The Adjustable Rate Mortgage

Have you noticed the many headlines about rising home prices, decreasing foreclosure rates, and “the lowest ever” mortgage rates? Everyone is telling you that now is the time to buy, and they probably have been for months; well, they are right. As a first time homebuyer, or even a repeat buyer, you have many options available to you- Government, Conventional, and Non-Conventional loans. There are different factors and terms such as interest and the length of the loan itself for each of these types of loans and this blog is discussing a product we offer called an adjustable rate mortgage.

Adjustable Rate Mortgages (ARM) typically offer lower interest rates than a fixed rate mortgage because the interest rate is only guaranteed for a specific time frame. ARMs are useful for buyers who are trying to maximize their purchasing power or for buyers who plan on owning a home for a specific period of time. ARM time frames are traditionally for 10, 7, 5, 3, 2, and 1 years, and 6, 3 and 1 month. All of these loans are for a 30-year term and some may be available for a 40-year term. 

Every ARM has a Life Cap which provides a limit on how high the rate can adjust after the initial period has concluded and typically a yearly adjustment which also limits how much the rate can fluctuate from year to year.  Once your initial interest rate period has been completed, the new interest rate is calculated on the anniversary of your mortgage by adding a pre-determined margin to an index.  The index is the instrument we use to determine the future interest rate. Typical indices are the Treasury Bill (T-Bill), London Interbank Offered Rate (LIBOR), and the Monthly Treasury Average (MTA). Your ARM can also be refinanced at any time into a fixed rate or another ARM product.

There are a few things to consider when looking at an adjustable rate mortgage; what’s your time frame for living in that particular house? This is a great mortgage product and it has become increasingly popular, but whether or not it’s right for you is dependent on what you need and your specific situation. We will sit down with you to help you decide what would best for your financial situation. At Intercoastal Mortgage company we pride ourselves in providing you with only the best quality you deserve, contact me to obtain the home of your dreams.

Is Their Asking Price Appropriate

If you're ready to purchase a new home, understanding the value of that property plays a critical role in the process. The asking price for a home is not always equal to its fair market value; because we finance new home purchases, it is important  to determine the actual value of the home to get the correct financing for the value.  By consulting with real estate professionals, property appraisers, and mortgage lenders, you can determine the actual value of the home, regardless of the listing price. It is important to establish the FMV (fair market value) of that specific house you're interested in, since this price could be lower than the asking price, giving you an advantage when making an offer.

The price which the home you are looking for should sell for is called its Fair Market Value (FMV). The FMV is based on criteria such as square footage value, upgrades, assessed value, and a comparative market analysis (CMA). The CMA is calculated by comparing other homes on the MLS (Multiple Listing Service) either in the neighborhood you specify or by the attributes of that particular house. They look at houses already sold as a determination of accurate pricing. The square footage value gives continuity to some of the variables of houses in the same neighborhood; such as lot size or improvements needed/completed. Assessed value adds a third dimension to give a comprehensive picture of what the fair market value is for a home.

The home sale price is what the seller of the home is asking the buyer to pay in order to purchase the home. This includes the financed amount and the amount of the down payment. In a previous week's blog, we discussed the advantages of mortgage pre-approval. Through this process your mortgage lender will assess your financial situation and calculate a maximum affordable sale price. This indicates what mortgage amount you can realistically afford. Assuming you enter the home buying process with a pre-approved mortgage amount, knowing the fair market value of the houses you are interested in will allow you to align your financial picture with the right property.

Often people think a house is out of their reach because they can't afford the asking price. What they may not know is that with the help of mortgage and real estate professionals, they may be able to own the home they want in their desired neighborhood by understanding the Fair Market Value. At Intercoastal Mortgage Company, we help you secure a loan that fits your needs, based on your income and budget. Homeownership is a phone call and application away, so contact me to help you in the loanprocess and obtain your next home.

Government Loans You May be Eligible For

There are many different types of loans in the market today. Some are privately held offerings and others are Government sponsored programs. This blog is discussing the loans we offer that are related to government programs. These loans aren’t only provided by the government; some are independent agencies that are insured by the federal government, and some are independent government agencies providing the actual loan.

