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.