Which Texas home loan is right for me?

Which Texas home loan is right for me ?

Years you plan to stay in the homeRecommended program
1-3 years3/1 ARM, 1 year ARM or 6 month ARM. Or a fixed rate if the ARM rate is not significantly lower
3-5 years5/1 ARM or fixed if rate is close to the same
5-7 years7/1 ARM, 30 year fixed of 15 year fixed
7-10 years30 year fixed or 15 year fixed
10+ years30 year fixed or 15 year fixed

The difference between ARM and fixed rate APR’s varies. When the ARM interest rate is close to the fixed rate, it may be better to go fixed, even for shorter expected terms. In most cases we are currently suggestingthe fixed rate option

Loan ProgramAdvantagesDisadvantages
Fixed Rate Mortgages30 year fixed15 year fixedMonthly payments are fixed over the life of the loanInterest rate does not changeProtected if rates go upCan refinance if rates go downThis is often the best choice!Possibly higher interest ratePossibly higher mortgage paymentsRate does not drop if interest rates improve
Loan ProgramAdvantagesDisadvantages
Adjustable Rate Mortgages (ARM)10/1 ARM7/1 ARM5/1 ARM3/1 ARM1 year ARM6 month ARM1 month ARMLower initial monthly paymentRates and payments may go down if rates improveYou may qualify for higher loan amounts30 year term, no balloon paymentMore riskPayments may change over timePotential for higher payments if rates increaseExtra closing costs if you have to refinance if the rate goes up
Loan ProgramAdvantagesDisadvantages
Balloon Mortgages7 year5 yearLower initial monthly paymentLower payment for a predetermined period of timeMany balloon mortgages offer the option to convert to a new loan after the initial termRisk of rates being higher at the end of the initial fixed periodRisk of foreclosure if you cannot make balloon payment, refinance, or exercise the conversion optionBalloon payment requires you to sell or refinance after the term, as opposed to a 7/1 or 5/1 program with a 30 year term
Balloon mortgages are not commonly used currently.
Loan ProgramAdvantagesDisadvantages
First Time Buyer ProgramsLower down paymentEasier to qualifyLower rates may be availableGrant funds for downpayment assistance may be availableMay be subject to income and property value limitationsSome government subsidized programs may generate a recapture tax if you sell the house too soonEducation courses may be required to qualify for these loans
Loan ProgramAdvantagesDisadvantages
Stated Income ProgramsDon’t need to verify incomeFaster approvalGood for borrowers who may not qualify with a full income documentation programHigher ratesPossibly higher down payment

These programs have become less available and more tightly restricted.
Loan ProgramAdvantagesDisadvantages
Interest Only ProgramsYou have several payment optionsLower monthly paymentsQualify for a higher loan amountQualify at the interest only paymentOption to pay the full normal paymentInterest only payments for up to ten yearsHigher ratesPrincipal loan balance will not decrease during the interest only payment periodPayment will be higher for the remaining termIn many cases you will want to refinance after the interest only period. This would  result in another set of closing costs and rates may be less favorable when and if you refinance
In most cases we do not suggest this program.
Loan ProgramAdvantagesDisadvantages
No point, No fee ProgramsNo out-of-pocket loan costs at closingClosing costs are paid from the lender rebateLess money required to closeRefinance without increasing your loan amountHigher ratesHigher paymentsSome lenders may have a short payoff penalty which is usually charged to the loan broker, but may be passed on to youSome require a prepayment penalty for the first one to five years
If you expect to have your loan open for a short term (1 to 5 years), a no point, no fee program may be best. If you expect you loan to be open for 5 or more years you will probably be better of to pay fees and points to get a lower rate (if you have the funds available). We can show you options with and without points.
Loan ProgramAdvantagesDisadvantages
Imperfect Credit ProgramsPotential for reestablishing credit if you pay your mortgage on timeWhen used for debt consolidation, you may be able to reduce your monthly debt paymentHigher ratesTerms may not be as favorableHarder to get long-term fixed loansLoans may have prepayment penaltiesLarger down payment may be required
Loan ProgramAdvantagesDisadvantages
Home Equity Line of CreditYou only borrow what you needPay interest only on what you borrowFlexible access to fundsInterest may be tax deductibleMay be free of closing costsA good source for an emergency fund, if set up in advanceCan be used for debt consolidation and lower paymentsRates are usually lower than consumer loan or credit card ratesRates can change. The maximum interest rate can be relatively highPayments can changeHarder to refinance your first mortgage
Texas currently has rules that limit the total mortgage size to 80% of the homes value when you take cash-out. At this time we are not offering HELOC’s.
Loan ProgramAdvantagesDisadvantages
Home Equity Fixed LoanFixed paymentsInterest may be tax deductibleGet cash out for any purposeHigher interest rates compared to first mortgageHarder to refinance your first mortgageInterest is paid on the entire loan amount, compared to an equity line of credit

In addition to our standard loan programs, you may benefit by obtaining one of our many special programs:

  • Purchase your home with no down payment using Private Mortgage Insurance (PMI) or Lender-paid Mortgage Insurance (MI).
  • Piggyback loans: 80-10-10 or 80-15-5. Avoid PMI payments by using Lender-paid MI.

At Texas Capital Mortgage we offer a free, no obligation consultation. Call Today!

Texas Capital Mortgage – 28 FM 1960 West – Houston, TX 77090
Office Phone: 1- 866-433-0500 toll free Fax: 832-565-1656

NMLS# 304162

We provide service for the entire state of Texas.

Our goal is to provide your with the best mortgage products with low rates and superior service. Call one of our experienced mortgage loan origionators for a rate quote or answers to your financing questions.  

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