Principles 2 Level 3 & 4
Computerized Loan Origination
A computerized loan origination system allows a real estate broker or sales agent to pull up a menu of mortgage lenders, interest rates, and loan terms, then help a buyer select a lender and apply for a loan right from the brokerage office.
Mortgage Credit Certificate (MCC)
A Mortgage Credit Certificate allows the homebuyer to claim a tax credit for some portion of the mortgage interest paid per year. It is a dollar-for-dollar reduction against their federal tax liability. In other words, a Mortgage Credit Certificate reduces the amount of taxes owed to the federal government. Note: The Mortgage Interest Credit (MCC) is a non-refundable tax credit. The homebuyer MUST have a tax liability in order to take advantage of the tax credit.
Government National Mortgage Association
Established as a government-owned corporation within HUD, a structure it retains to this day. For a fee, Ginnie Mae guarantees timely payment of principal and interest on privately issued mortgage-backed securities (MBS) collateralized by FHA, VA, or other government-insured or guaranteed mortgages.
Major Players in the Secondary Mortgage Market
Fannie Mae: Federal National Mortgage Association (FNMA) Freddie Mac: Federal Home Loan Mortgage Corporation (FHLMC) Ginnie Mae: Government National Mortgage Association (GNMA)
Straight Amortized Loans
Features a payment plan wherein each total monthly payment amount is different. The fixed portion of the payment is the amount applied towards the principal with the portion paid to interest changing from month to month as the principal balance is reduced.
The Fed Tools: Discount Rate
Federal Reserve member banks are also permitted to borrow money from the 12 district reserve banks to meet their fund reserve requirements but not to expand their lending operations. The interest rate charged by the district banks for the use of this money is called the discount rate. This rate is the basis on which banks determine the percentage rate of interest they will charge their loan customers.
Periodic Adjustment Cap
Limits the amount the interest rate can adjust up or down from one adjustment period to the next after the first adjustment. In general, the rate of your loan can go up at any scheduled adjustment date when the lender's standard ARM rate (the index plus the margin) is higher than the rate you are paying before that adjustment.
Lifetime Cap
Limits the interest-rate increase over the life of the loan. By law, virtually all ARMs must have a lifetime cap.
Determining LTV
Loan amount ÷ Purchase price = LTV (Turn to percentage amount.
Texas Mortgage Credit Certificate Program
The Texas Department of Housing and Community Affairs created its Texas Mortgage Credit Certificate Program (MCC) for the residents of Texas, to help make ownership of new and existing homes more affordable for individuals and families of low and moderate income, especially first-time buyers.
Federal Reserve Operations
"Independent within the government." This is due to the following reasons: Since it charges member banks interest, the Fed generates revenue independently without a need for Congressional funding. It has the authority to act on its own without permission from Congress. Members on its Board of Governors are appointed to long terms, which limits the ability of Congress and the president to influence its day-to-day operations.
Calculating Taxes and Insurance
(Annual Insurance + Annual Taxes) ÷ 12 months= T + I
The Federal Reserve System
(Commonly known as the "Fed"), the nation's central bank, operates to maintain sound credit conditions, help counteract inflationary and deflationary trends, and create a favorable economic climate. The Federal Reserve System divides the country into 12 federal reserve districts, each served by a federal reserve bank.
Maximum Loan Proceeds Formula:
(Maximum allowable monthly payment ÷ Mortgage factor) x 1,000 = Maximum loan amount.
FICO Score
A credit scoring system created by the Fair Isaac Corporation. Historically, it has been demonstrated that the higher the credit score, the less likely it is that the borrower will default on a loan. FICO scores range from 300 to 850. Normally FHA requires a minimum FICO score of 580; prospective borrowers with scores under 500 are not eligible for FHA loans. Fannie Mae and Freddie Mac look for A FICO score of at least 620. They may require, however, a higher rate of interest or a higher down payment if the score is under 660.
