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Live Within Your Means

Paying off your mortgage is a struggle. At Van Excellent Realty, LLC, we make sure you have the knowledge to finance a home that suits your needs and budget. Our real estate brokers will guide you every step of the way. We take pride in helping homeowners in the Dallas-Fort Worth Metropolitan Area of Texas find the right mortgage, as well as giving them tips on home buying and home selling.

Mortgage Basics

Before Getting Started

  • Check your budget to know how much you can afford on a mortgage every month.
  • Ask for free credit report. You’re entitled to request one annually.
  • Know all the variables associated with financing a home, interest rate policies, etc.

Put Your Finances in Order

Before buying a home, it is only imperative to know the amount of money you are willing to spend. You can only borrow a certain amount once a lender has prequalified you. This allows you to focus on a realistic price range and become an attractive dealer. You would also be required to complete the long and arduous process of getting a loan application, whether or not you wish to prequalify.

Take time to read and review your credit report. You may also reach out to local lenders to know the credit bureaus they utilize and ask for a copy of your credit report. Should you have any credit problems, don’t fret. Always be ready to present a rationale for each slipup and show improvement on your ability to pay bills in a timely manner.

How Much Mortgage Can You Buy?

The Federal National Mortgage Association (Fannie Mae) is a government-sponsored organization that purchases mortgages from lenders and sells them to investors. Two income-to-debt ratios established by Fannie Mae are standard requirements for conventional mortgages.

The first requirement is that monthly mortgage principal and interest payments (P & I), plus insurance and property taxes, cannot exceed 28% of the buyer's gross monthly income (some exceptions may apply to increase this limit to 33%).

The second requirement limits total monthly debt payments (housing, credit cards, car payments, etc.) to 36% of gross monthly income. In addition to these requirements, you may have to pay 10% to 20% down on the total purchase price to qualify for a conventional mortgage. 

Types of Mortgages


How much house you can buy also depends on your mortgage's term and interest rate. The term is the length of time (usually 15 or 30 years) over which payments will be paid. The rate can be fixed (meaning it doesn't change over the loan's term) or adjustable (it fluctuates with market conditions). Thirty-year fixed-rate mortgages remain the most popular. The longer term lowers the monthly payment, while the fixed rate provides stability over the life of the loan. As interest rates are usually low, buyers who are planning to stay at 6-7 years in their new house prefer these mortgages.


A 15-year term lowers the interest rate, reduces total interest payments, and increases principal payments. But it also increases monthly payments. If you can't afford the higher payments now, you might opt for a 30-year mortgage. If there are no prepayment penalties, you can make additional principal payments as your income increases. Making just one extra monthly payment a year will pay off a 30-year mortgage in less than 22 years and can save tens of thousands of dollars in interest costs.

If you plan to stay in a home no more than 3 years, you might want an adjustable-rate mortgage (ARM). ARMs offer initial rates that are lower than fixed mortgages. At some point, usually after the first year, rates are tied to market conditions and are subject to potential rate increases. Many home buyers are attracted by the affordability of an ARM during the initial period. However, you should be confident that your future income will be sufficient if both interest rates and your monthly payments increase.

Balloon Payment

A balloon is a lump-sum payment that pays off the loan in full after a fixed period of time. The rates on balloon mortgages are usually 1/4% to 3/4% less than on 30-year fixed mortgages, but during an initial period of between 3 and 15 years, payments are similar. After this period, the remaining outstanding principal balance is either due in full or subject to refinancing. The balloon payment method is ideal for home buyers who are planning to sell before the final payment is due. However, because property values fluctuate, you may not be able to sell when you want. You may also face higher payments if you are forced to refinance at a higher rate, and there is also a risk that you may not be in a position to refinance when the balloon becomes due.

How to Find the Right Mortgage

  • Estimate how long you expect to live in the house. If the answer is less than 3-5 years, consider an Adjustable Rate Mortgage (ARM), which typically starts out with a lower rate. If you plan to live in your new home longer than 5 years, a fixed-rate mortgage offers protection against rising interest rates.
  • Shop around for mortgage rates. Banks, credit unions, and mortgage companies all offer mortgages. Compare at least 6 lenders in your area.
  • Add up all the costs for each lender. Include fees, points, closing costs, etc., to arrive at the total mortgage cost for each lender.

