Category Archives: Mortgages

The Stumbling Block to Home Ownership


The Stumbling Block to Home Ownership

 Home ownership is a critical part of life.  It is not only because of the tax advantages, and the accumulation of wealth with equity in your home, but also feeling part of a community.  It allows you to have roots.

Its’ not only important to individuals, but also to the community.  People who own their home, whether is a single family home or a townhouse or condo, have more pride in the property and invest in their community. For all these reasons, this is why home ownership is so important.

But all too often I see first time homebuyers struggling to take that first step.  As a REALTOR® I often times get calls from a first time home buyer about a property and then never hear from them again.  At some point they wanted to buy a home but then the urged died and went away.

I have come to realize that home buyers’, especially first time home buyers’ are simply overwhelmed by the process of buying a home.  It is a difficult, complicated process especially if you have never gone through the process before.  But let me reassure the first time home buyers’ out there.  Millions of people have bought homes, and millions more will buy homes.

If you are a first time home buyer, or you haven’t bought or sold a home in many years, sit down with a REALTOR® who can walk with you every step of the way to make this task easier. From helping you find a mortgage company, to a home inspector working with a REALTOR® from the beginning can make this endeavor a more organized process.

If you are thinking of buying or selling talk to a real estate professional – talk to a REALTOR® – who can give you the information you need to make an informed decision.

As always, if I can help with any of your real estate needs, please feel free to text or call me at 301-712-8808 or email me at RolandLow1@gmail.com.

Roland

 

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PMI Insurance Deductions – Now You See It, Now You Don’t, Now You See It!


PMI Insurance Deductions – Now You See It, Now You Don’t, Now You See It!

 PMI insurance is one of the most hated aspects of the real estate industry – at least in my honest opinion.  Basically, if you do not put at least 20% down on the purchase of your home, you will be required to pay PMI insurance.  The payment will be factored into your monthly payments.  What makes the PMI payments almost tolerable is that the PMI insurance that you pay is – was – and is again, tax deductible.

Let me throw in a comment about the world of real estate.  Yes, we hear a lot of complaining about the PMI insurance, or the origination fee if you are doing a VA mortgage.  But the truth of the matter is that the mortgage / real estate industry in the United States is the envy of the world.  In many countries homebuyers  would love to be able to buy a home with only 20% down.

The PMI fee was made palatable by having the fee deductible on your Federal taxes – until last year.  At the end of 2017, Congress passed a budget bill that eliminated the Federal deductions for PMI insurance for 2017.  Because it was the end of the year, tax professionals were scrambling to amend documents to change the deductions.  Then, in the first of February, Congress passed a bill that retroactively reinstated the deductions for PMI insurance for 2017.  That’s a good thing, unless of course, you finished your 2017 taxes about the time the new bill passed into law.

Don’t fret – you can file an amendment to your taxes and  enjoy the benefit of deducting PMI insurance once again.

Of course, if you have any questions of your tax liability, talk to a tax professional who can give you the information you need.  Don’t listen to a thing I say about taxes – only real estate!

If you are thinking of buying or selling real estate, talk to a real estate professional – talk to a REALTOR® – who can give you the information you need to make an informed decision.

As always, if I can help with any of your real estate needs, please feel free to text or call me at 301-712-8808 or email me at RolandLow1@gmail.com.

Roland

 

Millennials’ and Home Ownership


Millennials’ and Home Ownership

Millennials are the next wave of Americans to enter the homeownership field.  And a lot depends on how they perceive homeownership.

If you look at various reports about millennials, you will read everything from they are not interested in owning a home to they simply cannot afford homes today.  In many ways both of these statements are true, yet we need to look at the history of homeownership to understand what is going on in the world of real estate.

The group of people we know as ‘millennials’ or generation ‘y’ was born somewhere between 1980 – 1995 to 2000.  There is no precise date of when millennials were born, but what is important is the period that they grew up in.

If you think back to when this age group was coming into their own, the real estate market was unlike it had ever seen.  Prior to the real estate crash of 2008, home prices were increasing at a staggering rate.  People could buy homes and turn around and sell then in a relatively short period of time and make a fortune.

Because of the belief that home owners could not lose, mortgage companies had no problem giving out mortgages with what were called “no-doc loans”.  “No-doc loans” did not require any supporting documentation of employment; savings, ability to pay, etc.  Couple that with the teaser mortgage interest rates and we had a real estate market out of control.  The straw that broke the camel’s back occurred when mortgage companies were selling the mortgages as sound bond mortgages, when in fact the bonds had little value to them.  Like a tidal wave rushing to shore, the real estate market came crashing down.