Federal National Mortgage Association (FNMA)
A federal government agency. Its mandate was to act as a secondary mortgage market facility that could purchase, hold, and sell FHA-insured loans. By purchasing FHA-insured loans from private lenders, Fannie Mae created liquidity in the mortgage market, providing lenders with cash to fund new home loans.
Fixed Rate Loans
A fixed-rate amortized loan payment plan features constant payments of principal and interest throughout the life of the loan. The lender first credits the monthly payment towards the interest owed for the month, with the remainder of that payment going towards reducing the principal balance. With each successive payment, the percentage applied towards the principal grows as the monthly interest that is due declines. By the end of the term, the full amount of the principal and all interest due is reduced to zero. Such loans also are called direct reduction loans.
Federal Agricultural Mortgage Corporation
A government-sponsored enterprise (GSE) with the mission of providing a secondary market for agricultural real estate mortgage loans, rural housing mortgage loans, and rural utility cooperative loans.
Mortgage Brokers
A mortgage broker brings together a borrower and a lender and earns a fee for that service.
Targeted Area Property
A targeted area is a census tract in which 70% or more of the families have incomes that are 80% or less of the statewide median income or an area of chronic economic distress. Homebuyers purchasing properties located in targeted areas do not have to be first-time homebuyers and purchase price and income limits are generally higher.
Interest-Only Loan Scenario
A term loan of $10,000 at 8% per annum, payable interest-only monthly, to be paid in full in three years would look like this: Loan Amount $10,000 × 0.08 = $800 Annual Interest $800 ÷ 12 = Monthly Interest-Only Payments of $66.66 for a three-year term Full Principal Payment of $10,000 + last Monthly Interest-only Payment of $66.66 = Final Balloon Payment of $10,066.66
Reserve Funds Requirement
All nationally chartered banks must join the Federal Reserve and purchase stock in its district reserve banks. The Federal Reserve requires each member bank to keep a set amount of its assets on hand as reserve funds; these funds are unavailable for any other use, including for loans.
Certificate of Reasonable Value (CRV)
An estimate of the market value on the date of inspection for the property being purchased. The CRV, which allows for a comparison between the sales price and the market value, places a ceiling on the amount of a VA loan allowed for the property.
Interest-Only Loans
An interest-only loan, also known as a straight loan or term loan, is a type of balloon payment loan (more on that in a minute) that calls for periodic payments of interest. A Fannie Mae-backed interest-only loan requires a 30% down payment, at least a 720 credit score, and a 24-month cash cushion. Term loans are generally used for home improvement loans, second mortgages, and investor loans rather than for residential first mortgage loans.
Interest-Rate Caps
An interest-rate cap places a limit on the amount your interest rate can increase.
Negative Amortization
Any interest you don't pay because of the payment cap will be added to the balance of your loan. A payment cap can limit the increase to your monthly payments but also can add to the amount you owe on the loan
Land Loan Requirements
Be wholly within the state of Texas Contain at least one acre, excluding any portion beneath a dedicated public roadway or navigable waterway or subject to frequent inundation or otherwise unusable Have legal, usable access to a public road. Access must be a minimum of 60 feet wide or meet the county public road width requirements, whichever is greater. "Usable" means that it can be driven on by a standard passenger car in inclement weather Be properly described by either a Field Note description of the tract with the surveyor's official seal and signature (original or copy) or a complete copy of the recorded subdivision plat if the description is by lot & block Not be zoned strictly for commercial use Not have been owned by you or your spouse within the previous three years
Rates, Fees, and Requirements-My First Texas Home
Below are the fees and requirements associated with these loans: Current interest rate and exact closing costs can be obtained from a participating lender All interest rates obtained through My First Texas Home are 30-year fixed annual percentage rate mortgage loans Must qualify under FHA, RHS, VA, or conventional (Fannie Mae HFA Preferred) guidelines The homebuyer must occupy home within 60 days of closing. TDHCA does limit the fees participating lenders may charge to help minimize your costs of closing the loan.
