Buying a Killeen TX Home With Bad Credit

The mortgage boom of the past few years created a number of lenders that offered home financing for people with bruised credit. For the time being, those particular loans are basically no longer available. Instead of pursuing a loan with bad credit, people should look at ways of improving their situation first.

Some lenders are still willing to offer financing for individuals whose credit score is less than 620. The majority of these lenders will require a 20% down payment and the interest rate will likely be 9% or greater. Compared to the 3% down payment for an FHA loan and an interest rate of 5% as of this writing, you can see that the higher rate loans are very costly.

Lenders use credit scores to determine the risk of lending money. Low scores translate into high risk. The higher the risk the less likely the bank will be to lend the money. But improving credit scores is possible, regardless of the situation.

The first thing to do is get a copy of your credit report. This will help you to see where you currently stand. After reviewing your credit report you should follow these basic steps:
• Bring all delinquent accounts current.
• Pay down all credit card debt.
• Do not close credit cards after they are paid off.
• Do not acquire any new debt
Following this basic plan will help you to raise your credit scores. In the meantime, begin saving for that 3% down payment for your new Killeen TX Home. By the time you have saved up the money your credit score should be significantly higher and you can talk to a mortgage lender about your options for buying a Killeen TX home.

Buying a Killeen TX Fixer Upper Home with the FHA 203k loan

The Federal Housing Authority (FHA) has introduced a new program that seems to be a perfect fit for many borrowers looking to purchase a Killeen TX Home. This program is called the 203k loan. It is designed to allow borrowers to purchase a home in need of modest repairs with a fixed rate FHA loan.
Some sellers are trying to unload homes just to get them off of their hands. These Killeen TX homes typically need minor repairs and updates. The problem with this scenario is that a mortgage lender will not approve a loan on the home until the repairs are made to ensure the safety and livability of the home. The lender does not want to spend any more money on repairs. This is where the FHA 203k comes in.
The FHA 203k loan will allow approved borrowers to finance the cost of the home as well as the cost of the necessary repairs in one loan. The main restriction is that the amount of the repairs cannot exceed $35,000 total.
The other rules regarding the repairs to the home are very lenient. People can purchase new appliances, replace the roof, and update the heating and cooling unit as part of the listed repairs. It is strongly advised that all work be completed by a licensed and insured contractor.
The best way to approach this type of loan is to find a few professionals who are experienced with the FHA 203k. You will need a Killeen TX realtor, a mortgage lender, and a contractor that have dealt with FHA 203k loans in the past. This is a good product, but since it is a government sponsored program there are quite a few supporting documents that must be accurately completed in order to assure the loan is approved. Having someone on your side that is comfortable with this particular paperwork will help the process go much smoother.

Top Ten List When Buying a Killeen TX Home

Due to the effect a home purchase has on your finances and your life in general, it is important to get it right. Take the time to follow the advice below and you should be in a good position for a Killeen TX Home purchase.

1. Review your credit – You can obtain your credit report from the three main credit bureaus. Make sure the debts listed on your report are accurate.

2. Quickly act to fix errors – Any inaccurate information on your report should be reported immediately to the credit bureaus. Unfortunately this process takes time so the sooner you get started the sooner you will be finished.

3. Review the steps to buying a Killeen TX Home – There are a lot of terms and special situations related to the home buying process. Getting familiar with these items will help prepare you for the process.

4. Analyze your finances – Many online mortgage calculators can show you proposed payments for different loan amounts. This can help you determine if the amount you are willing to pay for a home is comparable to the home prices that you are reviewing.

5. Compare your debt to your income – A mortgage lender will make two calculations in regards to your income and proposed house payment. Your house payment should not be more than 25% of your gross monthly income. Your current debt, added to your proposed house payment, should not be more than 41% of your gross monthly income.

6. Save for a down payment – Unless you qualify for a VA home loan, most loans will require that you pay anywhere from 3% to 5% of the purchase price as a down payment.

7. Consult a mortgage broker – Talk to a mortgage broker about getting prequalified to purchase a home. This will aid you in setting a maximum price limit when you start house hunting.

8. Consult with a Killeen TX Realtor – An experienced realtor can make a world of difference in the entire home buying process. Find a realtor that understands your specific needs and is dedicated to working for you, not the seller.