Each type of loan has different guidelines; generally, government loans are either aimed at a specific group of people or designed to appeal to a specific demographic. They are designed to help people with homeownership. Let’s start by naming these loans:

·         Veterans Administration (VA)

·         Federal Housing Administration (FHA)

·         Virginia Housing Development Administration (VHDA)

As an independent agency of the U.S. Government, the Veterans Administration (VA) is responsible for the administration of various programs that benefit U.S. service personnel and qualified veterans. Although the VA itself doesn't make mortgage loans, it does guarantee the repayment of loans made to veterans. VA-guaranteed loans usually feature flexible terms, zero or low down payments and less restrictive qualifying requirements, making it easier for veterans to purchase homes. VA loans are also assumable, meaning that someone who is not a veteran could end up benefitting from the program as well.

As part of the U.S. Department of Housing and Urban Development (HUD), the FHA is primarily responsible for insuring residential mortgage loans made by qualified lenders. FHA loans are quite popular because the income and credit requirements are more lenient than those of conventional loans. Though commonly referred to as "FHA loans," the loans are not granted by the FHA, but the FHA insures the lender against loss. FHA loans are also assumable and require low down payments. FHA offers a fixed rate and  1, 3 and 5 year adjustable rate mortgages. Both fixed and adjustable programs require only a 3.5% down payment. The FHA maximum loan amounts vary for each area of the country. FHA is the original first time homebuyers program.

The Virginia Housing Development Authority (VHDA) is the state’s mortgage finance agency. Created in 1972 by the Virginia General Assembly, their mission is to help low and moderate-income Virginians attain quality, affordable housing. Their vision is to be the leading mobilizing force for affordable housing in Virginia.  VHDA’s flagship program is an FHA Plus program that allows qualified first-time home buyers to purchase with less than the traditional FHA down payment. 

As stated previously, we offer you many loans to help you obtain the home of your dreams. There are multiple loans and each one has a specific benefit or advantage for you. Call us and learn if you meet the requirements of any of these loans, thus benefit from the advantages it would provide you. A little research can make all the difference, but we’re here to help you in the home purchasing process from start to finish. Give me a call and let me assist you inpurchasing your next home.

How Can You Use A Construction/Renovation Loan

There are many different types of loans available to you in this current market, and this is the best time in years to purchase a new home. What you may not be hearing much about is the ability to take out a loan to build your own home. Have you given any thought to or considered the possibility that you could build a house of your own?  People are often quick to dismiss this idea because it seems very difficult or only for the super wealthy, but that is not the case.  I’m going to discuss in this blog how you can obtain a construction/renovation loan and build/design your own home.

Borrowers wishing to build a custom home may obtain financing through a package program called “Construction/Permanent financing”. This program takes a borrower though land acquisition, construction and conversion to a permanent loan upon completion of the project. A construction/permanent loan is a one-time close loan program to finance the construction of your dream home, providing both the construction funds and the permanent loan. This means you will save thousands of dollars by not having additional closing costs from multiple loan settlements.

The normal construction/permanent loan allows for 6-12-months for completion. Construction extensions are available if necessary. The size of the dwelling and the time of year are two factors that may effect your construction loan term. Long-term rate protection for the permanent loan is available for customers worried about rising interest rates. During the construction period, interest is only charged on the amount of the loan actually outstanding. When the home is completed, the permanent loan period begins.

Borrowers who are buying a home, or have an existing home which needs to be renovated or remodeled, can utilize a renovation loan program. This loan finances the purchase or refinance of the home as well at the improvements to be made. Just like the construction to permanent loan program, the construction and the permanent phases are combined into one loan, saving time and money. The renovation or remodeling can take up to 12-months, with draws as frequently as monthly, depending upon the complexity of the project. Once the work is completed, the loan automatically rolls to the permanent loan.

Many people do not understand or appreciate the idea of building, whether because they find it more complicated or too expensive, but it’s actually quite simple. Think about a house where you aren’t having to remodel to fit your needs and aren’t unsatisfied from the lack of quality design. Whether you’re in the market to buy, renovate or build, Intercoastal Mortgage Company is the lender for you. Give me a call andachieve the dream of building and owning your own home.

ICMTG Perfectly Poised for these Low Rates

We are going through dramatic shifts in the economy and interest rates are the lowest they’ve ever been. Regardless of your personal political views, it is safe to say the current trend of economic change is not likely to slow any time soon. On the home mortgage front, there are a lot of people purchasing and refinancing, and there remains a large number of houses on the market at much lower prices than a few years ago. Whether you are buying a new house, taking advantage of the market and investing, or refinancing your existing home, you need a mortgage. This blog is dedicated to highlighting the prime position Intercoastal Mortgage Company is in to best serve the needs of individuals taking advantage of these amazing rates.