Demand Deposits
Better known as checking accounts.
Maximum Allowable Monthly Payment Formula
Borrower monthly income x Maximum allowable housing expense ratio = Maximum allowable monthly payment.
Depository Lenders
Consumers deposit funds into savings; these funds are used for making loans; interest is earned on the loans made from these funds, and some of the interest earned from the loans is used to pay interest to the consumers who deposited the funds into savings to begin with.
Conventional Loans
Conventional loans are loans that are not underwritten by any agency of the federal government. They can be conforming (conforming to guidelines set by Fannie Mae and Freddie Mac) or nonconforming (those that do not meet the Fannie/Freddie guidelines). Typically, the LTV on a conventional loan has been 80 percent of the value of the property or less, requiring a down payment of 20 percent or more. At the present time, the maximum LTV for most conventional loans is 95% (a 5% down payment).
Nonconforming Conventional Loans
Conventional loans are nonconforming when they do not meet Fannie Mae/Freddie Mac guidelines. They may be nonconforming because they exceed the conforming loan limit or buyers may lack sufficient credit or collateral. Lenders create nonconforming loans with the intention of holding them in their own portfolio or selling them to private mortgage packagers.
Government Sponsored Enterprises (GSEs)
Created by Congress to provide liquidity, stability, and affordability to the mortgage market. They are "sponsored" enterprises because, in spite of the fact that they were created by the government and operate under a government charter, they are publicly traded companies.
Commercial Banks
Designed to be safe depositories and lenders for a multitude of commercial banking activities. They have a variety of sources of capital, including savings, loans from other banks, and the equity invested by their owners.
Federal Home Loan Bank System
Designed to serve as a reserve credit system to support housing finance and provide relief to troubled homeowners and lending institutions. It consists of 11 member banks.
ARM Disadvantages
Early redemption penalties that come into play when selling or refinancing early in the loan term Lack of predictability of monthly payment amounts Greater full-term loan expense Overall complexity
Early Redemption Penalties
Early redemption penalties were created to protect lenders that rely on years of interest payments to make money. When loans are paid off quickly (whether by refinance or a sale), lenders will make less money than they originally anticipated. Thus, the early redemption penalty. This penalty can often be up to 80% of six months' worth of interest.
National Housing Act
Enacted in 1934 as part of the New Deal. It established the Federal Housing Administration (FHA), which offered loans funded by approved lenders.
Government-backed Loans
Government-backed loans are those insured by the Federal Housing Administration (FHA), guaranteed by the Veterans Administration (VA), provided by the U.S. Department of Agriculture (USDA), or provided by special programs created by individual states or local jurisdictions.
Federal Home Loan Mortgage Corporation
Help thrifts manage the challenges associated with interest rate risk. In 1971, Freddie Mac issued the first conventional loan MBS (mortgage-backed security).
VLB Loan Programs
Home loans Land loans Home improvement loans
The Fed and the Prime Rate
How do the federal funds rate and discount affect the prime rate? If banks can get such-and-such percentage for their excess reserves (fed funds rate), they are going to want a higher rate from consumers in exchange for loans. And if banks need to pay the Fed an interest rate for money lent (discount rate), they are going want a higher percentage (prime rate) from borrowers. As you can see, the interest rate that consumers are charged by banks is strongly influenced by the Fed's three tools: the funds reserve requirement, the fed funds rate, and the discount rate.
The Index
If the index rate moves up, your interest rate will also go up in most circumstances, and you will probably have to make higher monthly payments. On the other hand, if the index rate goes down, your monthly payment could go down.
VLB Home Loans
In 1983, the Legislature created the VLB Veterans Housing Assistance Program (VHAP) to aid Texas veterans in purchasing a home. Eligible Texas Veterans have an opportunity to purchase a home with a competitive, low-interest loan with little or no down payment. Veterans with a VA service-connected disability rating of 30% or greater qualify for a discounted interest rate.The VLB does not offer refinancing nor can it be used for a down-payment on a home.