9. Get a comparative sales report on the home you choose – Just because the seller has set a sales price does not mean that the house is worth that much. Consult with your realtor to find out the prices of similar styled homes in the area that have sold within the past 6 months.

10. Pay for a home inspection – Asking an objective professional to review your home for any defaults is one of the best things you can do with your money. The inspection ensures that you are getting a Killeen TX home in the condition listed in the advertising.

Things To Avoid When Buying Killeen TX Homes for Sale

Owning a Killeen Tx Home is considered the American dream. Many people dream of the day when they can claim a piece of realty as their own. However, there are some things to be aware of when going through the purchase process. Listed below are some of the most important things to consider when purchasing Killeen TX Homes for Sale.

1. Do not be rushed – Some people do not take the time to adequately interview a realtor and a lender. They take the first positive suggestion they hear and then they are off looking for a home. You will likely be paying on your home for 15 years or more, so it is important to get everything right.

2. Don’t buy without a Killeen TX Realtor – One of the biggest mistakes people make in trying to buy a home is thinking that they should do it all themselves. A realtor has training and experience designed to help you in your pursuit of a home. A qualified realtor can save you time and money in the process.

3. Don’t haphazardly pick a mortgage lender – The realtor makes a living selling homes. In order for the sale to occur the majority of transactions require a mortgage. The realtor can recommend a competent mortgage lender that can help you with the loan process.

4. Don’t buy without a home inspection – The same people that refuse to use a realtor are the same people that don’t like to get a home inspection. The reasons for using home inspector are almost identical to using a realtor. The home inspector can look at your home objectively and inform you of any possible defects in the property.

5. Consult with a home insurance agent – Everyone’s needs are different. Some people have exquisite art collections that require extra provisions with their homeowner’s policy. Other people may have multiple vehicles that need to be covered. Whatever the case, seek out the advice of a insurance agent that can answer your specific questions about your needs.

Follow the tips above and listen to the recommendations of your chosen professionals. These people can make the home buying process a much easier transaction for you. Killeen TX Realtors with experience can be worth their weight in gold when deciding to buy a home or not. We would be happy to sit down and talk to you about all of your options before doing anything.

Get Your Credit in Line for a Killeen TX Home Mortgage

The frequent news reports about the historically low interest rates have caused quite a buzz in mortgage loans.  People are looking to refinance and some people are entering the home purchase arena.  The following list represents some helpful hints to improve your credit standing in order to get approved for a mortgage loan when buying a Killeen TX, Home.

1. Get current on all debt – The single biggest factor affecting credit scores is how you repay debt. If you are currently behind one payment on any loan it will significantly lower your scores.
2. Pay down credit cards– This particular item gets repeated a lot by financial advisers and lending experts, and for good reason.  Besides how you pay debt, the amount of available credit you have can greatly impact credit scores.  The more available credit card balances you have, the higher your scores will go.
3. Do not borrow any more money – Managing the debt you currently have will go a long ways towards improving your scores.  Taking out more debt does not look good on your report.  And a recent inquiry, or multiple inquiries, will lower your score.
4. Do not close any paid off credit cards – This suggestion goes hand in hand with item number 2 above.  If you close a credit card you lose the capacity, or available limit, that goes with it.  This will lower your scores almost overnight.
5. If you have collections or judgments, wait – This sounds counter intuitive.  A collection or judgment is a negative item and you would like to remove all negatives.  However, when it comes to these types of accounts credit reports act strange.  ANY activity on a collection or judgment, whether you are paying off the account or the creditor changes the balance on the loan, will lower your score.  Talk to your mortgage lender about how you should handle any of these types of accounts that may appear on your report.

All of these items have been proven over time to raise credit scores when looking to buy a Killeen TX Home.  You should sit down with a mortgage lender before you put an offer on a home to ensure that you are pre-qualified to purchase a Killeen TX, home.  This will give your lender a chance to highlight anything that needs work before signing for the loan.

Comparing Mortgages – 30 Year Loan vs 15 Year Loan

People have utilized mortgages for many years as a means of acquiring a Killeen Tx, home.  Although a lot of different types of loans have surfaced over the last 10 years, the majority of Killeen homes are purchased with the aid of either a 30 year loan or a 15 year loan.  Surprisingly enough, these loans only have a few differences.

The most obvious difference is the payments.  If we used a 5% fixed interest rate, the payments would be as follows:

You can see from this example that the 15 year loan definitely has a higher payment.  However, it is not double the 30 year loan amount.  It is only $450 different.

