Deciding how much house you can afford. Your lender decides what you can borrow, but you decide what you can afford. Lenders are careful, but they make qualification decisions based on averages and formulas. They won't understand the nuances of your lifestyle and spending patterns quite as well as you do. So, leave a little room for the unexpected – for all the new opportunities your home will give you to spend money, from furnishings, to landscaping, to repairs.
Types of Loans. There are plenty to choose from and this is where its beneficial to have a great mortgage broker to discuss which loan is perfect for you. If you need assistance in finding a mortgage broker, please contact us.
To escrow or not to escrow. Some borrowers choose to escrow their property taxes and homeowners insurance premiums as part of their monthly housing payment. So their mortgage payment is composed of the monthly Principal, Interest, Taxes and Insurance (or PITI). The benefit is to help borrowers spread insurance and tax expenses over 12 payments. Otherwise, you pay your principal and interest monthly and then pay your taxes and insurance separately, usually in one installation each.
How much is home owners insurance? The amount of homeowner's insurance you should carry depends on the replacement cost of your house – what you need to spend to replace it as it stands. Do not confuse that with “market value” or you could end up over or under insuring your house. A good place to start to get a quote on homeowner's insurance is your car insurance company. Sometimes they will even give you discounts!
How much are taxes? Property taxes are calculated at tax rate times the assessment of the property. Property taxes in Texas vary by city, school district, county, and perhaps some other taxing jurisdictions. Contact us for the tax rates for a particular area.
When contacting a mortgage broker - ask for a pre-qualify (or pre-approval) letter! In today's market, most sellers request a pre-qualify letter with every offer! Also, mortgage brokers are required to give you a GFE – or Good Faith Estimate – within 3 business days of applying for a loan. The estimate must include an itemized list of fees and costs associated with the loan. It's only an estimate, but it should give you a good idea of what you can expect and afford!