The VA Option Clause
In the event that the purchase price is greater than the amount cited in the CRV, the veteran may withdraw from the contract without penalty and have the earnest money refunded or pay the difference in cash at closing — as long as their agent makes sure the sales agreement contains a VA Option Clause.
Federal Deposit Insurance Corporation (FDIC)
Insure deposits Supervise financial institutions for safety and soundness Make large financial institutions resolvable Manage receiverships
Final loan approval
Lenders review the borrower's creditworthiness and the value of the property.
Loan Pre-qualification
Lenders take prospective borrowers at their word and then give borrowers a general estimate of the amount for which they will be approved.
Pre-approval
Lenders thoroughly review the borrower's qualifications and, if the borrower is approved, offer a pre-approval letter indicating the borrower's ability to obtain financing.
The Secondary Market
Loans are bought and sold after they have been closed and funded by a primary mortgage market lender. Lenders routinely sell loans to avoid interest rate risks and to realize profits on the sales. The government influences activity in the secondary mortgage market in a couple of ways, most notably through government-sponsored enterprises (GSEs) and government agencies that have major roles in the secondary mortgage market. Most lenders use Fannie Mae/Freddie Mac standardized forms and follow the underwriting guidelines issued by those entities so they can sell their mortgages into the agencies' secondary mortgage markets.
Benefits of an ARM
Lower initial interest rates Larger loan amounts Likelihood of falling interest rates
Calculating Principle and Interest
Mortgage factor x (Loan principal ÷ 1,000) = P + I
Texas Bootstrap Requirements
Owner-builder's household income may not exceed 60% of the area median family income. All owner-builders are required to provide at least 65% of the labor necessary to build or rehabilitate their housing by working with a state-certified Nonprofit Owner-Builder Housing Provider (NOHP). There are various ways for how owner-builders may fulfill their sweat equity requirement. They may contribute the labor personally, build or rehabilitate housing for others, and/or receive non-contract labor assistance from friends, family, or volunteers.
Savings Banks (MSBs)
Play an active and important role in local real estate financing activities, providing long-term mortgage loans with funds derived from customer savings accounts.
Nonconforming Conventional Loan Advantages
Processing a conventional loan usually takes less time and there is usually no legal limit on loan amounts with conventional loans whereas government-backed loans have dollar limits that vary by agency.
Finding an Eligible Property-My First Texas Home
Properties eligible for loans through My First Texas Home include: Single-family units Single units in condominium developments and planned unit developments Duplexes, as long as one unit of the duplex is occupied by the eligible borrower as the principal resident and the duplex was first occupied for residential purposes at least five years prior to the closing date
Federal funds rate
Rate that banks charge other banks for money lent. The Fed indirectly controls this rate.
Real Estate Mortgage Trust (REMT)
Registered company that owns and operates real estate mortgages; investors can buy and sell interests in mortgages. REMTs make income via origination fees, interest, and profits from buying and selling mortgages.
Federal Home Loan Bank System (FHLB)
Regulate member organizations Set reserve requirements Establish discount rates Provide insurance for depositors
Residual Income
Residual income is defined as the amount of monthly income remaining after all the debts are deducted, including: Income tax Social security tax Maintenance and utilities
Rural Development
Rural Development (RD) provides both direct and guaranteed loans for the purchase or construction of single-family homes, repair of existing homes, and the development of affordable rental housing. The program's full name is USDA Rural Development Guaranteed Housing Loan, but is usually referred to as simply a USDA loan. It is also called a Section 502 Loan, referring back to its origins found in Section 502(h) of the Housing Act of 1949.
Mortgage Bankers
Search out and develop new mortgage businesses by originating loans, selling the loans to investors, and collecting the payments on the loans for the benefit of the investors.