Another difference is the total interest paid back over the duration of the loan.  Using the same numbers from above, here is what the total payback would look like.

As you can see, the 15 year loan cuts the total interest by over half.

These two examples assume the same interest rate for both loans but this is not the case.  A 15 year fixed loan normally has an interest rate that is lower than a 30 year loan.  Since the loan term is shorter the risk is smaller.  Therefore the lender can offer a better interest rate.  Usually the differences in the rates is 0.5%.  So in the example above, if the rate for the 30 year loan is 5.00% then the rate for the 15 year loan would be 4.50%.  This would make the total interest paid back over the life of the loan that much lower. When deciding on loans for your new Killeen Tx, home, you might consider a 15 year loan instead of a traditional 30 year loan.

Adjustable Rates or Fixed:  Which One is Better?

Lots of news reports continue to appear about the low rates that are still available to homeowners.  For active military personnel, the extension of the first time home buyer’s credit until June 2011 has created a lot of buzz in the Killeen TX real estate market.  But some of this buzz is full of questions.  What is the best type of loan, a fixed rate or adjustable rate?  What is the difference?  These are valid questions that deserve some attention for the large number of people connected to the military in Killeen, TX.

To begin with, the two mortgages work as their names imply.  The fixed rate mortgage has a pre-determined interest percentage that does not change over the course of the loan.  Borrowers can choose different loan terms from 5 years up to 30 years in increments of 5 years.

Conversely, the adjustable rate mortgage has a interest percentage that can change periodically.  The majority of these loans offer a introductory term where the rate is set and does not change initially.  This introductory term can be as short as 6 months and as long as 5 years.  At the end of the introductory time, the mortgage rate can increase or decrease.  There are a wide variety of adjustable rate mortgages and each one is tied to a different inedex.  The fluctuation of the index will determine if, and how much, the rate will change.

Obviously, the striking difference between the two loans is the changing of the payments.  The fixed rate mortgage will have a interest and principal payment in the first month of the loan that is identical to the interest and principal payment of the last month.  This can bring great comfort to those who like things to be constant and predictable in their life.

However, the fixed rate loans typically have loan rates that are higher than the rates for adjustable rate loans.   With an adjustable rate loan that has an introductory period of 5 years, the difference in rates can be as much as 1%.  Usually, people that expect to sell a home within 3 to 5 years are good candidates for the adjustable rate loans.

There is one significant point to keep in mind when considering an adjustable rate loan.  The chance that the loan payment will go up is almost guaranteed.  Introductory rates are set low to allow the borrower to purchase the home with the hopes that they can refinance in a few years once their income has increased.  This potential increase should be discussed with a reputable lender so that you have all of the facts before signing on the dotted line.

With the flow of daily information about historically low mortgage rates, a lot of people are looking at Killeen TX homes for sale and pondering their options.  Buying a home is a big undertaking and it should be handled with strict attention to detail.  Making sure all of the little things are in order will allow you, your realtor and lender to process the transaction smoothly.  Here are some helpful tips on getting your affairs in order when you decide to purchase a home.

1. Talk to a Realtor – Because of the size of most real estate transactions, it just makes sense to have a professional on your side.  Finding an experienced realtor that can assess your needs and help you pick out the right home is a crucial first step.
2. Organize your documents – When you apply for a mortgage loan you will be asked to present a number of items to your lender.  The most basic information that you will need are:

• Copies of paycheck stubs covering the most recent 60 days
• Copies of checking account statements for the most recent 60 days
• Copies of savings account statements for the most recent 60 days
• Copies of most recent statement for all retirement accounts
• Copy of last two years tax returns with all associated documents

Having all of this ready to go can save you time and headaches down the road.

1. Contact a lender – Ask your realtor to refer you to a reputable lender.   Set up an appointment with the lender and take them the documents listed above.  The lender will analyze your information and present the best loan scenarios that apply to your situation.
2. Get preapproval – Once the lender has determined your eligibility for a home loan, ask the lender for a pre-approval letter.  You can take this letter to your realtor and begin viewing homes in the Killeen TX real estate market.
3. Pick a home and sign a contract – Once you have found a home that you like ask your realtor to help you complete a contract to purchase the home.  From this point, the realtor and lender will work together to complete the purchase process.

