Home Loan Options
It's easy to feel overwhelmed by Texas's many different types of home loans. NORTEX Mortgage has a team of dedicated mortgage loan experts in Plano, TX, ready to assist you in finding the right loan program suited to your unique needs.
Fixed Rate Mortgages
The term “fixed-rate mortgage” refers to a home loan with a fixed interest rate for the entire term. This means the mortgage carries a constant interest rate for the life of the loan.
Mortgages insured by the Federal Housing Administration (FHA) allow borrowers to receive low mortgage rates with a minimal down payment.
Single-family and multifamily homes can qualify for an FHA loan. Banks can continuously issue FHA loans with little risk or capital requirements. The FHA doesn’t issue loans, set interest rates, or guarantee against default.
Individuals not qualifying for a conventional mortgage may obtain an FHA loan. They’re a popular option for first-time home buyers. FHA loans offer low minimum down payments, reasonable credit expectations, and flexible income requirements.
Adjustable Rate Mortgages (ARM)
With an adjustable-rate mortgage, the initial interest rate is fixed for a period of time. After this initial period of time, the interest rate resets periodically, at yearly or monthly intervals. The interest rate for ARMs is reset based on a benchmark or index, plus an additional spread called an ARM margin.
With terms ranging from 10 to 30 years, the loan can be paid off at any time without penalty. This type of mortgage is structured (known as “amortized”) so that you can completely pay it off by the end of the loan term. Also, there are “bi-weekly” mortgages, which shortens the loan’s term as you pay half of the monthly payment every two weeks (with 52 weeks each year, you’ll make 26 payments, or 13 “months” worth annually).
If you choose an “impound account,” your monthly payments may vary. If you put less than 20% cash down, then in addition to your monthly loan payment, some lenders will collect additional money for the prorated cost of property taxes and homeowners insurance. This allows the lender to pay these expenses. If the property tax or the insurance change, your monthly payment will be adjusted. Overall though, payments in a fixed-rate mortgage are very stable and consistent.
Combining features from fixed-rate and adjustable-rate mortgages, hybrid ARM mortgages can be another excellent option for a home loan. They’re also known as fixed-period ARMs.
What are Hybrid ARMs?
A hybrid loan usually starts with a fixed interest rate for 3, 5, 7, or 10 years. The loan then converts to an ARM for a set term of years. Such as a 30-year hybrid with a seven-year fixed rate and a 23-year adjustable rate.A fixed-period ARM’s initial interest rate is lower than the rate of a 30-year fixed mortgage (sometimes significantly less). So you can enjoy a lower rate while having a period of stable payments. On the other hand, a typical one-year ARM goes to a new rate annually. While an ARM’s starting rate is considerably lower than a standard mortgage, they risk future hikes.
Homeowners can get a hybrid and refinance when the initial term expires. These loan types are best for people not planning to stay long-term in their homes. By getting a lower rate and monthly payments than with a 30- or 15-year loan, they can break even more quickly on refinancing costs like title insurance and appraisal fees. With lower monthly payments, borrowers can make extra payments to complete the loan early, saving potentially thousands of dollars.
Conforming loans are conventional loans that meet bank-funding criteria set by Fannie Mae (FNMA) and Freddie Mac (FHLMC). These stock-holding companies buy mortgage loans from lending institutions and secure them for resale to the investment community. Every year, from October to October, Fannie Mae and Freddie Mac establish limits on what constitutes a conforming loan in a mean home price. Buying back mortgage loans allows these agencies to provide a continuous flow of affordable funding to banks that reinvest their money back into more mortgage loans. Fannie Mae and Freddie Mac only buy loans that are conforming to repackage into the secondary market – effectively decreasing the demand for non-conforming loans.
Conforming loans are conventional loans that meet bank-funding criteria set by Fannie Mae (FNMA) and Freddie Mac (FHLMC). Both of these stock-holding companies buy mortgage loans from lending institutions and secure them for resale to the investment community. Every year, form October to October, Fannie Mae and Freddie Mac establish limits on what constitutes a conforming loan in a mean home price.
Buying back mortgage loans allows these agencies to provide a continuous flow of affordable funding to banks that reinvest their money back into more mortgage loans. Fannie Mae and Freddie Mac only buy loans that are conforming, to repackage into the secondary market – effectively decreasing the demand for non-conforming loans.
Conforming Loan Limits
Conventional Loans: Amazing Rates and Flexible Terms
At Nortex Mortgage, we deliver conventional loans at the most competitive rates in Texas. Our mortgage professionals have served borrowers in Plano, McKinney, Frisco, and surrounding Texas for over 20 years. Conventional loans are one of the most popular mortgage options for clients here and nationally because they have great rates and are highly adaptable to a client’s unique needs. So when you’re ready to learn more about conventional mortgages, contact our loan professionals with any questions or get a free quote.