Texas Bootstrap Loan Program
The Texas Department of Housing and Community Affairs (TDHCA) administers the Owner-Builder Loan Program, also known as the Texas Bootstrap Loan Program (Bootstrap). self-help housing construction program that provides very low-income families (owner-builders) an opportunity to purchase or refinance real property on which to build new housing or repair their existing homes through "sweat equity."
Savings Associations
Specialize in long-term residential loans. Today, all savings associations must be chartered either by the federal government or by the state in which they are located. The primary function of these savings associations is to promote thrift and homeownership. Savings associations offer conventional, FHA-insured, and VA-guaranteed loans.
VA-Guaranteed (GI) Loans
The Department of Veterans Affairs (VA) is authorized to guarantee loans to purchase or construct homes for eligible veterans and their spouses. This includes the spouse of a veteran whose death was service-related or the spouse of a serviceperson missing in action/a prisoner of war (providing the spouse has not remarried). VA-guaranteed loans help veterans finance a home purchase with little or no down payment. This means VA loans can be used for 100% of the purchase price.
The Farm Service Agency
The Farm Service Agency (FSA) offers both direct and guaranteed ownership or operating loans to purchase and maintain farmland and to construct or repair buildings and other fixtures. Using government funds, direct farm loans are made and serviced by the FSA. Guaranteed farm loans are also made and serviced by local lenders and guaranteed by the FSA in the event of the borrower's default.
The Federal Housing Administration
The Federal Housing Administration (FHA) was created in 1934 in response to the housing crisis associated with the Great Depression. Its mission has been to provide access to low down payment mortgages to qualified buyers. The low down payment creates a high loan-to-value ratio, so the FHA insures these loans to make them more attractive to investors. The Federal Housing Administration (FHA), which operates under the Department of Housing and Urban Development (HUD), neither builds homes nor lends money itself. The common term FHA loan refers to a loan that is insured by the agency.
Texas Veterans Land Board
The Texas Veterans Land Board (VLB), a division of the General Land Office of Texas, administers three programs to assist Texas veterans in purchasing a principal residence and/or land and in financing home improvements. A veteran may participate in all loan programs simultaneously but may have only one loan in each of the three programs at one time. All VLB programs are self-funded, using ZERO public taxpayer funding. VLB programs are financed with bonds, which are serviced by loan payments from Veteran participants.
Debt-to-Income Ratio
The VA has no housing expense qualifying ratio; only the total debt-to-income ratio is considered. The combined total of a VA borrower's monthly debts cannot exceed 41% of their gross monthly income. These debts include: The house payment All installment accounts All revolving accounts Minimum payments on paid-out revolving accounts Child support Child care
VLB Land Loans
The VLB Veterans Land Loan Program is the only one of its kind in the nation, giving Texas veterans the opportunity to borrow up to $150,000 to purchase land at competitive interest rates while typically requiring a minimum 5% down payment for tracts of one acre or more. The bonds used to fund the program come from loan repayments and the cost of administering the program is financed through a small fee charged on each loan.
Primary Mortgage Market
The arena in which borrowers and lenders meet up for the purposes of negotiating the loan terms of a mortgage transaction. Savings and loans, commercial banks, credit unions, mortgage bankers and mortgage brokers, and investment groups represent a few of the players that make up the primary market.
Maximum Bootstrap Loan Amount
The maximum Bootstrap loan may not exceed $45,000 per household. Owner-builders may obtain additional loan funds from other department and non-department sources as long as the total amount of amortized repayable loan funds from all sources does not exceed $90,000
The Margin Formula
The fully indexed rate is equal to the margin plus the index.
Loan-to-Value (LTV) Ratio
The loan-to-value ratio (LTV) is a ratio of debt to value of the property.
The Fed Tools: The Prime Rate
The prime rate, or the short-term interest rate charged to a bank's largest, most creditworthy customers, is strongly influenced by the Fed's discount rate. In turn, the prime rate is often the basis for determining a bank's interest rates on other loans, including mortgages.
