Dallas is one of the major metropolises in Texas, part of the bustling Dallas-Fort Worth area. If you want to make a new start in the Lone Star State or get closer to the action in the big city, you may be looking for a mortgage in Dallas.
If you already live in the city, you could still have a close eye on trends in the housing market to determine whether now is the right time to refinance. A number of financial forces currently active around Dallas appear set to make 2019 very different from 2018 when it comes to house prices and availability.
The most recent average house price for the U.S., in general, is $309,700, according to the Census Bureau. The median price is $395,000. Per the most recent Zillow market data, the median home value in Dallas is a much lower $206,400.
The price of listed homes on the market, however, is $378,975. The aggregator lists the market as “cool,” which means it favors buyers more than sellers.
The Home Buying Institute noted that Dallas is paradoxically one of the “hottest” housing markets in the country while going through a “cooling” price growth trend. House prices are rising faster than the national average, but new construction is similarly accelerated, with 35,00 housing starts in the third quarter of 2018.
More available inventory should cut price increases and promote affordability. When you’re considering your next purchase, it pays to remember that numerous factors can affect your ability to get a loan and the amount of money available.
5 Critical Elements that Affect Mortgage Rate & Refinance Rates in Dallas
As the supply of available homes in Dallas increases and pricing stabilizes along with this rise in inventory, it may soon be an ideal moment to search for your dream house in the Dallas-Fort Worth metropolitan area. To ensure you have an accurate and up-to-date picture of your buying options in the area, there are personal financial factors to consider.
While market forces in a given region are important determinants of pricing and affordability, there are other traits that determine what type and size of mortgage you’ll be able to receive, and by extension, how much house you can purchase or refinance.
The following are five separate elements of your finances you should consider when applying for your mortgage or refinancing a property:
Your Down Payment Amount
How much money are you ready to pay for a home upfront? The long-cited standard amount is 20 percent of the purchase price. If you can spend one-fifth of the home’s value at the beginning of your mortgage, many lenders will offer perks, such as not requiring you to pay for mortgage insurance each month.
The Home Buying Institute explained that interest rates also tend to be tied to down payment amount. Lenders take on less risk when you make a large down payment, enabling them to offer preferential interest.
With that said, there are loan types that facilitate low down payments but don’t carry the same requirements. VA loans, for instance, may negate the need for mortgage insurance.
FICO Credit Score
There’s more than one credit score measure, but the most popular number is your FICO score. The Consumer Financial Protection Bureau specified that a good credit score is one way to secure a preferential interest rate.
The score represents your credit history over time, and a higher number broadcasts to lenders that you are a trustworthy borrower. The CFPB recommended not applying for many new lines of credit over a short period of time, as this lowers your score. Mortgage lenders who see this activity may hesitate to give you optimal rates.
Type of Home
Mortgage products differ based on the kind of house you’re interested in, and the purpose you intend to put that home to. If you’re buying a single-family dwelling to serve as your primary residence, you pose a lower risk of defaulting than someone considering a vacation house, according to The Home Buying Institute.
Since second properties have seen historically higher rates of loan delinquency, lenders may have tighter restrictions for such houses, as well as higher interest rates.
Debt-to-Income Ratio
Determining how your income stacks up to your total debts is one way to determine what types of mortgage interest rates you’ll be able to secure, and which types of mortgages are available. You calculate your debt to income ratio by totaling monthly debt payments and dividing them by your income over that period.
According to the CFPB, homeowners should be conscious of the significance of a 43 percent DTI. Companies offering Qualified Mortgages, which are defined by their low-risk features, typically offer these products to individuals with 43 percent DTIs or lower.
While there are offerings other than Qualified Mortgages, the 43 percent mark remains a key measure of financial availability.
Special Factors
Your membership in certain groups may open up new mortgage options, as may your choice of home location. For example, if you’re eligible for military benefits, you may be able to apply for a VA loan, qualifying for special features which can include low up-front payments and a lack of mortgage insurance.
When you search out homes in a rural area, such as one of the small Texas towns stretching out beyond Dallas city limits, you may qualify for a U.S. Department of Agriculture Rural Development Mortgage. Working with lenders to see if you qualify for these products can introduce new value and possibilities to your home search.
How to Get the Best Mortgage & Refinancing Rates in Dallas
Considering the factors mentioned above, along with the unique trends affecting the Dallas market, you can work closely with a mortgage lender to get the best possible rate for your new home loan. Not every mortgage provider is alike in offerings, policies, and regional coverage.
If you shop around for your next home loan, choosing between multiple offers, you may find one of these financial institutions is a clear winner with the right rates and offerings for you.
The CFBP released a cautionary statistic: When buying a new home, 47 percent of people don’t compare multiple lenders, going with their first choice. These buyers may be missing out on thousands of dollars in savings.
The agency explained an interest rate change as little as 0.5 percent could yield savings of $3,500 over the first five years of a 30-year fixed-rate loan. If you don’t want to turn down potential savings, you should consider several lenders active in the Dallas area for your next purchase or refinance.
Furthermore, the first offer you get from a particular lender may not be the best possible rate that the company is willing to provide. If you negotiate with the financial institution, you may be able to secure a better offer. RefiGuide pointed out that many of the charges associated with refinancing a home, such as a document preparation fee or application fee, are negotiable.
Recommended Companies in Dallas
There are numerous lenders, both local and national in scope, active in Dallas. The following are four potential matches for the next time you purchase or refinance a house in the area. Remember that it pays to compare rates at more than one lender.
- Ally Bank: This large-scale lender offers loans in every U.S. state except Hawaii. The bank offers hints for first-time home buyers and boasts an online portal that is designed to grant access to every loan document digitally.
- J.G. Wentworth: With a national reach, J.G. Wentworth offers multiple specialized home loan products that may help you move into your dream home. From USDA Rural Development Loans to VA loans and Federal Housing Administration Loans with low down payments, there are several offerings to choose from in addition to conventional loans.
- North American Savings Bank: When you work with NASB, you’re interacting with one of the top lenders in the U.S. in scale. The bank is especially active as VA lender, with 15,000 veteran customers using its loans since 2010. It is one of the top 15 VA lenders in the country.
- Rocket Mortgage: Rocket isn’t its own lender, but a subsidiary of Quicken Loans. Rocket is designed to be a fast, digital way to qualify for a loan. It takes in financial information quickly and automatically and gives out a loan rate you can lock in for 90 days.
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