What Makes a Conventional Loan Conventional
Conventional mortgages are so-called because they are fully funded and insured through private lenders or banks. That is, they are not at all backed by the government. Non-conventional loans are backed through federal departments like the Federal Housing Administration or the U.S. Department of Agriculture. While non-conventional loans are an excellent option for clients struggling to get approval for a mortgage, conventional loans offer some unbeatable benefits.
There are two main divisions of conventional loans: conforming and non-conforming loans. Conforming loans do not exceed county-specific limits set through Fannie Mae and Freddie Mac, two government-sponsored entities. Fannie Mae and Freddie Mac repurchase mortgages in bulk but only purchase mortgages up to certain limits – those that conform to their rules. In Collin and Denton Counties, limits are:
- $453, 100 for a single-unit home
- $580,150 for a two-unit home
- $701,250 for a three-unit home
- $871,450 for a four-unit home
You’ll need a non-conforming loan to purchase a high-cost home that exceeds the conforming limits. Also known as “jumbo loans,” non-conforming loans are still a type of conventional loan, just a more expensive one. Jumbo loans typically have slightly higher interest rates and require a slightly higher down payment than conforming loans. Despite this, the Nortex Mortgage loan officers can find the most competitive rates in our area and help our clients fund the homes they love.
The Benefits of Conventional Loans
Conventional loans provide some of the best interest rates in the mortgage market. However, they do require that clients are in good financial standing. To obtain this type of loan, you should have good credit, be prepared to make a down payment of at least 10% to 20%, have a minimal debt-to-income ratio, and have proof of steady income. If you are concerned that you may not be able to qualify for a conventional loan, our mortgage professionals can also help you explore non-conventional funding.
We’re Here to Help You Start the Journey
If you’re considering home financing in Plano, McKinney, or Frisco, Texas, we’d love to have the chance to help you. Our mortgage professionals have the long-term experience you deserve and the knowledge you need to narrow down the right loan choices for you. Contact us today to get started.
Mortgage Refinance: Cash-Out and Rate-and-Term Solutions
Consider refinancing your home loan if you’re looking to save money month-over-month or could use cash in hand now in exchange for home equity. Rate-and-term mortgage refinance is a solution for clients who want a better interest rate or term to save over time. Other borrowers choose cash-out refinance to receive cash out in exchange for some of their home equity. The refinance professionals at Nortex Mortgage can help you find the right solution for your needs. We have helped clients in Plano, McKinney, Frisco, and nearby Texas communities for over two decades. We are deeply passionate about helping our clients achieve their financial goals, and we’d love to talk with you. Contact Nortex Mortgage today, and let’s begin exploring.
As its name implies, rate-and-term refinance (sometimes called rate/term refinance) exists to help you lower your existing interest rate and/or change the term of your current mortgage. Rate-and-term refinances are sometimes called a “no cash-out” refinance because, unlike a cash-out refinance, no money is disbursed to you when you sign your new mortgage. Rate-and-term refinances also do not increase the value of your loan. Because almost everyone could benefit from saving more money over time, this type of refinance is popular among many types of homeowners:
Clients with an existing adjustable-rate mortgage (ARMs) are drawn to rate-and-term refinance because their existing mortgages have volatile interest rates that can be very costly. Refinancing to a fixed-rate mortgage means clients secure a steady monthly interest rate. This translates to more stability and savings over time.
Another type of borrower we often see for rate-and-term refinance are those who have previously obtained a mortgage while they had less-than-great credit or otherwise had difficulty qualifying for a loan with a competitive rate. Many of our refinance clients have improved their financial standing since signing their existing mortgage, and they’re ready to reap the savings refinance can bring.
A cash-out refinance replaces your existing home loan with a higher-value mortgage and gives you cash in hand. Once the paperwork is complete, your new mortgage will be the sum of your existing home loan and the value of your cash payout.
Our clients use cash-out refinance to pay off existing bills, make home improvements, invest in stock and other ventures, go on dream vacations, and for other reasons. To pay for this new, higher-cost loan, clients can elect to take on a longer-term or higher monthly payment.
Cash-out refinance isn’t available to everyone who would consider refinancing. You must have enough home equity in your home to justify your refinance to lenders. A good credit score and a low debt-to-income ratio would be best.
See What Your Options Are
Even if you’re unsure that a mortgage refinance is the right option for you and your family, it’s never a bad idea to look at your options. At Nortex Mortgage, we offer free quotes and are happy to answer your questions no matter where you are in the refinance process. If you own a home in Plano, McKinney, or Frisco, contact us to see if a cash-out or rate-and-term refinance may be right for you.
RHS Loan Programs
The U.S. Department of Agriculture offers a variety of programs to help low to moderate-income individuals living in small towns or rural areas achieve homeownership. The Rural Housing Service (RHS) helps qualifying applicants who need help to receive credit from other sources purchase modestly priced homes as their primary residence.