Interest Rate Points

Points are interest paid in advance to reduce the rate on a loan. One point is equal to 1% of the mortgage amount. The general rule is that 1 point is worth 1/8 of 1% off the loan rate. The decision to pay points for a lower rate is based on how much the seller is willing to contribute to points, how long you plan to stay in the house, and how important lower payments are compared to higher closing costs. You will need to calculate the long-term value of points based on these factors, keeping in mind that points are generally tax deductible in the year paid.

Other Alternatives

If you cannot afford a conventional mortgage, there are a variety of alternatives. An anxious seller will sometimes offer owner financing. The Federal Housing Administration (FHA) loans offer down payments as low as 3%, but may require the buyer to purchase mortgage insurance. The Veterans Administration (VA) offers no-money-down mortgages to qualified veterans of the U.S. military. Finally, there are local affordable housing advocates that offer low-cost, low down-payment loan alternatives.

Tips for First-Time Home Buyers

Buying your first home is a major decision, but many of the common challenges first time home buyers face can be reduced or even completely avoided with some basic know-how. Here are some helpful tips for first time home buyers.

Costs and Hurdles to Expect

In many cases, a mortgage payment including property taxes and homeowner’s insurance can be less than what you pay in rent. The tax savings generated by the interest deduction (which constitute most of the payment in the early years of a mortgage) may keep the monthly cost slightly more than rent. However, you will be building equity with each payment.

Often, the biggest hurdle in the first-time purchase is cash available for the down payment and your closing costs. But even this obstacle is not insurmountable. If you are a veteran, you may be able to obtain 100% financing through a VA loan and many lenders offer 95% financing based on your credit rating.

Try to Pre-Qualify for a Loan (If Necessary)

If your income enables you to qualify for the necessary mortgage loan, you may be able to negotiate a contract in which the seller pays your purchase closing costs and adjusts the price upward so that you, in effect, finance your closing costs. But the loan appraisal will still need to support this higher value in order for the loan to close.

A good place to start the entire process is to visit with a local lender to “pre-qualify” and establish your maximum loan amount. This loan maximum, coupled with your available cash, will determine the price range in which you should look. The lender will also provide you with a list of items required to begin the loan application process. We can provide you with lender referrals if needed.

As a first-time buyer, professional real estate assistance is crucial. We will work for you as a “buyer’s agent” and be your advocate in the transaction. In most cases, we will be paid out of the seller’s commission paid at closing, so you will not pay extra to be represented by us.

Find the Best Type of Real Estate to Suit You

One of the most important tips for first time home buyers and to take time considering what it is you really want, and what makes most sense for your finances, living situation and future goals. We will be able to help you evaluate the pros and cons of purchasing a single-family home, condominium, or townhouse and what the various types of ownership mean to you.

Other decisions can include:

  • Should you buy a resale home or new construction?
  • What kinds of inspections or warranties should you seek?
  • When making an offer, how much below listing price should you offer?
  • How does the price compare to similar homes on the market? Are you negotiating terms and other costs (home warranty, for example) as well as price?
  • What do you do if inspections uncover needed repairs?
  • Are there any factors related to the house or neighborhood which could create resale problems?
  • What closing costs are considered typical?

Hire a Licensed Real Estate Agent

In what is usually an emotional decision, you need the counsel of a reputable, knowledgeable professional real estate agent who can help you buy wisely.

When shopping for a mortgage, look at the overall cost, not just the interest rate. Generally, the higher the rate, the lower the number of points charged. Make sure you understand any hidden costs or special early payment penalties which could create problems for you. Look at different mortgage products, such as shorter-term fixed-rate loans or adjustable rate loans, but be sure you understand what your “worst case scenario” is if interest rates rise.

Once you have settled on a community and seen several homes, you will be ready to make an offer on a home you like. If you and the seller, with our negotiating assistance, come to terms and you execute a sales contract, you will then finalize your mortgage and move toward closing.


How to Buy a Home

The home buying process can seem overwhelming at the outset, but it can be broken down into a few simple steps, many of which your Realtor® can handle for you. The Van Excellent Realty, LLC team will work with and advise you through every step of the home buying process, from obtaining pre-approval to move-in. View the steps in the home buying process and contact us with any questions.

