Category Archives: Mortgages

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

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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

 

Feds Raise Interest Rates


Feds Raise Interest Rates

This afternoon, the Federal Reserve raised the interest rate .25%.  This is not an unexpected event.  The FED has been dropping subtle (and not so subtle) hints about raising the rates for several months.  The last time the Fed raised interest rates was in 2006.

Recent-increase-in-mortgage-rates-will-not-slam-the-door-on-a-fragile-housing-recovery1

The good news is that the Feds are raising the rates at this time because they are confident the economy is healthy enough to begin increasing the rate to market rates.  This is not a large increase and according to Janet Yellen, Fed Chief any further increases will be in gradual increases.  She also stated that the rates will remain low “for some time.”

New home buyers will face an increase in their mortgage payments although the increases will be rather minor.  A .25% increase in mortgage interest will increase your payment  approximately $2.50 for every $1,000.

Mortgage interest rates are only one factor to purchasing a home.  If you are thinking of buying or selling, 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

Now May Be The Time To Buy Real Estate – Really!


Now May Be The Time To Buy Real Estate – Really!

Ask any sales person and they will tell you, ‘Now is the time to buy’ – whatever it is they are selling. Whether its a new car, a suit or even real estate, sales people are there to sell their product.image

Real estate is no exception, and there are a lot of factors and considerations that come into play when buying or selling real estate. There are, however, strong indicators that now really might be a good time to buy your next home.

For the last few years mortgage interest rates have been at historical lows with 30 year fixed rates hovering around 4.0% to slightly below. Of course there are many factors that are considered when obtaining a mortgage which may result in different results. But these low interest rates have enabled many people to buy a home. It is only a matter of time before those cyclical rates begin to trend upward again. The Fed is indicating that those rates will most likely be trending upward in the near future.

There is another factor that will make buying a home sound financial advice – especially first time home buyers – and that is the dramatic increase in renting. A recent study by Harvard’s Joint Center for Housing Studies indicated that nearly half of all renters are struggling to pay their monthly rental payments. To make matters worse, rent costs are skyrocketing compared to wages. From 2001 to 2014 inflation-adjusted rents climbed 7% while the average household income fell 9%. This not only makes it difficult for renters to continue with their rent payments, but makes it more difficult to save for the cost of buying a home.

One of the major perceptions of buying a home is that buyers believe that they need 20% down to buy a house. That is simply not true. Ideally, people will be better off by putting 20% down, but mostly because they can avoid the PMI insurance and obtain a slightly lower interest rate. However, their overall financial strength will more likely be better with owning a house than not owning one.

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 me at 301-712-8808 or email me at RolandLow1@gmail.com

Roland

Home Buying – and Selling – for 2016


Home Buying – and Selling – for 2016

The groundwork is in place for a major jump in home buying for 2016 – especially this spring. Experts range the prospect from moderate to “robust.” It doesn’t appear that it will be the frenzied sales we saw just before the market went bust, but it appears that it will be healthy growth.

Real Estate Market Trend is Strong
Real Estate Market Trend is Strong

If you are even remotely thinking of buying – or selling for that matter – anytime in 2016, I would suggest that you take some time now to meet with a REALTOR who can help with a game plan to put you on the right path in obtaining your new home. If you are thinking of selling, a review by an objective REALTOR may help to point out areas that need to be improved to maximize your sale amount.

If you are thinking of buying in 2016 – especially if you are a first time home buyer, I suggest that you meet with an agent as soon as possible. I generally advise that first time homebuyer’s meet with a REALTOR about a year before they plan on closing on their house.

A year may seem like a long time, but there are times when you will discover that there are items on your credit bureau that may need to be corrected, or that you will need more money in your bank account than you thought. The earlier you find these issues and work to correct them, the better.

There are one of two issues that mortgage brokers and real estate agents will tell you are important. They will either say to “Pay down your debt” or “Save every penny you can.” These obviously can be conflicting goals and may lead to frustration on the part of the first time home buyer’s.

My suggestion is this: You have to have a balance between the two. Yes, reducing your debt may help to get a better interest rate, but if you put all your money on your debt and have not saved enough you will not be able to purchase that home.

For most home buyer’s, especially first time home buyer’s, its the down payment that gets in the way. Mortgage brokers will tell you that you should have 20% down payment in order to buy a house. The good news is that the 20% down payment will most likely prevent you from having to pay PMI insurance, but it is not necessary in order to buy a house. Many transactions are made with 3.5% to 5.0% down.

Here’s the good news: Say you buy a house for $250,000. For simplicity, we are not going to figure in any downpayment. If your home increased in value 3% every year, at the end of seven years you would have approximately $57,467 to put towards a down payment of your next home. That does not include any reduction in the principle you made with your payments.

If your home increased in value 4% a year; after seven years you would have approximately $78,982 to put towards a down payment of your next home.

Home ownership is one of the best ways to increase your net worth.

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