Buying a home is the American dream, but buying a home has also become more complicated in the last several years. Whether you need guidance for house hunting or getting approved for a mortgage loan, there are several things first-time home buyers in Montgomery County, Texas should know. For example, the best thing you can do as a first-time homeowner is contact local mortgage lenders in Houston and Conroe.

Buying Your First Home in Texas? The Three Things You Should Know

1. First Time Home Buyer Grant

Did you know that there are first-time home buyer grants that you may qualify for? In general, for those in Montgomery County, you’re considered a first time home buyer if you have not owned a home or taken out a mortgage in the last three years. To qualify for grants that help with a down payment or mortgage, you will generally need to meet certain income requirements.

For example, your household income must fall below 80% of the median income for Houston or Conroe. You must also purchase a home within the correct area. Specifically, you must purchase a home within the county that is offering homeownership assistance so taxes paid on the house will return to the county.

2. Down Payment Assistance

Down payment assistance programs are also important resources for first-time homeowners. A down payment assistance program can take a chunk off of your required down payment, which may be helpful if your mortgage loan requires more than 5% of the value of the home. There are several down payment assistance programs sponsored by the state, including programs for veterans, first-time buyers, and those who qualify for affordable housing.

Usually, down payment assistance programs work as a second mortgage that has low or zero interest. Once the principal mortgage of your home is paid off, you will then need to pay off the second mortgage from the down payment assistance. However, the trade-off is usually worth it since these programs make it easier for people to purchase homes.

3. FHA Loans 

You may also want to consider FHA loans. FHA loans are a type of mortgage loan that is backed by the government that you may qualify for with lower financial requirements. For example, you can qualify for an FHA loan even if you have a lower credit score or if you have a bankruptcy on your financial record.

FHA loans tend to have slightly higher down payments, but you can often combine an FHA loan with a down payment assistance program to purchase a home. To qualify for most FHA loans, you may need to have 3.5% of the down payment for the home, a credit score of 580 or greater, and at least a 43% debt-to-income ratio.

How Can Local Mortgage Lenders in Montgomery County Help?

Local mortgage companies in your area can be crucial when it’s time to buy your first home. Not only do mortgage lenders have knowledge about the best mortgage loans that work for your financial situation, but many mortgage lenders also work with real estate offices to help you find homes more easily. A few specific ways local mortgage lenders can help you can include:

Education About Loan Options in Houston

There’s a pretty good chance that you have more than one option for a mortgage loan. Federal housing administration (FHA) loans, jumbo loans, VA loans, and conventional loans are all options that should be considered. Your qualification for each loan will determine which loan option is best for you. Your mortgage lender will give you the best advice based on your financial situation, specifically your income bracket and your debt-income ratio.

Information About Home Loan Rates in Conroe

Mortgage lenders will also have information about the home loan rates that are common in the area. Because the housing market is constantly adjusting and because the interest rate on your loan will depend on the type of loan you have, it can be confusing to know the best home loan rates for your financial situation.

However, mortgage lenders can calculate and adjust your mortgage rate with a variety of tools and programs. A mortgage lender may also give you advice to postpone applying for a mortgage until you have a better credit score so that you can get the best possible deal for your home loan.

Refinancing Loans in Texas

As a first-time homeowner, you may not need to refinance your loan for some time. However, it’s good to ask local mortgage lenders about your refinancing options just to have the information in your back pocket. You can refinance your loan, use special-purpose refinancing, or cash-out refinancing to lower your mortgage rate, which can make it easier to pay off your mortgage.

What Are the Steps for Buying Your First Home?

When it’s time to buy your first home, there are several steps that are involved in the home buying process. A small portion of this process involves applying and qualifying for mortgage loans or homeownership assistance programs. Other parts of this process will include getting your finances in order, hiring an experienced real estate agent, and getting pre-approved for a loan.

Get Your Finances in Order

Before you apply for a home loan, you should get your finances in order. You will generally get a better deal on a mortgage loan when you have a healthy credit score and a good debt-to-income ratio. Loan officers look for red flags, such as accounts that have been closed suddenly or opening several new accounts all at one time.

Collect a Decent Down Payment

Gathering a decent down payment can be crucial for your future homeownership. Essentially, the larger the down payment you make on your home, the less your mortgage payments will be each month. Additionally, sizeable down payments may be beneficial because you may not need to take out mortgage insurance, which must also be paid each month.

Of course, if you plan to use a down payment assistance program, you will need to learn about how to qualify for these programs, including any classes you may need to take. Some programs also have specific time periods in which you can purchase a home.

Hire an Experienced Real Estate Agent

Hiring an experienced real estate who knows the local market is also key. Experienced real estate agents will be able to help you negotiate a price for a home, or find neighborhoods that are most suited to your lifestyle.

Get Pre-Approved for Mortgage

In addition to your credit score, mortgage lenders also pay a great deal of attention to your past credit history. To get the best approval for your mortgage, you should keep all of your accounts in good standing and have a track record of making credit card payments on time.

Getting a pre-approval letter is generally the best way to show buyers that you are serious and financially qualified to buy a home. That said, being pre-approved for a mortgage does not necessarily mean you need to accept that lender. Sometimes, it’s good to shop around until you can find a lender who has the best rate.

For first-time buyers, there are many financial requirements to become a homeowner. If you work with mortgage lenders, you can learn all about your mortgage rate and loan options, including down payment assistance programs that can make it easier to purchase a home. For more information about what you can expect as a first-time home buyer in Montgomery County, reach out to Home Loans With Gary today.