Consider the advantages of going with a smaller mortgage company such as ICMTG.

§   We are lenders, not brokers; and we hire only the best and most experienced

§   We are not a single banking entity

§   We provide the best and broadest product variety

§   We are a local lender

§   Our place in the community

Our mortgage loans are processed, underwritten, closed, and funded in-house. We make the loan decision. We are accountable for the entire process from beginning to end. As a result your transaction will go smoothly and your closing should be on time. While we are mortgage lenders, we are not limited to one bank’s mortgage products. Not only does this allow us to remain competitively priced, but to offer a wide range of products to suit all of our borrower’s needs. Our product line is exceptional, constantly updating our products to meet the changing needs or our valued customers. Whether you are a 1^st time homebuyer or an experienced homeowner, Intercoastal has the product and program to suit your needs. We understand our local market and we are housed right here in Northern Virginia. This means direct access to the underwriting and closing department, which allows us to provide prompt, full approvals without surprises. Need a quick closing? No problem!

Intercoastal is listed as one of the top 25 lenders in the Washington Post and Washington Business Journal. We have built a reputation as a reliable, professional and innovative company. We pride ourselves on delivering quality mortgage products and services while helping our valued customers realize their American dream.

Trust, efficiency, reliability, and experience play the most important roles in the mortgage process. Developing a rapport with your home buying professionals is a crucial aspect of a successful home buying experience; as it allows for a customized mortgage to fit specific needs and budget. Contact me for only the bestmortgage lending and obtain the house you’ve been dreaming of.

Closing Your Loan

If you’re in the process of obtaining a mortgage loan then you are probably interested in getting to closing as quickly and efficiently as possible.  In previous blogs we have discussed how to get to closing; what you need to have and what you can expect through the process, but what happens when you get to the finish line? Your application for a mortgage loan has been approved and you have received a commitment letter from us. The final step before you can call the house your own is the closing, or settlement, of the purchase transaction and mortgage loan. You will have to sign a purchase agreement and your loan request will be approved, but you still have no rights to the property, including access, until the legal title to the property is transferred to you and loan is closed. You should have an understanding of what is involved in the closing process, and here I discuss what you need to do to finish up this process.

When you get to closing, you will sign the necessary documents, the seller will transfer the deed to the property, funds will be collected and disbursed and the closing agent will record the necessary instruments to give you legal ownership of the property. Settlement of a mortgage loan is a legal process, so specific procedures and requirements will vary according to state and local laws. This information applies to closing practices in our area.

As soon as you receive firm approval from us, the lender handling your loan, you will want to confirm the actual date of loan closing. An estimated closing date was probably specified in the sale contract, but a firm date needs to be set by your agent.  The loan closing date will include representation, either in person or through documentation, of all the necessary parties - the buyer, the seller of the property, the party’s agents, the title company, and your lender. Your loan commitment can expire, as can the rate lock agreement, so the settlement date should be set with that in mind.  The settlement date also has to allow adequate time to assemble all of the required documentation. The real estate agents involved in the sale transaction and the lender are often the best people to coordinate the closing arrangements, since they are the most knowledgable and experienced in this area. Most lenders require at least three to five days advance notice of the closing date in order to prepare the loan documents and get them to the closing agent.

Examples of documents that may be required for closing:

• ·         Title Insurance Policy
• ·         Termite Inspection and Certification
• ·         Survey or Plot Plan
• ·         Water and Sewer Certification
• ·         Homeowner’s Insurance
• ·         Flood Insurance
• ·         Certificate of Occupancy or Building Code Compliance Letter

Closing your home loan is a standard process in home ownership, but it there are variances for individual situations. Your process may be shorter or longer than your neighbors and this could be due to the documents needed, the seller’s specifications, the house’s necessary repairs, and your financial agreement. Contact me for only the highest quality lending and begin the process of homeownership.

What Is a Conforming Loan?

This week I will be discussing conforming loans, as a sequel to last week’s blog, where we discussed combination loans. A conforming loan is a mortgage loan that is equal to or less than the dollar amount established by the conforming loan limit set by Fannie Mae and Freddie Mac. The term "conforming" most often refers to a specific mortgage amount; however, the terms "conforming" and "conventional" are frequently used interchangeably. Mortgages that exceed the conforming loan limit are classified as non-conforming or jumbo mortgages.

