Many clients who discover the Houston home of their dreams with the help of a local Houston real estate agent require a home loan in order to finalize their purchase.
In most cases, a Houston REALTOR® can help guide you through the process of applying for and receiving a loan for your upcoming purchase. It is important to discuss the matter with your real estate agent. This is especially true if you are a first time home buyer. However, even seasoned buyers and sellers rely on their REALTOR®s for guidance.
A local Houston real estate agent can help you determine your price range. Among the primary concerns of most Houston REALTOR®s is finding a home that their clients not only love but also one that they are able to afford. Despite the media hype associated with unethical REALTOR®s facilitating their clients purchase of homes they are unable to afford, this is far from the norm in Houston, Texas.
It is important to be realistic and account for potential future fiscal instability. Ultimately, the best piece of advice is to find a home you can responsibly commit to.
Understanding Houston Home Mortgages
A home mortgage is merely a bank loan that is secured by the home itself. Typically, obtaining a home mortgage is done in order to finance the purchase of the property upon which the loan is taken out. In other cases, a loan may be taken on a home in order to borrow against the house itself. The latter case is known as a second mortgage or a home equity loan. The proceeds from a home equity loan can be used for any purpose, unlike a regular home loan, which is used to finance the purchase of the home that the loan encumbers.
The parties to a loan agreement usually include a borrower, who is the person borrowing the funds (and becomes the owner of the property) and the lender, usually a financial institution which secures an encumbrance or lien on the property itself.
The most common types of home loans offered here in Houston are fixed rate mortgages and adjustable rate mortgages. Fixed rate mortgages are advantageous because the rate never fluctuates. The payments associated with a fixed rate mortgage are therefore predictable. An adjustable rate mortgages will usually remain fixed for a certain amount of time and will then shift. Although adjustable rate mortgages can be easier to obtain than fixed rate mortgages, adjustable rate mortgages are far less predictable.
Although the term you select will depend largely on your financial status and objectives, the most common term is for a 30 year mortgage. Given the extensive time commitment involved and the large amount of resources that will be expended over the course of the loan, it is imperative that you make an informed decision prior to obtaining a loan.
Be sure to discuss which mortgage is right for you with your Houston real estate agent and your bank’s loan officer. It is always advisable that you perform your own independent research, as well.
What Determines The Interest Rate of My Home Mortgage?
Home mortgages are peculiar. There are a number of factors that will influence your monthly payment, including the amount of the loan, the size of your downpayment, your credit history, the residential area within which your future home is located and whether you elect to pay for points to decrease your interest rate.
It is important to contact various loan officers at several banks. Shopping for the most competitive home loan is not only common practice within the Houston real estate community, but is also highly recommended.
Equally important is diversifying the banks you contact. For instance, most real estate agents in the Houston area recommend that their clients contact large banks as well as smaller, local banks. It is almost always beneficial that you also contact banks you have not previously worked with, as well as those with which you have existing accounts.