This is the real estate market that millennials’ grew up in and has tainted their view of home ownership.  Yet study after study clearly shows that home ownership is a high priority to that age group.  Their focus is on completing education and paying down debts before taking on a mortgage.  One of the other misconceptions is that the mortgage industry has been preaching that you need 20% down in order to buy a house. May be a good practice, but is not true.

Here is what I see as the future of the real estate market.  There is a large group of millennials who are pent-up demand for home ownership. As these potential buyers begin to slide into the market, there will be little supply of homes available which will drive the price of homes up.  As the price of homes increases, more and more sellers will list their homes resulting in a robust housing market for the next few years.  It will be a slow, but steady growth.

If you are thinking of buying or selling, talk to a real estate professional – talk to a REALTOR® who can give you the information you need to make an informed decision.

As always, if I can help with any of your real estate needs, please feel free to text or call me at 301-712-8808 or email me at RolandLow1@gmail.com.

Roland

2018 FHA Loan Limits – Maryland


2018 FHA Loan Limits – Maryland

The FHA just announced the loan limits for FHA loans for 2018. The limits vary by state and by county so it is important to talk to a REALTOR® or mortgage office to know the limit for your location.

In Maryland:

Carroll County                         $517,500                     (same as 2017)

Frederick County                     $679,650                     up from $636.150

Washington County                $453,100                     up from $275,665

If you have questions for any other county in Maryland, please feel free to contact me.

If you are looking to buy or sell, talk to a real estate professional – talk to a REALTOR® – who can give you the information you need to make an informed decision.

As always, if I can help with any of your real estate needs, please feel free to email me at RolandLow1@gmail.com or text or call me at 301-712-8808.

Roland

What Every REALTOR® Wants You to Know About Credit Scores


What Every REALTOR® Wants You to Know About Credit Scores

 Unless you are paying cash for a house, you will need to have a loan or mortgage, to buy the house.  Having a good credit rating will make that task a lot easier.

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First, let me start by saying that I am not a mortgage broker, however, many of the questions I get from real estate clients involve mortgages.  If you are working with a REALTOR® they should be able to refer you to a mortgage person who can answer any questions and to get the ball rolling for an approval.

Nevertheless, there are many things we can talk about to help buyers, especially first time home buyers with questions they may have.  It is important to understand that the news indicates that you must have 20% down to buy a house – not true.  FHA requires as little as 3.5% and the USDA has programs in specific areas that will require 0% down!  There are far too many programs to discuss here.  That is where a mortgage officer can help, but there is some basic information that can help a home buyer understand the approval process.

Recently I talked to a potential client who was aggressively paying down his credit card debt, which is not a bad thing.  However, the client was under the impression that he had to have all his credit cards paid off before he could apply for a mortgage – again, not true.  It is important to pay down debt to a level that helps your credit score, but it is also important to have cash on hand when buying a house.  That is where a mortgage person can help.

Here is some basic information to help you understand how your FICA score is computed.  Probably the most important factor is your payment history.  Your payment history is the best predictor of future behavior and therefore one of the most important factors in a credit score.  Your payment history accounts for 35% of your credit score.

Another important factor is the amount you owe, and it’s not just how much you owe, but how much you owe compared to the amount of credit you have available.  If a person is maxed out on their available line of credit they are more likely to be over extended and miss future payments.  This accounts for 30% of your credit score.

These two factors account for 65% of your credit score.  New credit and length of credit also count for your credit scores.  Talking to a mortgage officer can help you to determine where you stand and what you need to do to improve your score to enable you to buy a house.

If you are thinking of buying or selling talk to a real estate professional – talk to a REALTOR® – who can give you the information you need to make an informed decision.

As always, if I can help with any of your real estate needs, please feel free to text or call me at 301-712-8808 or email me at RolandLow1@gmail.com.

Roland

What Every REALTOR® Wants You to Know About – VA Home Loans


What Every REALTOR® Wants You to Know About –

VA Home Loans

 One of the best benefits for current or former military personnel is the VA Home loan.  Although this loan may not be for everyone, it has unique advantages that warrants a closer look by all who qualify.

va-loan

VA Home Loans are part of a Veteran’s benefit program that has helped millions of veterans purchase a home since World War II.  There are some distinct advantages for this loan for all who qualify.

