Mortgage Loans Available in Texas | Loans For All Types of Borrowers

The other name of mortgage loan is a “mortgage”. This is a very common term for people who are either involved in real estate business or working in a bank. The mortgage is used by the clients of real property to raise funds in order to buy real estate by the present owners of the property for raising funds for any of the purposes while putting a lien on the land or home that is being mortgaged. This loan is held on the assets of the borrower. So, if you are shopping for a home or real estate property, then there are chances that you might be looking for home loans as well. Nowadays, a one mortgage loan does not meet all the requirements of the clients. This is because every element of the life of the purchaser affects the type of loan they will need. For example, where they live, how long they are planning to stay put, their income, etc. all the factors varies from person to person and for this reason, the type of loan also differs. There are five most common types of mortgage loans available in the market.mortgage loans in texas

  1. Conventional-conforming loan: The conforming loan is one of the most common types of mortgage loans that conform to the guidelines offered by the GSE. The most popular aspect of this is the size of the loan, which is $417,000 for almost all the single family residence. The other guidelines generally deal with the size of the down payment, the loan-to-value, the debt-to-income ratio, the middle FICO score as well as the credit history, etc. The conforming loans are neither guaranteed nor insured by the federal government in any way.
  2. FHA: The FHA is an acronym for the Federal Housing Administration. This FHA mortgage program is a type of insurance program that is managed wholly by the Department of Housing and Urban Development, commonly known as HUD; this is a department of the federal government. These loans are available to all customers, not just the new ones or first time home buyers. The government insures the loan against all the losses that can happen from the borrower’s default. One of the best advantages of this loan is the down payment requirement. A borrower is only required to make a down payment of no more than 3.5% of the purchase price. But, the disadvantage of this loan program is, you will need to pay for the mortgage insurance for the life of the loan. The only way to cancel the Mortgage Insurance Premium or MIP is to either pay off the entire loan or refinance the existing FHA loan to a conventional-conforming loan.

This type of loan is appropriate for the home buyers with a small saving for the down payment. These loans come with a lot of caveats. Firstly, most of the FHA home loans are limited to certain loan amounts as dictated by each respective county.

  1. VA: One of the most popular mortgage loan programs is a VA loan. These are a bit special from the other two available in the market. The US Department of Veterans Affairs or in short, the VA, provides a home loan program, especially for the members and families of the people in military service. This is the reason it is different than the other loans available. This signifies that the VA will guarantee the loan for any loss that may be caused by the default of the borrowers. The main benefit of this loan program is that loan borrower can get 100% financing to buy a home, which is one of the two loan programs that offers a true zero (0) down payment.

This is reserved for people who have served in the military of the United States of America and their eligible spouses.  The VA loan program is an excellent alternative of the traditional mortgages available for those who served. If you qualify for this loan, you can get a beautiful house with no down payment or requirement of mortgage insurance. But, you should also keep this in mind that, the VA has very strict guidelines on the collateral of the home that you buy. It must be for a primary residence and the property must meet the minimum requirements of safety, soundness and security.

  1. USDA: To help the families in the rural area, the US Department of Agriculture designed the USDA home loan program. There are two (2) types of programs under this: (a) Direct and, (b) Guaranteed. Both offer 100% financing, so, no down payment is required for both loan programs. This loan program is handled by the Rural Housing Service or in short RHS. This loan is mainly provided to those who wants to buy a house in a designated rural area and have very low or modest income, but not able to get enough housing through the traditional financing.
  2. Non-conforming Jumbo loans: If you’re looking to buy a property with a high value and can manage a larger monthly mortgage payment, then you should consider a non-conforming jumbo loan. Jumbo loans are for mortgage loans that exceed the loan limits set forth by the GSE’s, or any loan that exceeds $417,000 is considered a Jumbo loan. Special rules apply for this type of loan. Generally, a borrower must have impeccable credit, a good down payment, and adequate reserves.

These are five main and basic types of mortgages available in Texas. You can choose the one that will not only suit your needs but also your budget. Which one suits you?

by nico2me