The Office of Federal Housing Enterprise Oversight (OFHEO) sets the conforming loan limit on a yearly basis. The OFHEO has regulatory oversight to ensure that Fannie Mae and Freddie Mac fulfill their charters and missions to promote homeownership for lower income and middle class Americans. It’s set to provide loan limits and agreements that apply to buyers with less money to spend on a home and those looking for less expensive houses. 

The OFHEO uses the October to October percentage increase/decrease in average housing prices in the Monthly Interest Rate Survey of the Federal Housing Finance Board (FHFB) to adjust the conforming loan limits for the coming year. In other words, they base the loan limit for the following year on the average house prices for the current year.

The term conforming loan became popular sometime after 1970 when Freddie Mac and Fannie Mae created standardized loan documents and processes. If a buyer fits the criteria set forth by Freddie Mac and Fannie Mae, it is known as a conforming loan. Conforming loans for a One Unit primary residence in our area have the following loan limits and minimum down payment requirements:

            

             Conforming Loan; maximum loan amount is $417,000

                        Minimum dawn payment is 5%

            Conforming High Balance Loan; maximum loan amount 1s $625,500

                        Minimum dawn payment is 10%          

           

There is less risk with a conforming loan because lower loan amounts are involved. If you fit the qualifications to obtain a conforming loan then you can use it to purchase your next home. As a loan officer for Intercoastal Mortgage Company, I can not only supply you with the most professional service, but the best quality a lender can provide. We specialize in many different types of loans and are here to help you achieve your dream. Contact me to beginthe process.

What Is a Combination Loan

A Combination loan could be appropriate for your needs if you don't have the necessary funds for a down payment, can't access liquid funds at the time of your purchase, or you need a large loan. Combo loans, sometimes referred to as piggyback loans, is financing that incorporates a second mortgage behind a larger first mortgage.

In this blog we will discuss what a combo loan is and how they can benefit a borrower.  There are several reasons these types of loans are appealing…

1)      Many home buyers do not have the ideal down payment, typically 20%, for that particular property

2)    Many home buyers do not want to put down or liquidate the necessary assets to get to that down payment

3)     May be used as an additional option besides traditional mortgage insurance (MI)

In high cost areas such as ours it can be very difficult to save the required funds to get to an ideal down payment.  Combo loans allow access to funds for borrowers that may not have access to a large down payment.

Many borrowers have worked very hard to save for a large down payment.  When a borrower faces the reality of having to part with their savings, they may feel as though they are not going to be able to replenish their savings in the manner they would like.  A combo loan allows them options in retaining a portion of their savings.

Many people must purchase MI if they lack the traditional 20% down payment. MI applies to the first loan on your home in the event that the loan amount exceeds 80% of the purchase price or value in a refinance.  When you have a combo loan, the first loan is for 80% of the lesser of the purchase price (or the appraised value in the case of a refinance) and the second loan is for the remaining balance. The second loan normally has a higher interest rate than the first loan.

The advantage to you as the borrower is that the interest from both loans is now tax deductible. Also if you desire to pay down your loan, the second loan is for a smaller amount than the first, therefore easier to pay off. The total payment for the combination loan can be lower than if you had traditional MI. These loans are typically known as 80-15-5 (5% down payment) or 80-10-10 (10% down payment). Your down payment can be for any percentage or dollar amount. Here are two different scenarios to illustrate the option:

•                    80/15/5- This scenario involves putting down 5% of the purchase price, and financing a first mortgage of 80% of the purchase price, coupled with a second mortgage comprising 15% of the purchase price.

•                    80/10/10- This scenario involves putting down 10%, and financing a first mortgage of 80% of the purchase price, coupled with a second mortgage comprising 10% of the purchase price.

Dividing a mortgage into two loans enables you to avoid having to pay mortgage insurance. It is typical for lenders to require mortgage insurance when you finance more than 80 percent of the home’s value. If you qualify for and choose to go for a combination loan, you may avoid mortgage insurance, thereby saving money on the premium. You may also save on closing costs when the two loans go through the same lender and close at the same time. You also benefit from combination loans when your loan amount exceeds the limit for conforming loans. As of 2010, the cut-off for a conforming loan is $417,000 in most states and $729,750 for designated high-cost areas (later reduced to $625,500).  You divide up the loan so that the larger amount stays under the limit, and obtain the lower conforming interest rate for the first loan. You will want pay off the second higher-rate loan over a short period of time to decrease costs. We will be discussing conforming loans in greater detail in a future blog.