RHS Loans are an attractive option because:
- Minimal closing cost
- Low or no down payment
RHS loans can be used to purchase and renovate a previously owned home or new construction. Families must be able to pay their monthly mortgage, homeowner’s insurance, and property taxes.
Find out if you qualify for an RHS Loan.
NORTEX Mortgage is an RHS-approved lender.
First Time Homebuyer Loan Programs
Many state, county, and local government programs offer financing for qualifying low-to-moderate-income families wishing to purchase their first home. Loan assistance programs like Mortgage Credit Certificate (MCC) offer a partial tax credit for interest on the loan.
These programs typically offer:
- More relaxed qualifying guidelines
- Lower upfront fees
- Lower interest rate
USDA Loans: Rural Mortgages with Great Perks
When it comes to home financing, finding great benefits without breaking the bank can be a difficult proposition. USDA loans are amazing home financing solutions for clients interested in living in suburban and rural areas in Plano, McKinney, and Frisco, Texas. USDA loans are a type of nonconventional loan that is insured through the federal government, which means they have more flexible approval requirements than some other privately insured loans. If you’re interested in learning more about home financing, our professionals have more than 20 years of experience to rely upon. Contact Nortex Mortgage with questions or to schedule a consultation about your goals as a homeowner.
Nonconventional Solutions for Rural Homebuyers
USDA loans are a type of nonconventional loan. Nonconventional loans are insured, in part, through various departments of the federal government. These differ from conventional loans, which are fully funded and insured through private lenders. Other common types of government-backed loans include VA loans and FHA loans, each of which is uniquely designed for different types of borrowers.
USDA Loan Basics
USDA loans are backed through the U.S. Department of Agriculture. The USDA developed these loans through the Rural Development program, which is an effort to encourage homebuyers to populate and develop non-urban areas. The USDA designates which areas and properties are eligible for USDA loans and sets income limits for borrowers. While they are backed by the federal government, they are fully funded by approved lenders. Because they are insured through the USDA program, these loans are less of a risk to lenders, which means they have less stringent approval requirements and some amazing benefits, including:
- No required down payment.
- Fixed interest rate with 30-year terms
- Minimal private mortgage insurance (PMI)
- No maximum purchase limits
USDA Loan Property and Borrower Requirements
The USDA has a few types of loans and grants, but we will focus on the USDA Single Family Housing Guaranteed Loan Program. You can use funds from this loan program to purchase property and land or to renovate or improve an existing property. You can also use these loans to prepare a site for construction, purchase essential household equipment like heating and cooling systems, or even purchase energy-efficient measures. To be eligible for this program, among other requirements, you must:
- Have a low or moderate income as defined by the USDA depending on where you plan to purchase (our team can easily determine if you meet this requirement)
- Plan to occupy your USDA loan home as your main residence
- Be a U.S. Citizen, national or Qualified Alien
- Purchase a home that passes an inspection and is declared adequate, modest, safe, and sanitary
Start the Journey to Homeownership with USDA
If USDA loans sound like a good option for your family, contact Nortex Mortgage today. Our qualified mortgage professionals can give you the answers you need. We can quickly determine if you’re eligible for a USDA loan and show you areas that are eligible for financing. We have more than two decades of experience helping clients in Plano, McKinney, and Frisco, Texas, and we’d love to talk to you.
Few home financing options can beat the amazing benefits associated with VA loans. These government-backed mortgages are fully funded through private lenders but insured through the U.S. Department of Veterans Affairs. They require no down payment and have minimal credit qualifying requirements. These unique loans are only available to certain qualifying servicemembers, veterans, and qualifying candidates who have served our country in some way. At Nortex Mortgage, we have the highest respect for our VA loan clients, and we’re here to help you if you’re starting the journey to homeownership. We have served clients in Plano, McKinney, Frisco, and nearby Texas communities for over 20 years. Contact us to learn more today.
The Background of VA Loans
The VA home loan guaranty program, which regulates VA loans, was created in 1944 to help veterans and their families rebound from the harsh economic climate during and after World War II. Today, these mortgages continue to help qualified candidates by providing an easier path to owning a home than is available through the conventional loan process. VA loans are a type of nonconventional loan, which means they are insured through a government department. Other common types of nonconventional loans you may have heard of include FHA loans (backed by the Federal Housing Administration) and USDA loans (backed by the U.S. Department of Agriculture).
The Basics of VA Loans
VA loans are guaranteed, in part, through the U.S. Department of Veterans Affairs. Because of this, they pose less risk to private lenders – who fund the loans – than conventional loans, which the government does not back. Private lenders are encouraged and able to lend to a broader range of applicants, including those with less-than-great credit or who do not have enough cash to make a down payment. To qualify, borrowers should have sufficient credit and proof of income to meet the expected monthly mortgage payments and other homeowner’s expenses. Lenders ultimately decide who to approve.
