There has been a lot of press about the mortgage situation and the ability of “regular” people being able to refinance. The Dallas refinance outlook is much the same as throughout the country with a few additional considerations. If you happen to be in the Dallas area, you haven’t been hit as hard with the mortgage crisis as many other cities in the US. This doesn’t mean it’s any less difficult for you to go through the refinance process. You’ll still be considered for a refinance mortgage based on the usual criteria, such as your credit score, income, value of the property and the amount of the loan.
Refinance mortgage options can be categorized as a traditional refinance and a streamlined refinance. Either of these options can be explained to you more in depth and also specific to your exact situation by working with a qualified loan officer in your area. The traditional refinance will be a lot more in depth and take more into consideration than the streamlined refinance. What this means is that it may be more difficult to qualify for a traditional refinance, especially depending on the value of your home compared to the loan amount you’ll be applying for. The same things a lender would consider if you were purchasing a home for the first time or even a second or third home would be considered with a traditional Dallas mortgage refinance.
A streamlined refinance is usually done with the same lender and usually an FHA lender where you have an opportunity to take the same loan situation and simply reduce your rate. This is program that is sponsored by the Federal Housing Administration and of course takes into consideration only the situation with the existing rates being lower than what you are currently paying. It doesn’t have as much flexibility to do any sort of cash-out refinance with the streamlined refinance, but will take into consideration the fact that you’re paying a higher rate than the going rate and make the adjustment to match.
The Dallas refinance market is still strong all things considered. Of course some of the factors that may influence your ability to get a refinance mortgage will be the value of the home in relation to the amount you owe on the home. You may be “upside down”, owing more than the home is worth. This makes a traditional refinance next to impossible. A streamline refinance may be an option for you, but again, check with your local loan officer or mortgage broker. If you’re working with a competent loan officer, you should be presented with a few different options and the explanation of what each of these options represent should be understood by you.
Assuming the value of your home is more than the loan amount, you’ll be past this specific barrier and then be able to work with a lender on your mortgage application which will take things like your credit score and income into consideration. The majority of the rates advertised are for what is known as “A paper” loans or the loans where the credit score is high and the income is sufficient to justify the loan amount. Lenders have been forced to crack down on the liberal lending policies they were working with a few years ago which got the US into it’s current situation with the lending crisis in the first place.
These lenders have made these adjustments and although there are still a few loan officers and lenders that may “look the other way”, the auditing process to make sure that loans are solid has also changed and the enforcement is more strict than it was previously. Do as much research on the internet as you’d like, but narrow your choices down to about 3 or 4 companies that you could work with based on the information you collect. Then do your homework by picking up the phone and contacting these lenders or loan officers and ask some basic questions to determine who you feel most confident working with.
I wanted to take a different approach than some of the other articles I’ve read on the internet regarding mortgages. In this case my information is general enough to apply to individuals throughout the country, but a special message regarding the Phoenix home mortgage market. Arizona is a bit like California and Vegas as it relates to the mortgage crisis and the other issues that have plagued the economy over the past few years. Phoenix experienced a lot of double digit percentage increase in property value from the time the construction started on a home to the time when the home was ready to sell. Not too many other places experienced this type of rapid growth.
The area has since corrected quite a bit but the overall inventory of available homes has not equalized and has left the resulting area as a buyers market. I wanted this information to frame the ideas behind this article. I’ll be giving you some information on what to consider from a mortgage perspective including mortgage rates and the term of the mortgage.
If you are looking to purchase a home, you’ll most likely need a mortgage from a lender. Despite what marketing efforts would have you believe, the lenders and the loan products available to individuals are not stacked in your favor. These are products that give the lenders and the banks the greatest advantages. This article will hopefully give you enough basic information to be able to ask the right questions when discussing this information with your loan officer or mortgage broker.
The very first thing to consider is how long you plan on staying in the home you’ll be purchasing. I know you can’t always plan these things out, but having a good idea before getting into a long term commitment like a mortgage loan is always smart. If you plan on being in your Phoenix home for a long time, possibly even the rest of your life, your objective with the mortgage should be to minimize the amount of interest you’ll pay on the home. If you know you are there for a short term of 3-5 years or less even, your objective instead may be to get a loan with the very lowest possible monthly payment. The reason you’d want a lower payment is because the overall percentage of principle you’d pay towards your home over that span of time is relatively small because at the beginning of your mortgage, the majority of the amount you pay goes towards interest. Because of this, your first series of payments on your loan really aren’t making a dent in the overall amount you’d pay. So keeping your cash flow high during that short term period of time can be more important than the lowest possible rate.
Mortgage products come in all different types with different options. The most traditional is a 30 year fixed rate mortgage which is a bit self explanatory once you know the lingo. 30 years describes the length of the loan and a fixed rate means the rate over the life of the loan is not adjusted. There are also 15 year mortgages as well as 20 year, and even 40 and 50 year mortgage products that some lenders offer to their homebuyers. The term of the loan and the rate along with the loan amount will easily help you determine the monthly payments. Also calculating this in reverse may help you determine how much house you can afford given a specific rate as well as the term and monthly payment you’d be able to afford to make.
If nothing else, the mortgage crisis that we’ve been experiencing in the US has been specifically an issue with people making choices where they have lived beyond their means. As a loan officer, I’m in favor of people living within their means. It doesn’t mean you shouldn’t have a nice home, but make sure it is something that fits within your ability to meet that financial obligation month after month. The Phoenix home mortgage situation is a great example of how real estate can slip and through the mortgage industry for a loop.
