November 2017 - Horizon FHA Loans LLC

What Do You Need to Qualify for a Texas Veteran Home Loan?

The criteria needed to qualify for a Texas veteran home loan is very similar to a VA mortgage. However, Texas veteran home loans have the added requirement that you are or have the intent to remain in Texas, or in other words, are “a bona fide resident.” Veteran home loans can make a major difference in your life. Here is what you need to qualify for a Texas veteran home loan.

Active Duty Qualifications

Active Duty Personnel are eligible to qualify for a Texas veteran home loan after having served at least 90 days during wartime and 180 during peacetime. During this time, you must have had a continuous active status.

Prior Service Eligibility

You can also qualify for a loan with prior service. Whether your service occurred during wartime or peacetime determines your eligibility. In order to become eligible for wartime prior service, you must have served for a minimum of 90 days on active duty. A release from active duty can come from anything other than a dishonorable discharge. Under some circumstances, a less than 90-day service may make personnel eligible. This is primarily if a disability required the personnel to step down. To become eligible during peacetime, you must have served a minimum of 181 days of continuous active duty and have been released or discharged for any reason except for dishonorable discharge.

Selected Reserve

Along with active and prior service qualifications, you can also qualify through the Selected Reserve. You may also qualify if you have been discharged because of a service-related disability and have been given an honorable discharge, have been placed on the retired list, have been transferred to an element of the Ready Reserve, or are currently continuing to serve in the Selected Reserve.

There are several ways to qualify for a Texas veteran home loan.  Active duty, prior service, and selected reserve qualifications can all help your qualify for a veteran home loan in Texas. Texas also offers a few additional ways to qualify. These include certain US citizens, surviving spouses, personnel discharged for disability, medical conditions, or mental conditions. A Texas veteran home loan can make a big difference in your finances. For more information on how you can qualify for a veteran home loan, contact Horizon FHA. Call us today at 972-569-7226 to make that big move you’ve been dreaming of a reality.

Avoiding Monthly PMI by Going from FHA Loans in Texas to Conventional Loans

Photo by Dinesh Boaz

FHA loans in Texas have opened the housing market to many more prospective homeowners. They put dreams of homeownership within reach of more citizens by drastically lowering payment requirements and minimizing closing costs. As wonderful as this program is, however, it does have a drawback, and that drawback is monthly PMI (Private Mortgage Insurance). It’s this recurring cost that drives many homeowners to refinance through convention loans.

Differences in Initial Costs

Most new homeowners who choose FHA or VA loans do so to avoid large down payments and closing costs. This system has enabled far more people to buy homes, and it’s a very effective way to purchase a new home. After all, it’s incredibly difficult for a new home buyer to save up even ten or twenty thousand dollars to make a deposit on a small, cheap property. FHA loans in Texas allow potential buyers to build equity over time with a larger loan that covers these initial expenses.

Conventional loans require large down payments that very few potential buyers can afford. This is particularly true for young, first-time buyers. Conventional loans come with higher closing costs, too, which require money the buyer could otherwise have used to build equity. Since FHA loans have low closing costs, they allow buyers to get a jumpstart on equity building. Between the two types of loans, it’s easy to see why so many buyers choose FHA loans to purchase houses.

Differences in PMI

Most problems with FHA loans in Texas begin once the borrower realizes they cannot get rid of PMI (Private Mortgage Insurance). This monthly charge depends on the size of the down payment, the size of the loan, the borrower’s credit, and more. Large or small, however, it’s always a frustrating cost that does nothing to build equity.

PMI protects lenders from potential defaults and failure to make payments. It is essentially a safety net that allows lenders to offer options like FHA loans in Texas to borrowers who would not qualify for conventional loans. It makes a risky loan much more appealing to the lender. So, they are willing to offer more of them. However, FHA and VA lenders cannot waive PMI fees. It doesn’t matter if borrowers have a proven track record of successful, timely payments.

Conventional loans allow borrowers to essentially grow out of these monthly dues. In fact, the law requires conventional lenders to send borrowers written notice when they are able to opt out of PMI. If the borrower chooses, they can continue paying it, but very few do. Most would rather use that money to pay off their loan faster. This scenario leads many FHA borrowers to refinance with a conventional loan once they are able.

There’s nothing wrong with using the complex mortgage market to your best advantage. The lenders will get their dues one way or another, but there’s no reason to pay PMI if you don’t have to. FHA loans are a great way to get a home. Refinancing with conventional loans may allow you to build equity faster.