What To Watch For When Working With A Home Loan Company In Texas

Texas Loan Companies: What You Need To Look Out For

We have all been there. You have an emergency or bills to pay but have no money at all. A personal loan is the first thing that comes in mind when in a tight spot and need cash fast. With dozens of loan companies at your disposal, you are spoilt for choice, or are you? You, however, shouldn’t borrow from the first company you come across.

There are several important factors that one should consider applying for a loan from any company.

Understanding Personal Loans

A personal loan can be defined as money borrowed from a lender to be paid back with interest at a later time. Lenders have to determine a person’s eligibility for a loan before processing or approving a loan application. Lenders will look into an applicant’s:

  • Income
  • Credit history and score
  • Employment status
  • Debts
  • Expenses

After submitting the loan application papers, the lender starts processing the loan immediately, then calculates how much you should pay for the same. You will, however, get these details once the loan has been approved. Should you be unable to repay the loan in full, the lender might choose to use debt collectors or even use legal action against you.

Why Should You Get A Loan?

Most people are eligible for different types of loans. Nonetheless, you should go about applying for loans simply because you can borrow. Financial experts advise against this and only recommend going for one for genuine reasons. Personal loans should, therefore, be treated with the utmost care to avoid building a mountain of debt on yourself. You should also avoid inquiring about a loan too often, as this too can affect your credit score.

Outlined below are some of the good reasons why people get personal loans.

1. To Pay For Medical Expenses

You can never prepare adequately for a medical emergency. Even your medical insurance might not be enough to cover for all expenses. If your savings are running low and unable to settle the medical debt, you can apply for a personal loan. With the personal loan, you should be able to clear the expenses more conveniently. The loan repayment plans are more manageable as compared to having to pay a lump sum at once.

2. For Home Improvement

A home improvement project can help give your home a value boost. That said, some projects can be too costly for the homeowner, forcing him/her to seek financing instead. A personal loan will come in handy in funding some of the expensive projects such as roof replacement or extensions. Some of these improvements tend to pay the loan off in one way or another.

3. Debt Consolidation

There are times when you will have several loans to service. This means some of the loans might end up being forgotten, forcing you to make late payments. Going for a debt consolidation loan can however help you manage these loans at once. The loans are consolidated into one, meaning you only have to think of one loan from that moment on. This reduces the risk of late payments and additional charges that may come with late payments.

4. Significant Purchases

Big purchases may put a huge dent to your savings account. Some investments, such as when you need to replace appliances in the house, or need to buy a car require lots of money. You can take a personal loan to help top up the amount you already have. Many people take loans to pay for their cars and other major purchases in the house. As long as you are confident, you’ll be able to repay the loan on time, then taking a personal loan can be beneficial.

Factors To Consider When Looking For A Loan Company

As mentioned earlier, it wouldn’t be wise of you to apply for a loan from the first company you see. Shopping around can land you a better deal. Here are some of the factors you need to consider when looking for a lender.

1. Interest rates: Check to see how much the company charges in interest. Variable interest rates may seem enticing but are riskier in the end.
2. Reputation: Look for a company reputable enough to stick to the terms of the contract. In addition to this, the company shouldn’t share your information with other companies or advertisers.

3. Repayment terms: Only go for the company offering flexible repayment terms. A trustworthy company will be willing to discuss the repayment terms with the customer.

4. Upfront fees: Some companies will require you to pay upfront fees. Most of these companies aren’t worth it.

5. Customer care: Customer support is critical too. You should be able to reach the company at any time of the day when in need. They should also be responsive to inquiries.

Contact us or call The Texas Mortgage Pros today for more information! Visit our blog for more related articles.

FHA Flipping Rules

What You Need To Know About FHA Flipping

When you ignore a relatively unknown FHA flipping rule, you could be stopping a purchase where it stands. Property flipping is when an investor buys a house, makes some improvements and then sells it for a profit. If you have watched any HGTV, you will see that people can easily make a living from this.

However, there is a dark side to property flipping when looked at from the side of mortgage loans. This is particularly true with FHA. If you are a buyer, your lender and realtor should understand FHA flipping rules and guidelines. You should also know about this to ensure that you are on the safe side.

Explaining FHA Flipping Rules

A property flip is defined by mortgage lenders as a home that has been owned for a short period of time and then sold for a sizeable profit. FHA and other lending agents care about this because of the possible fraud which is linked to it. Of course, it is important to remember that this is a possible fraud.

