Lending Programs

All this talk about rates over the past year has shed light on one point, not everyone has a full picture of the lending process. For example,
• Not everyone puts 20% down when purchasing a home.
• Not every loan is created in the same way.
• Mortgage loans are products, much like clothes. Everyone with a mortgage is involved in a loan, but not all the loans are the same. Some are more expensive than others (designer), some are basic and get the job done (jeans and a T-shirt), some are riskier to wear, and if the wearer moves too far in one direction or another, something could become exposed.

There are many loan programs and products that offer buyers various options to get into a home they can afford. Finding the right mortgage product comes from a conversation of education, questions, and answers between a good local lender and a borrower. Whether trying to overcome the hurdle of a down payment or seeking a loan structure that offers a more favorable interest rate, buyers have options.

Seldom pointed out Federal Housing Administration (FHA) points that I think readers would be glad to see shared are:
• A borrower does not have to be a “first-time homebuyer” to qualify for an FHA loan.
• FHA loans offer down payments as low as 3.5% of the sales price.
• FHA loans are not just for single-family residences, they can be used to purchase properties with up to 4 units. As long as the buyer lives in one of the units as a primary residence, the others can be rented out and the income they produce can be counted to help the buyer qualify.
• Borrowers can receive “gift” funds to put toward the down payment on the loan and they may even qualify for state or local down payment assistance programs or grants.

The Texas State Affordable Housing Corporation (TSAHC) offers several loan types, interest rates, and down payment assistance (DPA) options. Down payment assistance is available as a grant or a 3-year deferred (forgivable) second-lien loan. Borrowers can use TSAHC’s DPA to purchase a home, even if they’ve been a homeowner before and home buyers may purchase a home anywhere in Texas using these programs. There are even special loan programs for first responders (police, fire, and EMS) and teachers through the Homes for Texas Heroes Program.

Community Lending Programs offer loan products that are based on property location (large, desirable areas all over Galveston County qualify). Just like any other loan, a buyer must qualify for these programs but does not have to be a first-time homebuyer. Once the borrower’s qualification is confirmed and a property selected, the community lending program will offer lender credits for the flexibility of a lower interest rate or closing costs savings that can save the borrower thousands of dollars.

The City of Galveston even has a Homebuyer Assistance Program (HAP). For qualifying borrowers, this program can offer up to $14,500 to assist with down payment and closing costs. These grants are offered by the City and are through Housing and Urban Development (HUD), check with the City’s website to see if you qualify. www.galvestontx.gov/271/Homebuyer-Assistance-Program

There are even wealth transfer loans available to parents and grandparents who wish to assist in the home-buying process for their children or grandchildren but don’t want to hand over a large sum of money for the purchase. Lenders offering this type of loan can qualify the borrower and set up the loan, so the lending institution provides a portion of the funds, and the parent or grandparent provides the remaining portion. All funds are combined to the total sales price and the borrower makes the regular payments just like usual.

Some lenders are offering home-improvement loans for homeowners to make green (energy efficiency) improvements to their existing homes. Improvements such as energy-efficient windows and doors, solar panels, roof, floor, and wall insulation, and energy-efficient HVAC and appliances can be very costly but having these items can save the homeowner a lot over the years of homeownership. These improvements also add to your home’s value and done correctly, can make an excellent return on investment.

For a list of local lenders that can explain in detail each of these programs and many more options to get you into a loan product that fits you perfectly, contact your local Realtor. Texas Realtors and Texas State Affordable Housing Corporation offer a comprehensive website with free educational materials for current and future homeowners. The website to visit is: www.texasfinancialtoolbox.com