitness can save your life? Well, maybe not literally. But being well informed about money can reduce stress and help you and your family live a healthier and happier life. Here are three tips to get your started

Tip #1:

The U.S. has one of the lowest personal savings rates amount the world’s economically developed countries.

As of this year, people in the U.S. have saved less than 5% of their disposable income, on average, according to the U.S. Department of Economic Analysis. While that number has undoubtedly increased over the last few years because of hard lessons learned during hard economic times, Americans as a whole still need to save more.

Saving money is crucial to financial well-being. Savings can help you cope with financial emergency, make a major purchase, and even get ready for retirement.

Saving is easier if you start early and make a habit of it. One good practice is to sign up for an automatic savings plan that deducts money from your paycheck or checking account and sets it aside before you have a chance to spend it. Stash your savings in a savings account, certificate of deposit (CD), investment account or retirement account to meet your future needs.

Tip #2:

Only 40% of adults have a budget and keep close track of how much they spend on food, housing, entertainment and other categories, according to a survey conducted for the nonprofit National Foundation for Credit Counseling.

Approximately half of the adults surveyed said they had a good idea of how much they spend or tried to stay within certain limits. 7% had no idea and no set limits. A budget is an important toll to plan and track how much you’re spending and saving each month. To make a budget, start with your monthly income and then allocate specific amounts for each expense. Try to set aside at least 10% for savings, and no more than 30% on housing, 25% for living expenses and 15% for transportation.

Tip #3:

Nearly 70% of young adults have a credit card and 64% worry about their debts at least occasionally, according to a survey conducted for the National Endowment for Financial Education.

Paying credit card bills and other debts on time is essential because a history of on-time payments strengthens your credit score, which measures your overall creditworthiness. It’s much better to build you credit record slowly and patiently than to take on more credit cards than you can handle or spend more than you can repay.

Strive to learn more about savings, budgeting and using credit responsibly, especially credit cards. Learn to improve your financial literacy, which will, in turn, help you to achieve your goals, both financially and personally.

5 Money-Saving Tips for Your Home

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  1. Check Your Plugs – Here’s something you might not know: Plugged in toasters, coffeemakers, TVs and other electronic devices in your home actually use a small amount of electricity even when they’re not in use. By unplugging them when you’re not using these devices, you can save electricity and lower your utility bills.
  1. Go with the Right Light – Compact fluorescent light (CFL) bulbs are an easy way to make your home more environmentally (and economically) friendly. Although they’re a bit pricier up front, CFL bulbs last a lot longer than traditional bulbs and can save you about $30 each in energy over their lifetime
  1. Not-So-Hot Can Save a Lot – Want to see a dramatic difference in your energy bills? All you have to do it lower the water temperature on your hot water heater to 120 degrees from the standard 140. You won’t feel the difference when you wash your hands, but you’ll appreciate the difference it’ll make in lowering your budget.
  1. How Low is Your Flow? – By switching to low-flow showerheads, you can not only reduce the amount of water your family uses every day, but also the energy needed to heat it. On average, you may be able to see a savings of up to $75 per year on water, and up to $50 per year on energy bills by going low-flow.
  1. Care About Your Air – Just before summer is the perfect time to clean and replace the filters on your air conditioning system. A clogged air conditioning filter can increase your cooling costs by 10% or more. Also, consider installing a programmable thermostat. It will increase the efficiency of your air conditioner.

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How to Avoid Buying More Home Than You Can Afford

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You want to buy a new home. Now is a great time, as rates are still low compared to other points in history. It also gives you a spot in this world that’s yours to do whatever you want with. Nevertheless, in getting ready, there’s one really big question you want to make sure you answer before moving forward: Just how much house can you really afford?

We’ll go over a couple of different ways to calculate that and how to avoid getting yourself in over your head. If you know how much you can realistically spend, you’ll be able to buy with confidence.

Get Pre-Approved

Before you take a look at what’s on the market in your area, it’s helpful to get a pre-approval letter from Texas Loan Star for your mortgage financing. This accomplishes two goals:

  • You’ll get a real dollar figure that can serve as a solid basis for determining just how much you can afford. Your pre-approval letter represents the maximum amount that the lender can approve you for. It shows real estate agents your offer merits serious consideration because you’ve already taken concrete steps to secure financing from us.
  • When you get pre-approved, we will pull your credit in order to determine the amount of your monthly debt payments. This is then put up against income documentation to get your monthly debt-to-income (DTI) ratio – a measure of how much of your monthly income goes toward paying off bills, including housing, car payments, student and personal loans, as well as credit cards. The maximum DTI depends on the type of loan you’re getting, but this is important because it also determines how high of a house you can afford to have and by extension, the cost of the house you can afford.

Don’t Strain Your Budget

A pre-approval will tell you exactly how much you can afford to spend for any given loan. Still, you may not want to push to the upper limits of that approval.

Leave Room for Emergencies

You never know when a sudden illness or an unexpected job loss could throw your budget into temporary disarray. You’ll want to make sure you leave some room in your budget every month to save for your rainy-day fund.

How much should you make sure you’re saving every month? One strategy is to figure out the cost of everything you absolutely need: food and water, housing, medicine, electricity, etc. After that, take a look at anywhere you might be able to cut back. For example, you can probably get by without some of your subscriptions as well as not subscribing to every sports package on cable TV.

Reserves

We understand life does not always go perfectly. Stuff happens. That’s why one of the lending checks is to make sure your budget isn’t stretched so thin that a temporary life event puts the affordability of your home in jeopardy. For that reason, you have to have reserves in order to qualify for most home loans.

When we measure reserves, we take a look at the assets you have in the bank and determine how long you could continue to make your full mortgage payment in the event of a job loss or other source of financial stress.

Call us today to see what you can be pre-approved for! 713-802-0606 – texasloanstar.com