Understanding Home Loans and What to Look for in a Lender
Shopping for a loan can be a challenging experience, but with the right loan officer that knows the business and understands your needs, you can get the best rate and realize your dreams of home ownership. Learn what a mortgage lender does, how to choose between mortgage lenders, and important terms to know before selecting a mortgage lender. Offering residential mortgage solutions for both individuals and business entities (LLC, Partnerships, Trusts and Corporations), SouthStar Bank can help you achieve your home ownership, real estate investment and financial goals.
SouthStar Bank offers broad options to serve you better:
What Do Mortgage Lenders Do?
The role of a bank or mortgage lender is to originate and/or fund loans so that borrowers can buy, build or refinance their home. To originate and fund a loan, the lender must review all financial documentation of the potential borrower, including credit score, assets, debts and debt-to-income ratio, so they can determine if the borrower is qualified for a loan. This is the same basic process, whether the person is buying a family home or refinancing their existing home.
How Do I Choose a Good Mortgage Lender for My Home Loan?
Many borrowers, especially first-time homeowners, may not understand the nuances and complexities of home loans. For this reason, one of the most important qualities of a good loan officer is to be a great communicator. The best mortgage lenders can convert complex terms into easy-to-understand language for their clients.
Questions to ask about potential mortgage lenders
- Do they respond to your initial inquiries?
- Are they focused on closing the deal, or do they want the best solution for your situation?
- Do they offer a wide range of mortgage products with competitive interest rates?
- Do they provide valuable insight into the process, and are they available to answer questions?
- Are they a good problem solver?
With a broad range of lending experience, SouthStar Bank is perfectly positioned to guide you through the mortgage process. We provide personalized customer service and will recommend the best loan program for your needs. Contact us for more information.
How Much Can I Borrow for a Mortgage?
This is often the primary hurdle for first-time home buyers, and one to discuss with your loan officer. The best way to determine how much of a loan you can qualify for is to review your monthly financial obligations against your total monthly income. This calculation is known as the debt-to-income ratio (DTI). For many loans, the maximum allowable DTI is 50%. For example, if the borrower’s monthly gross income is $6,000, their maximum monthly debt obligation, including their proposed monthly mortgage payment, should not exceed $3,000. There are exceptions to this 50% DTI rule, so you should consult your mortgage professional for guidance.
Important Terms Used by Mortgage Lenders
Becoming familiar with these selected terms will help you to better understand the mortgaging process, so that you can make more informed choices about your new home or investment property.
Adjustable Rate Mortgage (ARM)
This type of loan starts at an introductory rate and is then based on interest rates that will change automatically according to market indexes. Your monthly payments will never exceed the ARM loan cap.
The amortization of a loan is the process of paying off the loan over time. Monthly loan payments can be shown using an amortization schedule or amortization calculator.
Unlike a VA or FHA loan, a conventional loan is not offered by a government sponsored entity. Terms are typically 15, 20 or 30 years.
This is the value of a property, beyond the amount that is owed on the loan. A homeowner can often borrow against this home equity value.
Insured by the Federal Housing Administration, FHA loans are often suitable for first-time homebuyers or low-to-moderate income borrowers. These loans require lower minimum down payments and credit scores, but require PMI.
Review by a lender to determine a borrower’s loan eligibility. Obtaining this puts buyers in a better position when home shopping.
Private Mortgage Insurance (PMI)
To protect the lender, certain homeowners are required to purchase PMI. It is most often required if the loan amount is more than 80% of the home’s value.
This is a short-term agreement that the lender makes to the borrower, to commit to a specific interest rate on the loan until the buyer can finish negotiating the home purchase.
The borrower or homeowner replaces their existing loan with a new mortgage loan. Often used to negotiate a lower interest rate to reduce their monthly payments, or to shorten loan terms for quicker payoff.
Truth in Lending Disclosure
This document, required of all lenders, gives home loan borrowers vital information about the loan, including interest rates, loan amount, closing costs and final cost upon loan maturity.
This discounted home loan is exclusively available for military veterans. Advantages include no down payment or PMI, no minimum credit score, higher allowable debt-to-income ratio and lower rates.
Why Should I Choose SouthStar Bank as My Mortgage Lender?
We’ve assisted thousands of customers throughout Central Texas in realizing their dreams of buying a home or investing in property. We’re a valuable partner with extensive knowledge of the real estate and lending marketplace, whether you’re a first-time homeowner, purchasing a vacation home or need cash from your home equity to pay for remodeling costs or other expenses.
