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Dallas Home Loan Information

Many options exist for how to obtain your Dallas home loan.

From conventional loans to FHA loans to VA loans, each type of product has advantages to some borrowers and disadvantages to others. The advice of a lending professional can be of great assistance in determining which home loan is the best home loan for your needs. In our opinion, it is best to work with a local lending professional, for they have far better insight into local market circumstances, and can go one step further than someone distant from the market - local professionals can recommend the best Dallas area home loan.

Types of Lending Professionals

There are basically two types of lending professionals that you will encounter in the market, mortgage bankers and mortgage brokers. Both are very knowledgable of available products, can be of great assistance in identifying type of loan that will best fit your needs, and are extremely capable of helping you obtain your mortgage. There are a few differences between the two professionals. The following links will help to clarify the services that each of these professionals provides.

Types of Home Loans

Now that we know who to talk to, what do we talk about? Your mortgage loan is going to come in one of two basic forms. It will either be a conventional loan issued by a private financial firm, or it will be a government backed loan.

For the first time home buyer, government guaranteed loans will offer the best opportunity to finance your house without devastating your life savings. It is frequently possible to acquire these loans with a minimal down payment. These programs include FHA, VA and RHS loans. For Texas Veterans, you may also qualify for funding through the Texas Veterans Land Board.

If the loan program you are considering is not covered by the above mentioned programs, then your Dallas Home Loan will be in a category known as a conventional loan. Conventional loans come in two broad categories, conforming and jumbo.

Conforming loans are for lower dollar amounts and are called such because they conform to FannieMae and FreddieMac guidelines. These two entities buy and package mortgage loans after they have been originated, and then sell them to interested investors.

Jumbo loans are written for amounts larger than those that conform to FannieMae and FreddieMac guidelines. As such, they are slightly more difficult to resell after they have been issued and therefore will usually command a higher interest rate.

Conventional loans also come with an array of choices as to how interest rates will be determined. In a fixed rate mortgage, interest is fixed for the term of the loan - you always know exactly what your rate will be. However, there are other products called Adjustable Rate Mortgages (ARMs), which have varying interest rates over the term of the loan, as their name would suggest. The loans will have a fixed interest rate for a set period of time, usually 1,3,5 or 7 years. After the period of fixed interest, the interest rate may adjust (up or down) depending on the prevailing interest rate in the market at that time. The new interest rate is calculated by adding a margin to a published index (Prime Rate, LIBOR, etc).

There are also products that allow the borrower to pay only the interest due on the loan, without having to make principal payments. These loans are commonly called interest only loans. In times of broad economic expansion, these loans are popular, as the lender anticipates growth in the underlying property value that will build equity in the loan package. In times of economic contraction, these loans are more difficult to obtain.