There are currently nearly eleven thousand homes for sale in the greater Houston area. Approximately one-fifth of these houses are situated at some point along the foreclosure continuum. So far as the home buyer is concerned, this means that bargains abound. The average sale price of homes in Houston at present is just over $400K. While this may seem high to some, it is lower than that of homes for sale in the vast majority of the rest of the country. Interest rates, although they’ve gone up recently, are still at a historic low. Got family, need a home? Now’s the time to buy!
Nearly everyone in search of a Houston based home today is interested in the types of available Houston home loans. It will perhaps come as good news to all that the lending agencies have returned to the safe and sound lending limits that once made America’s housing market the greatest in the world. Although there are exceptions, there are three primary types of Houston mortgage loans currently available. People in search of home loans in Houston, Texas will want to consider the following types of mortgages.
Fixed Rate Mortgages
A fixed rate loan is exactly what it sounds like: a set interest rate that does not change over the life of the loan. In other words, you will pay the same amount each month until the home is paid for. Fixed rate loans are typically scheduled for 10, 15, 20 and 30 years. The longer the repayment is extended, the cheaper the monthly payment becomes, and the more the buyer pays over the life of the loan in interest. The buyer usually pays more interest than principal in the beginning years of the mortgage loan, and more principal than interest in the latter years. Typically, the buyer has the option of paying off any amount of principal at any time, thus reducing the overall amount of interest charged.
Adjustable Rate Mortgages
Just as it sounds, an adjustable rate loan has a rate that varies over time, depending upon how the market performs, and often, depending upon the current value of United States Treasury bills. The rates are usually lower than a fixed rate to start but have the potential to go up over the years, a scenario that makes many people uneasy. Typically, although terms differ, they cannot go up beyond a particular level within a set time frame. Many people start off with an adjustable rate and later convert to a fixed rate.
Non-conforming Mortgage Loans
Conforming loans typically meet specs set by government programs such as Fannie Mae and Freddie Mac, which often purchase loans that meet their criteria. They are subject to a loan limit of $417K. More massive loan amounts are considered to be non-conforming. These are often creative loans that combine some ploys to get a buyer into a home, but which will likely have higher monthly payment years down the road. Many non-conforming loans are known as Jumbo loans. A jumbo loan often begins as an interest-only loan, but when the initial number of years have passed, the homeowner then pays a higher payment that includes both principal and interest.
As is the case with all loans, the buyer must be approved by the lending institution for a home mortgage in Houston. This requires a credit check as well as an extensive application. The buyer must also provide a down payment which is typically dictated by which loan program the borrower decides to peruse. The best home loan in Houston is one that the home buyer is certain he can afford; the loan the meets his particular needs, this specific time.
For more information about Houston mortgages, contact a Home Loan Specialist near you.