Before President Bush signed into law the Tax Relief and Health Care Act of 2006, mortgage insurance premiums were not tax deductible. As of January 1, 2007, borrowers can now deduct mortgage insurance payments on their tax returns. There are some complexities to deciding whether to get a combination loan or mortgage insurance; you have to determine what works best for your individual situation. Your mortgage lender should be able to consult with you about your best options. At Intercoastal Mortgage Company we specialize in all aspects the loan process and do our best to ensure you get your desired house. Contact me for afree consultation and take the first steps toward homeownership.

Understanding a Good Faith Estimate

A Good Faith Estimate (GFE) is an important yet sometimes confusing mortgage document that potential homeowners and those refinancing their homes may encounter. A GFE could also be one of the most powerful negotiating tools for you to land the best deal on a mortgage loan. This document helps ensure borrowers end up with the same terms they were quoted at the closing table. In this blog I discuss what a Good Faith Estimate is and how you can use it.

A Good Faith Estimate is the estimated closing costs associated with taking out a mortgage loan to buy or refinance a home based on your personal information. Included in the GFE is a summary of your anticipated loan terms, an itemized list of all the various costs involved with financing, and how much money you will need to bring with you to closing. In the past, lenders provided potential borrowers with Good Faith Estimates, however, there have been many changes in the way these are used and provided to clients.

We will need some information from you so be prepared when you come in, call, or apply online to fill out a loan application. Here is a list of what we will need from you to give you a good faith estimate:

·       Your name

·       Your monthly income

·       Your social security number (to obtain a credit report)

·       The desired property address

·       Estimate value of the property

·       Loan amount

·       Other items necessary and relative to the loan

The Good Faith Estimate is provided to potential homeowners to help them avoid overpaying for a loan and sets forth the expected interest rate. Loan charges, third-party fees, and other costs associated with the loan must be displayed uniformly. In the past, lenders weren’t always uniform in their estimations of fees included on the Good Faith Estimate and how such fees should be disclosed. Sometimes sellers agree to pay all or some of the buyer's closing costs, but when they don’t a GFE comes in very handy to maintain the expected expense of purchasing a home.

At Intercoastal Mortgage Company we provide our clients with an accurate Good Faith Estimate and the most professional service a lender can provide. Contact meand begin the loan process to own your own home.

5 Tips to Prepare for a Home Loan

People often ask when the best time to buy a house is. The answer is: right now. Current mortgage rates are the lowest they’ve been in many years. Though it is not as easy to quality for a home loan now as it was several years ago, borrowers who are prepared and have the professional support of a quality lender, improve their position considerably. This blog discusses the best way to prepare for a mortgage loan, so when you are ready for home ownership, you have a better chance of successful funding.

These tips will help you prepare to obtain a mortgage:

·       Have an idea of how much you can afford - though this can change once you consult with your qualified loan officer, it helps to have a starting point. Start by completing a loan application form for us so a loan officer has their specific financial information and can run qualifying numbers

·       Know your credit scores - it is easy to obtain a credit report.  This will give you scores and show any areas of concern which you may need to address

·       Know what documentation you are going to need. Our application process at Intercoastal Mortgage Company is very easy and streamlined, your loan officer will tell you what you will need to produce as you move through to closing your loan. Examples of documentation would be copies of pay stubs, W-2 forms, and bank statements.

·       Have your documents ready when we need them - when you find the house you want, you don’t want your processing delayed while you search for documents.

·       A little education can go a long way - know the current interest rates, learn how closing costs, points, and different types of loans effect the terms. We help our clients put all of this in perspective to make the best choice for their individual situation.

Good credit is the key to obtaining a mortgage with favorable terms in this lending market. Get copies of your credit scores and credit history and study the reports carefully to make sure there are no errors or issues to resolve. Make sure you know your budget, and be prepared for unexpected expenses.  We will help you with any questions and assist you in this process for the best possible outcome. Contact me and you can begin the process of home ownership.