MCC Eligibility
The program is open to those individuals and families who: Meet income and home purchase requirements Have not owned a home as a primary residence in the past three years Meet the qualifying requirements of the mortgage loan Will use the home as their principal/primary residence The MCC may not be used in connection with the refinancing of an existing loan. For targeted areas, the first time homebuyer requirement is waived, and there are increased income and purchase price limits.
The Uniform Residential Loan Application (or URLA)
The purpose of the form is to allow borrowers to apply for a mortgage loan and to allow consistency in data-gathering by lenders that is needed to evaluate borrower eligibility.
Texas Veterans Home Improvement Program
This program was introduced in 1986 to provide below-market interest rate loans to qualified Texas veterans for home repairs and improvements. The VLB offers up to $50,000 for a 20-year loan or up to $10,000 for a 10-year loan.
Secondary Mortgage Market
The vast majority of mortgage loans that are created in the primary mortgage market are bundled and sold to what is known as the secondary mortgage market. The secondary mortgage market consists of holding warehouse agencies — most with some governmental ties — that purchase those bundles and reassemble them into packages of loans that they expect to resell to investors.
Agricultural Loan Programs
There are currently programs under the U.S. Department of Agriculture (USDA) — the Farm Service Agency and Rural Development — that provide loans to farmers and/or homeowners in rural areas. Both of these programs were previously a part of the former Farmer's Home Administration (FmHA).
Loan Eligibility
They have to be at least 18 years of age and a bona fide and legal resident of Texas on the date of application. Additionally, they need to meet one of the following service criteria: An active-duty military member A member of the Texas National Guard A reserve component military member having completed 20 qualifying years for retirement A Veteran having served at least 90 active duty days unless discharged sooner due to service-connected disability and not discharged dishonorably A surviving spouse of a veteran listed as missing in action or whose death was service-connected
My First Texas Home
This program allows qualified Texans access to competitive interest rate home loans and down payment and closing cost assistance. Homebuyers who meet the following minimum requirements are eligible to apply for a loan under the program: First-time homebuyer or a homebuyer who has not owned a home as primary residence within the past three years Homebuyer(s) income does not exceed the program's income limit guidelines Purchase price of the home does not exceed the program's purchase price limit guidelines
Reserve Funds Requirement = Savings Account
This savings requirement would incentivize you in the following two ways: Have a higher amount of savings and be prepared for an emergency expense Spend less money as you now have less disposable funds to spend
Thrift Institutions
Thrifts are organized in two different ways — either stock companies or mutual companies. There were a number of mutual associations that were converted to stock companies in order to attract more capital.
VA Eligibility Requirements
To determine the portion of a mortgage loan that the VA will guarantee, the veteran must apply for a certificate of eligibility. Eligibility is the veteran's entitlement to VA home loan benefits under the law, based on military service. It reflects the available entitlement (the maximum amount the VA will guarantee). The maximum guaranty amount equals 25% of the conforming loan limits and are adjusted yearly, on a county-by-county basis.
Private Mortgage Insurance
To insure a lender against borrower default and loss due to foreclosure, private mortgage insurance (PMI) is required on conventional loans for which the borrower has invested less than 20%. Federal law requires that for any loans originated after July 1999, the PMI must be terminated after the borrower has accumulated 22% equity in the property (the loan-to-value ratio is 78%) and is current with all loan payments. However, the law also states that a borrower whose equity equals 20% of the purchase price or appraised value may request that the lender cancel the PMI.
Homebuyer Education Requirement
To qualify for a homebuyer benefit, the homebuyer must complete a pre-purchase homebuyer education course prior to loan closing. This requirement can be satisfied through: The Texas Statewide Homebuyer Education Program: Homebuyers can complete an in-person course available through a certified homebuyer education provider — a HUD-approved non-profit organization or government entity. A HUD-approved online course (verify course approval with TDHCA prior to completion) The "Becoming A Homeowner" course: TDHCA's free online Homebuyer Education course available through Texas Homebuyer U A Certificate of Completion is required regardless of which course a potential homebuyer chooses.
