If you have always dreamed of living in Texas, don’t wait too long to make your dream come true. The first step is to understand how you may be able to finance your Texan dream home.
A mortgage can be a great way to turn your dream into reality. There are generally five types of mortgages that you will want to consider. Conventional mortgages can be used on all types of home loans, and you will need a good credit score to qualify. Jumbo mortgages are those where the home is worth more than can be borrowed with a conventional mortgage, and you will need more collateral to get one of these. Government-insured mortgages are backed by a federal agency like the Federal Housing Administration, the Department of Agriculture, and the Department of Veterans Affairs. You can find fixed-interest loans allowing you to pay the same interest rate over the course of the loan along with adjustable-rate mortgages.
Before you head to a financial institution to get a loan, you need to understand the new Current Affected Credit Loss (CECL) laws and how the CECL will affect loans. The CECL will affect loans that you try to get from this point forward. The new law will require lenders to estimate the probability of someone defaulting on the loan at the time that they make it. Therefore, if unemployment rates are rising and other economic indicators say that more people are likely to default, lenders will decrease your ability to get a loan. In the past, lenders have only had to add this 90 days after a borrower missed their first payment.
Cash Purchase with Reverse Mortgage
As a retiree, you can find some dream homes for sale when you use your cash. If you purchase a home with savings and then arrange a reverse mortgage, you can get a portion of this money back in a method similar to drawing down savings. Reverse mortgages are loans in reverse: a lender agrees to buy your home in several years but begins payments early. When you pass on or move to assisted living, they take ownership of the house and the balance of the value of the house goes to you or your descendants. Many of the same lenders who offer mortgages will offer reverse mortgages.
These loans are available to people 62 or older who own most to all of a home without liens. You can choose between taking out the price in a lump sum, over a fixed number of payments, or for as long as you are living in the home. The rules for this are based on the age of the younger person listed on the loan, and the amount you get over time is based on how long actuarial tables suggest that you will live. This approach can be an innovative way to use your savings to get the home you want and let the mortgage give you monthly living expenses.
There are many different ways that you can pay for a dream home in Texas. Learning financial literacy is an essential tool for preparing for your future home owning goals. Let Jas.Advisors.Grp help!