My New Blog

CONSTRUCTION LOANS IN TEXAS

April 5, 2011 – Over the past year Texas has seen a great increase in construction loans. When asked about this trend, local Texas Loan Officer Samuel Morales stated,

“In all honesty, at the current time it does not make sense to purchase a home with traditional financing. In the past owning a home was part of the “American Dream”, the fact of the matter is that most Texans and Americans are expected to stay in their homes for five years or less. The way a mortgage is amortized does not lend itself to this”.

“Let me explain, under your normal thirty year mortgage, you are mainly paying interest down for the first seven or eight years; should you put your home on the market within that time frame you are more than likely to be upside down. Even if you have a little equity in your home you still have to pay title fees, Realtor commissions and more times than not some buyer closing cost. What does this mean? Sorry seller but you’re upside down on your mortgage and possibly trapped in your home. Because of this a buyer needs to start out with a bit of equity in order to avoid what I call the “Mortgage trap”. A savvy buyer can do this by constructing on a lot or purchasing a fixer upper, the result, you guessed it, an increase in construction lending”.

When asked about the “Mortgage Trap” and how it is impacting the mortgage industry Samuel Morales says,

“There is already Legislation in the works, via the Frank Dodd Act, to make it mandatory for a buyer to come to the table with 20%. More than likely it will go through, the problem is that our economy is already in a fragile state, can we it handle a 90% or more reduction in home buyers with the existing surplus of homes on the market? I’m going to guess a big fat “NO”. How things work out over the next year will impact our entire financial system and that is downright SCARY”!!!!

About Samuel Morales:

Samuel Morales has been a Texas Loan Officer and Broker/Banker for the past nine years and runs www.yourloanofficer4life.com along with several sister sites.

Samuel Morales

Samuel@yourloanofficer4life.com

www.mortgageratenotifier.com

www.streamlinefha.org

###