Most of the property flips will be completely legitimate. However, when a property has a significant increase in value with almost nothing being done to it, everything becomes a bit suspicious. There are also many flipping schemes which include key parties in the mortgage, appraising and other industries which use false information to endure that purchases work.

Most of the concerns relate to the value of the property or straw buyers. A straw buyer is one who buys with no intention of living in the property. They will often buy the property at an inflated cost to create a profit for the seller. These are some of the reasons why FHA has created flipping rules.

HUD has broken the FHA flipping rules into 2 time periods. These are ownership of fewer than 90 days and ownership between 91 and 180 days.

To determine the time period of ownership, the clock will start on the deed recording date which is the sate when the seller stakes ownership. The next important date will be the date on the signed purchase agreement along with the date of FHA case file assignment. To clear the initial flip date requirement, the signed contract date and the case file ID will need to be assigned 91 days after the deed recording date. In order to clear the second flip rule period, the purchase agreement date and the FHA case number will need to be assigned 180 days later.

FHA 90 Day Flip Rule

The most restrictive of the established date ranges is the less than 90-day one. In these situations, FHA will not allow any financing of homes which are flipped in less than 90 days after the deed recording date. When there is no FHA insurance, a loan will be impossible. Of course, there are some sellers and transactions which are excluded from this rule and you need to be aware of this.

FHA 91-180 Days Flip Rule

If the property has already cleared the 90-day rule, it could still fall into the next rule time period. During this second time period, the sale of a property for FHA financing is allowed. However, there is a possible second appraisal requirement that may have to be met. The FHA will also not allow the buyer to pay for this.

The second appraisal will be required when certain conditions occur. This will be when the sale price is 100% or more than the price paid by the seller. If a higher priced loan is required and the purchase price is 20% more than the seller’s purchase price, a second appraisal is required.

An example of this will be a house which was purchased for $100,000. If this house is then sold for $200,000, a second appraisal is needed. The mortgage lender will determine the last requirement.

Preventing Appraisal Delays And Additional Costs

The Second Appraisal

In regards to the second appraisal, there are some FHA rules to know about:

  • This will need to be done by a different appraiser
  • Documentation must be included that support the increased value
  • The buyer cannot pay for this
  • A lower value will be used if the second appraisal is 5% lower than the original one
  • The lender must have a 12-month chain of title documenting resales

The FHA may require additional documentation including a second appraisal if the sale occurs between 91 and 365 days after purchase. This will also occur when the resale price is 5% or more than the lowest sale price of the property within the last 12 months. This is very rare, but it can happen.

FHA Flipping Rule Exceptions

It is important to note that there is a possibility of skipping these guidelines. There are certain transactions which are excluded from the FHA flip rules that you need to know about:

  • The property has been acquired by a relocation agency or employer in connection with the relocation of an employee
  • A resale by HUD under the real estate owned program
  • A sale by other government agencies of single-family properties via programs which are run by the agencies
  • The sale of property by a nonprofit which is approved to buy HUD-owned properties at a discount with resale restrictions
  • The sale of a property acquired through an inheritance
  • The sale of a property by a federally or state-chartered financial institute
  • The sale of a property by a state or local government agency
  • The sale of a property in a declared major disaster area upon issuance of a notice of exception from HUD

These restrictions will not apply to a builder selling any newly built properties or when buying a house for a borrower who is planning to use FHA-insured funding. All of these exceptions can be found in the FHA flipping regulations.

Other Loan Options For Flipped Properties

It is important to note that these rules only apply to FHA loans. A buyer who qualifies for other loan products could get financing even in these cases. There are a number of other loan types that can be considered such as:

These other loan options will not have the same flipping rules, but they will generally pay closer attention to the transaction if a short ownership period is in play. Underwriters will verify the length of the transactions. They will also review the appraisal thoroughly to ensure that the home actually matches the value.

Documentation Related To FHA Flipping

You might be wondering if a buyer can start the process of qualification while not being under contract. The answer is we, but if you want the purchase a flipped home, the date of the contract can cause flipping restrictions. To start the review process, the following documents should be prepared:

  • Buyer pre-approval
  • A copy of the recorded deed
  • A list of the improvements made to the property
  • An executed purchase agreement