It's easy for first-time homebuyers to get excited about the significant benefits of owning a home: getting to make the remodeling or impactful decorating choices yourself, building a financial future for yourself and your family, and knowing that you have a stable place to live that doesn't rely on a landlord's decision about your lease or the property.
As you learn more about home financing, it's valuable to know what a mortgage is, how to qualify for a Texas VA mortgage vs. FHA loans in Texas, and what the best mortgage companies Texas offers can do to help you find the best mortgage rates. In addition, understanding the financing rules for a house can help you budget well beforehand, make intelligent choices about maintaining your home, or move forward with confidence when you find a house you want.
In the simplest terms, a mortgage is a home loan. Mortgages can't be used to cover personal expenses or to fund any purchases other than a home. At this point, you might be wondering: isn't that the same as a monthly rental payment? Not quite! Here are just a few ways a mortgage loan payment differs from a typical rent payment and a few ways to prepare.
Even with FHA financing rules for FHA loans in Texas, which typically come with a lower down payment, you'll need some portion of the home's sale price upfront. That means in most cases, lenders won't fund a mortgage for 100% of the price of your new house. So while Texas VA mortgages can sometimes come with no down payment, it may still make sense to choose a mortgage with a down payment, depending on your financial situation.
In addition to your down payment, loan officers apply fees in exchange for funding your new home. Ask early on in the process for a run-down and estimates of these fees and closing costs so you can adequately prepare.
While not everyone does it this way, many people roll their homeowners' insurance costs and property taxes into one payment that they make each month. Without doing this through a mortgage escrow account, buyers would have to save enough to pay these other bills when they arrive once or twice a year. By wrapping them up into your monthly payment, your loan officer helps you stay on top of these recurring expenses.
A monthly rental payment stays the same throughout the lease term, and most leases don't last longer than 12-18 months. With mortgage loans, it's common to divide monthly payments to fulfill the loan obligation over 10,15, 20, or 30 years. If you're working with an FHA-approved lender to get preapproved for payments close to your current rental payment amount, a 30-year home loan could be the right solution. However, some people opt for shorter-term conventional loans with bigger monthly payments.
Unless your mortgage lender says that there is a fee to do so, homebuyers can often make extra payments on the mortgage and reduce the length of time it takes to pay it off. So if you had a typical 30-year mortgage but made one or two extra payments a year, you might shave several years off the length of the loan to own the house outright. However, be aware that paying a month ahead doesn't mean you can skip a month down the road.
With a fixed-rate mortgage, most people opt to have the same monthly payment every month for the loan duration. This can make it easier to plan and budget ongoing monthly homeownership costs. However, if you qualify for an excellent first-rate on an adjustable-rate mortgage (ARM), you may opt to have a mortgage where your interest rate changes with the market. In this case, your payment will fluctuate through the length of the loan.
The right mortgage lenders can help first-time homebuyers understand FHA loan requirements or qualifications for Texas VA mortgages. They know when your credit score might qualify you for a low-interest rate, and they guide you through improving your score for better rates or finding the ideal down payment amount for the best financing options. There are many options out there, and it's common to have plenty of questions when beginning the mortgage preapproval process. Texas United Mortgage is here to help! Reach out and let our FHA-approved lenders guide you through the financing process to help you buy your first home.
We also offer a valuable guide, "The Definitive Home Buying Cost Worksheet," to help you plan a helpful budget!
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