Buying a Home with Little or No Credit

Establishing good credit is very important when seeking a loan. This is a critical element that lenders evaluate your ability to handle debt and make payments on time. There are a few suggestions for how to establish good credit, such as securing a credit card, car loan or other personal loan. Once you have the credit, be sure to make timely payments on all your bills, and pay at least the minimum payment on your new credit card every month. Keep records of payments for such expenses as phone, utilities, and rent payments. This offers documentation of your credit worthiness, should you need it. Don’t fall into the “more is better” trap where credit cards are concerned. One or two established accounts may be better than several accounts -- avoid taking on excessive debt as this may decrease your credit score and ability to qualify for a home loan. This blog is about what you must do to purchase a house when your credit is not well established.

The three general things lenders consider when qualifying applicants for a home loan are credit, income, and assets. Of course, there is more complexity to the qualification process, but these are the main categories that are reviewed. If you do not have an extensive credit history, you must show you can handle a mortgage loan through your income and assets, and you may be asked to put down a sizable down payment to mitigate the risk of loss.

Here are some options to help you with the process of homeownership if you have little or no credit:

• ·        Raise your credit score with credit card purchases and other credit purchases
• ·        Ensure all other areas of your financial life are strong and intact such as job, rental history and outstanding monthly bill payments
• ·        Find a co-signer with strong credit who will lend their financial strength to your mortgage application - consult with your loan officer on the implications of this approach

There are options available if you are trying to obtain a home loan with no credit. Government-sponsored FHA (Federal Housing Administration) loans may be a good option for you to consider. We offer several types of mortgage loans, with options to suit a variety of situations. The main thing is to contact me so I can help you determine which option is best for you to use to buy your new home.

What’s The Best Way to Get a Down Payment

For many potential homebuyers, the money necessary for a down payment is often the biggest deterrent to home ownership. A typical down payment for a house is 20%. Many people, particularly first time home buyers who do not have money from the sale of their previous home, don’t have that much cash available. This blog is about helping you with the process of homeownership by giving you some tools to acquire the most important prerequisite; the down payment.

Suppose you have found the perfect house and interest rates are still low, but the one thing standing between you and your dream home is a 20% down payment. We’ve compiled a list of several ways you can acquire enough money for a down payment. As with all aspects of the mortgage lending industry, which can be complex, these suggestions should be run past your loan officer to get their professional input prior to making any decisions:

·        Monetary Gifts - Ask your parents or a relative give you money as a gift. You may agree to pay the money back (more like a loan) but acquiring the funds in the form of a gift rather than a loan is preferable for certain mortgages. All gifts need to be documented as such.

·        Shared Costs - Ask the seller to pay all or part of your closing costs. Many loan programs allow seller contributions.

·        Zero Point Loan - Consider this as a way to help lower your closing costs. In some cases you can even take a slightly higher interest rate in exchange for a credit back from your lender at settlement.

·        Low/No Down Payment - Ask your loan officer about some of the loan programs available today that require little or no money for a down payment. Examples include; 100% financing, 103% financing, 80/15/5 loans and more.

·        Borrow from Yourself - You may have financial resources in a retirement plan, such as a 401K or Thrift Savings Plan (TSP). You may consider borrowing money from your retirement funds or from the available cash value of a life insurance policy. Consult your tax or insurance advisor for these options.

·        Sell Something of Value - You may consider selling an asset to raise cash for your down payment, such as a car or boat.

The down payment will be a critical factor in whether you get the house you want. As stated in previous blogs, there are many options available and we are here to help. Don’t let the amount of a typical down payment keep your from exploring your options to own a home.  Now is the time to buy for multiple reasons so don’t miss out on these low home prices and mortgage rates. Contact me and get the house you desire.

Homeownership is Good For Your Well-being

Owning a home is a critical part of the American dream and the economic benefits of homeownership are immense. Instead of paying rent every month to someone else who gets all of the benefits of home ownership, you get all of the benefits of  purchasing something that you will own, which usually appreciates in value and offers significant tax benefits. But there's more to owning a home than financial profit. Did you know that owning a home has been proven to be better for your health, your well-being, and the health and well-being of your family? This blog is about why this is so.