1) Meet With a Loan Officer 

  • By sharing income and other family financial information, you will know the price range for which you are qualified.
  • You will learn of the type of loans available to buyers in today’s market.
  • Obtain a lender disclosure explaining the costs of borrowing money and closing costs.
  • Obtain a pre-approval letter.

2) Meet With Your Realtor

  • During this meeting you will determine the area and features you will want in your home.
  • Discuss your time frame – how quickly do you want to close on your home?

3) Begin Viewing Homes

  • When possible, all decision-makers should visit the various homes.
  • Always be candid with your Realtor. It will help them understand your particular needs and desires and enable them to select homes you will want to see.

4) Prepare the Offer

  • Your Realtor will provide you with a comparative market analysis (CMA) on the property you have selected to assist you in making an informed decision.
  • Your Realtor will go through the prepared offer with you and explain the terms and conditions.
  • Negotiations will proceed until both buyer and seller agree on all terms and execute the contract.
  • All documents will be sent to the title company where title commitment and closing information will be prepared.

5) Make Your Loan Application

Give your Loan Officer a copy of the contract and make official loan application.

6) Inspect the Property

Select an inspector and arrange for a general home inspection. Additional inspections could be recommended by the inspector. Typically, inspections are completed within 5-10 days from the effective date of the contract.

7) Appraisal and Survey of the Property

  • The lender and title company will make arrangements for the property appraisal and survey to be completed.
  • You will be provided a copy of the title commitment from the title company.
  • You will make arrangements for your homeowner’s (hazard) insurance policy and arrange for the insurance agent to provide the title company information for closing.

8) Arrange Property Closing

  • Your Realtor will arrange a closing date and time with the title company.
  • You will complete a final walk-through inspection of the property with your Realtor.
  • You will receive a copy of the Closing Disclosure for review prior to closing.
  • The title company prepares this document with the information provided by your lender.
  • You will bring a cashier’s check for all closing costs and the balance of the down payment to the scheduled closing.

9) Funding the Closing

  • Documents are sent to the buyer’s loan company for approval and funds are disbursed to the title company.
  • The title company receives and funds all money from the loan company.
  • Legal documents will be recorded in the County Clerk’s office and mailed to you when completed.
  • Title company prepares and issues the title policy and sends it to the loan company and to you.

Factors to Consider Before Selling a Home

1) Price

Many factors should be considered in pricing a house to sell. What you paid for your home, assessed value, how much you want or need to get out of it, the cost for custom items added for your specific pleasure or desire, what your neighbors say and the current price of homes on the market are things that should not be factored in.

Far too often, sellers go with gut feelings or subjective reasons when pricing a house to sell, rather than available statistical data. Many homes are priced so high that they have limited chance for selling. Overpriced properties often end up selling below market value because they stay on the market for a long time, they become “shopworn” and buyers tend of offer very low prices. Valuable marketing time is lost and opportunities to purchase a new home dwindle. Fewer showings occur because agents are not enthusiastic about the property. Marketing dollars and advertising efforts are wasted. Sellers become angry and frustrated. The tendency is to blame the listing agent and the marketing when the problem lies in the pricing.

The best chance of selling your property is within the first 5 weeks. Research shows that the longer a property stays on the market, the less money the seller will make. Your price should be based on SOLD properties rather than current listings. It should be priced to compete with – not sell – competition. Remember, the first offer is often the best! Buyers actually determine the value of a home. When pricing a house to sell, neither an agent nor any buyer/seller is smarter than the market!

2) Condition

The competitive intensity of today’s market dictates that the properties that sell the quickest are those that are clean, uncluttered and show well, have been well maintained, offer numerous updates and a neutral décor. Try to do whatever you can to make a favorable impression on a potential buyer so that your home will be remembered among the many homes a buyer will likely visit.

3) Location

The location of your property “is what it is” and is one of the variables that cannot be changed or adjusted. Factors such as a busy street, a quiet cul-de-sac, nearby railroad tracks, gated or non-gated community, views of power lines, lakes or ponds, accessibility to amenities, highways, etc. are all issues that can and should be considered in the listing price discussions.


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