Buying a home can be an exciting time in anyone’s life.  The thrill of home ownership and having a place to call your own has such a positive effect on people that it has actually been studied and documented by researchers.  Taking the time to follow the advice listed above can help make this process a smooth transaction for everyone involved.

FHA Home Loans – A Great Loan for First Time Homebuyers

With all the publicity surrounding the problems in the mortgage world, potential buyers in the Killeen TX real estate market are wondering what to do.  Thankfully there is a program that has been around for a number of years that has several beneficial features for the first time buyer: the FHA home loan.  Presented below are a few of these features that have allowed many people to become home owners for the first time in their life.

1. Small down payment – The FHA requirement for down payment purposes is 3% of the purchase price.  Compared to the 5% requirements of conventional loans this does not sound like a significant amount.  However, for a purchase price of $250,000 the FHA down payment of $7,500 is $5,000 less than the $12,500 down payment for a conventional loan.  That is some serious savings.
2. The down payment does not have to come from the buyer – The FHA rules will allow home buyers to use money that was given to them for their down payment.  There are some requirements surrounding how the money should change hands.  But this means that a parent, grandparent, uncle or just about anyone can give money to a potential buyer in order to help them secure their home loan.
3. Private mortgage insurance rates are lower – When people buy houses, lenders assess the loan based on a number of risk factors.  One of those factors is the comparison of the loan amount to the value of the home.  This comparison is calculated by taking the loan amount and dividing by the appraised value, which will result in a decimal figure.  For instance, a $242,500 loan divided by $250,000 is 0.97.   With conventional mortgages, as this number gets bigger so does the monthly private mortgage insurance premium.  However, FHA loans charge one low rate regardless of the ratio.
4. Attractive rates – FHA mortgage rates usually are very close to the rates offered for conventional loans.  This means that borrowers can get low fixed rates to keep their payments stable for the duration of the loan.
5. Generous loan amounts – At the time of this writing, the maximum amount for a FHA loan for Killen TX homes for sale is $271,050.

There is an old saying that states you have to learn to walk before you can run.  The FHA loan was not designed to allow people to purchase $500,000 homes located at the local country club.  However, for many young people that are trying to start their adult life, these loans can be a great vehicle.  Get in touch with Barbara and take advantage of this wonderful opportunity to buy a piece of Killeen TX real estate.

Advantages of The USDA Home Loan

Most of the time the term USDA is thought of as a certification program for steaks at the local restaurant.  However, the USDA does more than just inspect cattle.  The USDA has been involved with home loans for a number of years.  A lot of people that are looking at Killeen TX homes for sale may not be aware that this program exists let alone the advantages.   The following list will provide some highlights of the program.

1. True 100% loan – The most talked about feature of the USDA home loan is the high loan to value ratio allowed by their guidelines.  While a FHA loan asks for a 3% down payment and the conventional loan requires a 5% down payment, the USDA is the only loan that requires no money down.  Borrowers can take out a loan that is equal to 100% of the appraised value of the home or the home’s sales price, whichever amount is smaller.
2. Rollover of costs – Along with the 100% financing the USDA loan will let borrowers add all of the closings costs into the loan.  This is allowed if the purchase price and closing costs are less that the appraised value of the home.  This can really help cash strapped borrowers save thousands of dollars.
3. No need for private mortgage insurance – In general, anytime a person borrows 80% or more of the appraised value of a home they will be required to pay a monthly fee known as private mortgage insurance.  This insurance protects the lender against loss in the event that the borrower is unable to continue making payments on the home loan.  However, the USDA home loan does not require this mortgage insurance.
4. Basic income and credit requirements – In Killeen TX certified mortgage lenders and banks are allowed to offer the USDA home loan using income and credit guidelines similar to conventional mortgages.  Once the lender has approved the loan the file is forwarded to the local USDA office.  The USDA office will then review the loan file to ensure that all requirements are met.
5. Eligible properties – Generally speaking a home must be located outside the general city limits of a metropolitan area.  There are maps available to certified USDA lenders to indicate which Killeen TX homes for sale are eligible for the USDA home loan.

People with a solid credit history and consistent employment history are usually good candidates for a home loan.  The problem usually occurs when a down payment is required.  Anyone that falls into this category should talk to their realtor and find out which homes in the Killeen TX real estate market would be a candidate for the USDA home loan.