  1. In Most Cases You Are Eligible

Veterans and active military need to meet certain service requirements in order to be eligible for a VA-backed mortgage. The VA ultimately determines who has access to this program, but in most cases, buyers are eligible if they meet the following service conditions:

  • At least 90 consecutive days active duty during wartime
  • At least 181 consecutive days active duty during peace time
  • At least six years in the National Guard or Reserves

Some surviving spouses of service members and veterans may able have home loan eligibility.

These are broad guidelines, and there can be exceptions. You don’t need to be certain of your eligibility to start the VA loan process. Lenders will often work to establish your eligibility on your behalf.

  1. Zero Percent Down Payment Required

The signature benefit of VA loans is being able to purchase without a down payment.

Conventional loans usually require at least 5% down, while FHA lenders want at a minimum 3.5%. On a $250,000 loan, that’s nearly $13,000 and $9,000, respectively. It can take veterans years to save that kind of lump sum.

Beyond that, conventional and FHA buyers who can’t put down 20% will have to pay for mortgage insurance each month. VA loans don’t come with any kind of mortgage insurance.

  1. You’re buying a primary residence

This program focuses on getting veterans and military members into homes they’ll live in full time. You can’t use a VA loan to purchase a vacation home or an investment property you won’t live in as your primary residence.  But you can purchase condos and even multiunit properties, provided you live in one of the units. You’ll also need to meet VA occupancy requirements, which typically means living in the home as your full-time residence within two months of closing. Your spouse may be able to fulfill this requirement in some cases.

  1. You’re not seeking a fixer-upper

The VA wants veterans buying homes that are safe and structurally sound. To that end, properties need to satisfy a set of conditions the VA calls minimum property requirements.

Generally, VA buyers can pay to make repairs on a home in order to get to closing. But that’s not always a smart financial decision, and some fixer-upper properties may present a significant challenge for the VA appraisal process.

If you are thinking of buying or selling, talk to a real estate professional – talk to a REALTOR® – who can give you the information you need to make an informed decision.

As always, if I can help with any of your real estate needs, please feel free to text or call me at 301-712-8808 or email me at RolandLow1@gmail.com.

Roland

 

What Every REALTOR® Wants You to Know – How to Avoid PMI Insurance


There is great news in the real estate market today regarding the ever-hated PMI Insurance.  Mortgage companies are looking for ways to ways to bring more home buyers into the market.  The 20% down payment required by conventional loans has kept a lot of buyers out of the market.  The other part of a mortgage that has continued to be problematic is the PMI Insurance that is generally required of mortgages that do not have the 20% down.

Eliminate-PMI

There are many programs out there that will enable buyers to circumvent the 20% down.  Programs as low as 3.5% downpayment are widespread, but until the other day, the PMI Insurance continued to be a problem for homebuyers.

This week Bank of America announced a new mortgage program called the Affordable Loan Solution.  This mortgage requires as little as 3% downpayment and is not an FHA loan.  Bank of America’s program is a partnership with Self-Help Ventures and Freddie Mac.  Because the Bank of America program is taking the first-loss position of the lien it does not require the PMI Insurance.

To give you some idea how this program will affect home buyers:  Let’s assume that you want to buy a home for $350,000 at 4.0% mortgage interest with the minimum downpayment – meaning that you do not pay the 20% down.  Your payments would be as follows.  PLEASE NOTE: These numbers are for comparison only and are rounded off. 

Monthly Payments                        BofA’s Affordable Loan Solution                         FHA Loan

Principle & Interest                       $1,621                                                                        $1,612

Property Taxes                               $365                                                                           $365

Homeowners Insurance              $102                                                                           $102

PMI Insurance                              $-0-                                                                            $290

Est. Monthly Payment          $2,088                                                                  $2,369

This would amount to a savings each month of approximately $281 per month for homeowners.

The program does require a FICO score of 660 at this time.  Therefore, if you are thinking of buying I strongly encourage you to start the process early to ensure you have the score you need to qualify for this program.

If you are thinking of buying or selling, talk to a real estate professional – talk to a REALTOR® – who can give you the information you need to make an informed decision.

As always, if I can help with any of your real estate needs, please feel free to text or call me at 301-712-8808 or email me at RolandLow1@gmail.com.

Roland