There have been many studies on the psychological impact of homeownership; this is a summary of a few salient points from these studies, with more description to follow. These are study outcomes, reflecting general trends. There are, of course, people who do not fit these outcomes:

1. Your community thrives
2. Your kids gain confidence and a strong sense of safety and security, thus doing better in school and setting a foundation for a successful life
3. It creates a healthier environment
4. The economy prospers
5. You don’t have to worry about a lease and rent increases causing you to  have to move from year to year

“Pride of Ownership” is the concept that gives the homeowner the desire to invest time, money, and energy in their homes, neighborhoods, and local communities. Homeowners are more likely to participate in local elections, become part of a church/religious organization, volunteer, and join community organizations. Children of home owners tend to do better in school because they  feel the stability and security around them. They are statistically much more likely to graduate from high school than children of renters and less likely to engage in criminal activity and become teen parents. People who own their own homes rather than renting tend to be more stable, and stability is good for kids.

There is also evidence that homeowners have higher self-esteem and are happier than renters and statistically even have better physical health generally. People staying in the same place tend to develop positive and supportive friendships, as well as support systems, which are proven to be good for your health. Also, having equity in your home gives you more financial options should you need to access resources to deal with health concerns.

As you can see, the benefits of owning your own home go beyond the obvious and significant financial ones. With mortgage rates and house prices as low as they are, now is the time to secure a home for you and your family’s future. At Intercoastal Mortgage Company we can help you achieve this goal and we provide the highest quality service to our clients. Contact me for help with this and together you can obtain the American dream of homeownership.

Is Your House Worth Less Than You Owe?

Millions of Americans owe more on their home mortgage than what the home is worth now. This can make purchasing a new home or refinancing your current home difficult. This is particularly prominent for those who bought their homes at the peak of the market. However, there are options available to you, which will be discussed in this week’s blog.

Experienced mortgage professionals can tell you whether you qualify for a loan, once you fill out the mortgage loan application. If you do not qualify, we will explain why and give you specific suggestions for steps to take to improve your chances of qualifying for a loan in the future. Here are a few suggestions to help you with negative equity in your current home:

·        Sell your house at the best price you can get for it. Try to sell it at least for the mortgage balance, but make sure to consult your realtor and mortgage lender for guidance.

·        Ask about mortgage refinancing.  Refinancing may be difficult if there is no equity in the home, but it is worth exploring with your mortgage lender. 

·        If you are able to stay in your home, you may want to wait until home values rise again before putting your house on the market.

·        Consider reducing expenses and paying off debts. Though this does not improve your home equity status, it will put you in a better position when you apply to refinance or purchase a new home.

The housing market has been through some dramatic fluctuations and rebounding is the next natural phase after a downturn. Dealing with negative equity is not pleasant, but you do have options. At Intercoastal Mortgage Company, we are skilled in all areas of the refinancing and mortgage lending process. Contact me for a consultation and I will assist you in refinancing or purchasing your next home.

What Is Single Premium Mortgage Insurance?

Mortgage insurance is an insurance policy which compensates the lender for losses in the event of a default on a mortgage loan. Private mortgage insurance is typically required when down payments are below 20%. Rates vary based upon loan factors such as the percent of the loan insured, loan-to-value (LTV), fixed or variable, and credit score. The rates may be paid in a single lump sum, annually, monthly, or in some combination of the two (split premiums). This blog will be discussing the single premium option and why this is valuable to a home buyer.

At Intercoastal Mortgage Company we offer multiple types of loans, and lender-paid insurance policies. The mortgage insurance we offer is designed to protect the buyer and the lender alike. The benefit of mortgage insurance to you (the buyer) is that you are afforded the ability to own a home when you don’t have the standard 20% down payment. Single premium mortgage insurance is one of the many ways we can offer insurance coverage to suit your specific needs.

Single premium mortgage insurance is a one-time, lump sum that is typically paid at closing. When you have less than 20% to put down on a house, the premium to cover the gap may be financed into the interest rate. Financing the one-time premium has positive outcomes; it lowers the monthly cost of the insurance, and provides a tax deduction as an additional interest expense to the borrower. This buys you out of monthly mortgage insurance for the lifetime of the loan. Single premium is also cheaper than monthly payments when compared over time.

Single premium mortgage insurance (or upfront mortgage insurance) is available on most loans that require private mortgage insurance.  It can be paid by the seller or lender as a closing cost contribution. The seller can offer a percentage (3% for example) that will cover a non-refundable premium for the borrower, who will then never have to make a mortgage insurance payment.

With a smaller fee added into the closing cost, you can eliminate any extra monthly cost and still benefit from having an insured mortgage and ultimately getting your loan. At Intercoastal Mortgage Company we specialize in offering the right loan for our clients. Contact me for any additional information or to get the process of home ownership started.