A Guide to Dallas Fort Worth Texas Real Estate
Top 10 Mortgage Questions
1. What will a lender look at when I apply for a mortgage?
Lenders consider many factors in evaluating your loan application, but they usually focus on four areas:
- Income and debt. How much money you make and what other bills you have to pay helps the lender determine whether you can afford to make mortgage payments.
- Assets. The lender needs to make sure you have enough money to cover the costs of buying a home.
- Credit. Whether you’ve met other financial obligations helps the lender predict whether you will repay your mortgage.
- Property. The Dallas home you want to buy has to be worth enough to act as collateral for the mortgage.
2. What does it mean to get pre-approved?
Getting pre-approved means you receive a loan commitment from your Texas home mortgage company before you have found a
home, based on a review of your credit and finances. Having your credit pre-approved shows
sellers that you’re a qualified buyer and helps you establish a clear price range. The process is the same as a
typical mortgage application, except that your application doesn’t include property information.
3. What if I’ve had credit problems?
Your credit history is only one factor in qualifying for a loan, and having made some late payments doesn’t
have to keep you from buying a home in Texas. Someone who has consistently made payments on time in the past may have
more financing options than someone who has not, but that doesn’t mean a mortgage is off-limits
if you’ve had credit problems. In fact, we may be able to suggest a variety of mortgage options to help people with
less-than-perfect credit become homeowners and leave credit challenges behind.
4. What is the minimum down payment I can make on a home?
There is no minimum down payment required for buying a Dallas Fort Worth real estate. Many of today’s first-time
buyers believe they must be able to put down as much as 20% of a home’s purchase price in cash. That may have been
true in the past, but many of the mortgage options today’s DFW home-buyers require little
or no down payment.. We may be able to suggest a number of loan programs that can help you buy a home with little or no cash.
David Winans GMAC Real Estate has four offices to serve you in North Texas including Dallas, Southlake-Colleyville, Arlington and Mansfield.
5. Will I have to pay for Private Mortgage Insurance?
Private Mortgage Insurance (PMI) provides your lender with a way to recoup its investment if you are unable to repay your
loan. PMI is usually required when the mortgage amount is higher than 80% of the home’s value. That means that if
you buy a home with a down payment of less than 20%, you will probably have to pay for PMI. One common way of bypassing
PMI without making any down payment at all is to use an 80/20 program, which combines a first mortgage with home equity financing.
6. What closing costs will I have to pay?
Closing costs vary based on a number of factors — including the lender, mortgage type, purchase contract, and location
— but they usually include the following:
- Lender fees. Your Texas Loan Center mortgage company may charge for expenses related to making the loan, including an appraisal fee, a credit report fee, origination points, and discount points.
- Third party fees. Charges for services not provided by your lender often include the settlement fee, title insurance, and attorney’s fees.
- Prepaid items. Some mortgage costs must be paid to your lender in advance. The most common of these are pre-paid interest, hazard insurance, and deposits to set up an escrow account.
7. Should I pay discount points?
Discount points are prepaid interest, which you can pay to your lender at closing in exchange for a lower interest
rate on your mortgage. Paying discount points, each of which is equal to one percent of the loan amount, is often
called “buying down” your rate.
So does paying points make sense for you? The answer depends primarily on how long you plan to stay in your Texas home.
First, find out how much lower your monthly payments will be if you pay points. Then, calculate how long it will take
for those monthly savings to add up to the cost of the points. If it would take five years to break even and you’re
planning to live in your home for ten, paying discount points may be a smart move.
8. Should I choose a fixed-rate or adjustable-rate loan?
Most mortgage loans have either a fixed interest rate or an adjustable interest rate. With a fixed rate mortgage, the
interest rate never changes and your payments remain stable throughout the life of your home loan. With
adjustable-rate mortgages (ARM), the interest rate changes at regular intervals —
usually one time a year — based on market indicators. For most ARM options, rate adjustments begin after an
initial period — usually between 3 months and 10 years — during which the rate is fixed.
A fixed mortgage rate in Texas is usually best if you plan to stay in your home for the long term and are buying
at a time when rates are relatively low. You may get the most value from an ARM if you plan to move before the end of
the fixed-rate period, or if you’re buying at a time when rates are relatively high.
9. Should I lock my rate?
Locking your interest rate means your Texas mortgage lender guarantees the rate on your mortgage loan even if market
rates change before closing. Most mortgage lenders will allow you to lock the rate for 30 to 60 days, with the
option to extend the rate-lock period for a fee.
So how do you know whether to lock an interest rate? It depends on whether you expect rates to rise or fall before
you close on your home. No one knows for sure what direction rates will go at any given time, so it’s difficult
to make a reliable prediction. It helps to keep track of announcements from the Federal Reserve Board, whose monetary
policies have an effect on monthly mortgage rates, and to talk to you financial advisor about what may happen in the near or long term.
10. What will my monthly mortgage home payments include?
For the majority of borrowers, each monthly mortgage payment goes toward the following:
- Principal, which is the total outstanding balance of the mortgage loan on their real estate in North Texas.
- Interest, which is the cost of borrowing money on a home
- Taxes, which are levied on the property by one of the local governments in North Texas
- Insurance, which protects the owner and the lender from losses caused by fire and natural hazards to your Dallas home.
Let one of our professional realtors or mortgage loan officers help you today by calling
1-800-836-4374.
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