Unlike other mortgage lenders, SouthStar Bank offers both portfolio lending options through our Star Advantage Program as well as traditional mortgage products, including those offered by Fannie Mae, Freddie Mac, VA and FHA. We understand that not all borrowers have the same qualifications. By understanding our borrowers’ entire financial picture, we can approve loans that often don’t qualify under traditionally strict mortgage parameters. These portfolio loans, also referred to as bank-held loans, offer common-sense flexibility.
SouthStar Bank is committed to outstanding customer service, which includes walking you through the mortgage process, from start to finish. Whether you are in the market for a downtown Austin high-rise, a ranch in East Texas to spread your wings, or a rehab starter home — we have a loan to fit your needs. We’re not scared away by non-warrantable condos, barndominiums or even tiny homes. We understand that our clients are unique, and their loans should be too.
All decisions are handled in our local office, so you won’t have to wait for your loan application to move through an out-of-state loan review committee. This streamlines the entire process for a faster, more transparent and satisfying experience.
To begin, complete our easy online application.
Mortgage Options Available from SouthStar Bank
One advantage of choosing SouthStar Bank for your mortgage is that we offer a wide range of programs, from the popular 30-year fixed-rate mortgage to more specialized loans for unique situations, such as low and no down payment options.
- Star Advantage Program – Portfolio or bank-held home loans for unique situations, designed for those who are small business owners, self-employed, retired, starting a new job or recovering from an unexpected life event; or have poor credit rating, foreclosure or bankruptcy. These traditional and portfolio loans provide flexibility outside of the strict criteria of secondary market loans.
- Traditional Fixed and Variable Rate Mortgages – Our traditional mortgages include Fannie Mae and Freddie Mac, VA, FHA, Rural Living and USDA loans.
- Low Down Jumbo – The low down jumbo is a type of mortgage program that is an alternative to traditional loans, with a low down payment so that you can minimize your out-of-pocket expenses and retain more money up front.
- Zero Down WealthBuilder – For first-time buyers, the Zero Down WealthBuilder mortgage lets borrowers close on their first home without a large amount of money upfront. This preserves cash-on-hand and is designed for owner occupied residences.
- Low Down Rural Acreage – This loan program is intended for buyers of land who need to have more cash available for construction and other expenses.
- Refinance – Refinancing your home with a new loan can either lower your interest rate for reduced mortgage payments or shorten the loan’s term so that you can build home equity in less time.
- Interim Construction to Permanent Financing – This type of program, a construction to long-term loan, lets borrowers lock in a lower interest rate (and lower payments) for the construction phase. It then converts to a long-term mortgage when the building process is completed. A one-time close often saves customers both time and money.
Let SouthStar Bank assist you in finding the best mortgage with the lowest rates. Apply Now!
Empowering Our Community
SouthStar Bank is committed to serving the needs of our communities, and we offer a variety of mortgage lending solutions across Central Texas, spanning the areas surrounding San Antonio, Austin, Waco and Houston. With rising home prices, we understand the challenges of meeting upfront payment requirements. That’s why qualifying applicants will have all fees waived, including origination, processing and underwriting.¹
Your Home for Mortgage Lending
Our roots lie in the quiet town of Moulton, but make the circle across Central Texas where you’ll find 15 SouthStar Bank locations. Established in 1920, the Moulton headquarters is flanked by locations in Shiner and Gonzales. Flowing down toward Houston, you’ll find our Brazoria branch.
Make the circle back north through College Station to our Robertson Country Branches of Hearne, Franklin, Bremond and Calvert. Continue through Temple to the Harker Heights Branch.
Head south on I-35 to the state capitol of Austin surrounded by six SouthStar Bank locations: Georgetown, Sendero Springs (Round Rock), Leander, Steiner Ranch, Falconhead (Bee Cave) and Southwest Austin (Dripping Springs).
Like all Texans, we’re passionate about the place we call home. Whether you need a mortgage in downtown Austin or tucked away on the winding Guadalupe River, trust our local experts.
Are you looking for a mortgage in Austin, Texas? SouthStar Bank has more than 100 years of lending expertise and is recognized as a Top Austin Mortgage Company by Austin Business Journal. This was based on the number of Austin-area loans that the local offices closed in 2018 — 148 Austin-area loans for a total of $61.52 million, plus 106 non-local loans.
¹Must meet income restrictions.