VLB Home Loans Requirements
To qualify for the home loan, homes must meet the following requirements: The home must be the veteran's primary residence in Texas The home must be a single-family attached or detached home, townhome, or condominium Duplexes or other multi-family units must have been constructed at least five years prior to the closing date of the loan New homes must have either an ENERGY STAR certification or a HERS Index score of 75 or less The home must remain as the veteran's primary residence for at least three years, and the veteran borrower must occupy the home within 60 days after loan closing
VA Loan Qualification
Two methods are used to determine a veteran's ability to qualify for a loan: Debt-to-income ratio Residual income
Flexible Payment Loans
Under this plan, a mortgagor makes lower monthly payments for the first few years of the loan (typically the first five years) and larger payments for the remainder of the term, when the mortgagor's income is expected to increase.
VA Loan Assumption Rules
VA-guaranteed loans can be assumed by purchasers who do not qualify as veterans, and the balance of the veteran's entitlement will still be available for a new VA-guaranteed loan. However, if the seller-veteran wishes to have the full guaranty entitlement reinstated, an assumption must be by another qualified veteran who agrees to substitute their eligibility, or the old loan must be paid off.
VHIP Loan Requirements
VLB Home Improvement Loans in the amount of $25,000 or less are insured by the Federal Housing Administration (FHA). To qualify, the following requirements must be met: The home being repaired must be wholly located in the state of Texas. The home must be the applicant's primary residence. Single-family dwellings, condominiums, duplexes, triplexes, and four-plexes are eligible. Duplexes, triplexes, and four-plexes must be at least five years old. Modular or manufactured homes that are on a permanent foundation and are part of the real estate (real property) may also be eligible, but the final decision on these types of loans will be determined by the VLB. The VLB must be in first or second lien position. The borrower cannot advance funds to the contractor or purchase material prior to receipt of the loan proceeds from VLB. Loan proceeds will be available on the fourth business day after closing. The borrower must secure a general contractor.
VLB Assumptions (Transfers)
VLB Land Loans may be assumed after three years. Assumption forms must be requested by the account holder, and will only be mailed to the account holder. For more information concerning Assumptions (also known as transfers), veterans can contact the VLB servicer and ask for Special Loans.
MCC Veteran's Exemption
Veterans who served in active duty and were honorably discharged as evidenced by Form DD-214, and have not previously had a mortgage financed through a mortgage revenue bond program, are exempt from the first-time homebuyer requirement. They must still meet the applicable acquisition and purchase price limit requirements of a non-targeted area unless purchasing in a targeted area census tract.
Balloon Payment Loans
When a mortgage or deed of trust loan employs periodic payments that will not fully amortize the amount of the loan by the time the final payment is due, the final payment is larger than the others. This is called a balloon payment, and balloon payment loans are considered a type of partially amortized loan.
Mortgage-Backed Securities
When sold to investors, these repackaged loan bundles are presented as mortgage-backed securities (se).
Fully Amortized Loan
With a fixed-rate, fully amortized loan, the interest rate remains the same for the life of the loan and the monthly payments remain the same. The only thing that changes is how much of each monthly payment is applied to interest vs. principal.
Adjustable-Rate Mortgage Loans
With an ARM, the interest rate changes periodically, usually in relation to an index, and payments may go up or down accordingly.
Texas Department of Housing and Community Affairs
has over 30 years' experience and expertise in working with low- to moderate-income first-time homebuyers with two programs, My First Texas Home and Texas Mortgage Credit Certificate Program.Homebuyers may combine TDHCA programs for maximum benefit TDHCA's programs are available statewide The first time homebuyer requirement is waived for veterans Households who have not owned a home in the previous three years may qualify A homebuyer education course is required