Qualifying for and Obtaining a VA Loan
In addition to meeting these requirements, you’ll also need to obtain a certificate of eligibility (COE), which verifies your service or other qualifying factors that make you eligible. We can help guide you through obtaining your COE, which is relatively simple. Veterans and servicemembers who have served active duty for 90 days or more during wartime are eligible, as are most who have served during peacetime for at least 181 days of active duty. Certain Reservists and National Guard members are also eligible after a certain length of service. Certain surviving spouses of veterans killed during duty or because of a service-connected disability are also eligible, as are certain citizens who have served in various government organizations. If you think you may be eligible, contact us; we can quickly determine if you are a qualified candidate.
Your Partner in Nonconventional Financing
VA loans are only available through VA-approved lenders. At Nortex Mortgage, we work with only the best lenders, who allow us to offer competitive interest rates for VA loans and their many other benefits. When you’re ready to learn more about this great home financing solution for purchase in Plano, McKinney, Frisco, or nearby Texas, contact us to get started.
FHA 203k Loan
The FHA 203k is a renovation loan program that provides funds for both the purchase and renovation of a home. There are two types of FHA 203k loans. The first is normal 203k, which is given for properties that need structural repairs such as a new roof or room addition. The second is the streamlined203k, which is given for non-structural repairs such as painting and new appliances. The minimum Loan Amount to secure an FHA 203k loan is $5000.
HARP 2.0 Refinance
The Federal Housing Finance Agency created this program in March 2009 to allow those with a loan-to-value ratio exceeding 80% to refinance without paying for mortgage insurance.
To be eligible for a HARP 2.0 refinance, you must meet the program’s certain criteria:
1) You haven’t refinanced through the original HARP program.
2) You’re current on mortgage payments and no late payments over 30 days due (for six months) and no more than one late payment in the last 12 months.
3) Your mortgage is backed by Fannie Mae or Freddie Mac and was bought before May 31st, 2009.
4) Your loan to value (LTV %) is at least 80%.
The HARP allows homeowners who owe a mortgage that’s more than the value of their home a more affordable and stable loan.
Personalized Financing Solutions for High-Cost Homes
At Nortex Mortgage, our qualified mortgage professionals help clients secure home financing in all price ranges. Mortgages exceeding certain conforming loan limits are non-conforming or “jumbo” loans. In Collin and Denton Counties, the conforming loan limit for a single-family home is $453,100. You may require a jumbo loan if financing exceeds that limit. We serve clients in Plano, McKinney, and Frisco, Texas. Even for jumbo loans, we are confident we can help you find the most competitive rates available. Contact us to get started today.
High-Value Conventional Loans
Jumbo loans are a type of conventional loan. Conventional loans are funded and insured through private lenders, banks, and insurers. They differ from nonconventional loans, backed to some degree by the federal government. Conventional loans typically offer more competitive interest rates and flexible terms than non-conventional ones. Typical non-conventional loans include FHA loans and VA loans.
Conventional loans have two divisions, as mentioned: conforming and non-conforming loans. Government-sponsored entities (GSEs) Fannie Mae and Freddie Mac set the conforming loan limits varying from county to county across the United States. These giant companies buy mortgages in bulk from companies and create mortgage-backed securities. They will not purchase mortgages exceeding their set limits because those jumbo mortgages pose a higher risk. Loans that exceed the following limits in Collin and Denton Counties are considered jumbo loans:
- $453,100 for a single-unit home
- $580,150 for a two-unit home
- $701,250 for a three-unit home
- $871,450 for a four-unit home
Securing a Jumbo Loan
Jumbo loans are more challenging to qualify for than non-conventional and conventional conforming loans. To qualify, you should have good credit (a 700 score or higher, though each case is different) and a low debt-to-income ratio (40% or lower). You may need to provide substantial paperwork, including up to two years of tax returns, proof of income, and lines of credit. In most cases, jumbo loans require a down payment of at least 20-30%. The higher the down payment you can provide, the better interest rate you can secure.
Jumbo loans traditionally have higher rates than conforming loans because private lenders must keep their mortgages on their books rather than selling them to Fannie Mae and Freddie Mac. We work with several capable lenders with the financial power to make these high-cost loans and still offer competitive rates. Whether you’re looking for an adjustable-rate mortgage (ARM), or a fixed-rate mortgage, we can help. We also offer short and long terms to suit your needs.
NORTEX Mortgage is here to help guide you.
When you are ready to look at jumbo loans and how one could help you buy the home of your dreams, contact Nortex Mortgage. We have the experience you need for such an important investment. We help clients in Plano, McKinney, Frisco, and nearby Texas neighborhoods. Contact us today to schedule a consultation.