Locking In Your Rate

You never know when the lowest mortgage rate will be available to you, but with good timing, a little knowledge, and the help of your mortgage lender, you can lock in the interest rate once you have a ratified contract on a property.

 In a previous blog we discussed why the mortgage rates are so low, however they're constantly changing. This fluctuation makes it difficult to know when is the perfect time to lock in a rate. The last thing you want is to find your perfect house, only to learn the interest rates have gone up, or that you have to pay thousands more in points. In this blog I will be discussing how to lock in the lowest rate possible to save you the most money.

The process of locking in an interest rate varies from lender to lender.  Interest rates can vary on a daily basis.  While there are many variables that can impact interest rates, the most common reason for interest rate fluctuation is whether economic news is stronger or weaker than anticipated.  It will sound funny, but in order to have lower interest rates, you want to hear weaknesses in the economy with low inflation.  This combination will keep interest rates low to stimulate the economy.  Lenders typically have set times, Monday through Friday when the quotes are available and when you must lock in by in order to secure the agreed upon quote.

There are a few things to keep in mind regarding a mortgage rate lock-in to help ensure you are getting the best rate:

·          A rate quote is different than a rate lock - a quote has not legally binding and subject to change as the rates change; a rate lock secures that interest rate at the time of closing and is a binding agreement

·          Be organized and prepared; you may lock in once you have a ratified contract on a property and your settlement date is within a lender’s lock period.

·          It is best to have a specific property in mind and even better to be close to closing

·          Get the rate lock in a legally binding document, not just a verbal offer

·          Make sure the lock covers you to the settlement date

When locking in a mortgage rate, let your mortgage lender guide you through the process. Know your estimated closing date, and try to time your rate lock with that date. If you estimate 30 days to close, find out what the interest rate would be if you locked it for a 45-day period. You can't afford to take more time then you should.

You can save a lot of money by locking in the lowest rate possible to you, so it is worth the effort. The important thing is to get your rate on a day it's low and lock for enough time to close your loan. Interest rates are constantly changing, and currently they're the lowest they've been in years. Intercoastal Mortgage Company can help you obtain the best possible rate for you. Contact me and Iwill assist you in locking the interest rate for your loan.

How Should I Start the Loan Process

Chances are you are well aware that now is a great time to purchase your next home, but what steps do you need to take? This blog is going to cover the steps you must take to obtain a loan. You may want to start the process by contacting me for an initial consultation. After listening to your specific goals and needs, I will suggest the program that is appropriate for your situation. At this time I will ask you to fill out the mortgage application. It is recommended, for efficiency sake, that you apply over the telephone or through our safe and secure website. If you prefer, you may apply in person or through the mail. I will be happy to provide you with a good faith estimate based on the programs you are interested in and eligible for.

After you have completed the application I will initiate the conditional approval process. At this time, I may ask you for some personal documentation such as pay stubs, W2’s, tax returns, bank statements or other pertinent information. I will be able to quickly determine what documentation will be necessary based on your application and interview. Normally, we are able to issue a conditional approval within 24 hours, though this varies for individual circumstance. The approval will normally be conditioned upon some tasks that have not occurred yet, like the appraisal or title work being completed.

Now that you have completed these steps your loan will be placed in a conditional approved status. This will enable us to issue a conditional approval letter. This letter is normally drafted when you are ready to make a contract offer on a home after your property search. The letter will contain specific information on the property you have selected. If you are refinancing a property you already own, I will help you take the necessary steps to complete that process.

Once you have a ratified contract to purchase a home or have decided to refinance and given me permission to order your appraisal, we will "lock in" the interest rate on one of the many competitive Intercoastal Mortgage programs you may select. You will sign all verifying application documents in the loan package and return it here. I will complete all matters of due diligence. I will then submit the loan to our in-house underwriters. There, it will be validated and sent to our in-house closing department. The closing department will then interface with your chosen title company to insure that your settlement occurs on time and without any glitches. We excel at making this process as stress free as possible.

When purchasing your next home, you must utilize the best possible resources available to you. We strive to be the best lender to assist you with your next home buying experience. We are professional and, with the exception of the required 3^rd party appraisal, complete all other phases of the mortgage process in-house. Start the process today, and contact me.

What Is a Non-Conventional Loan

These types of loans are for the borrower or property that does not meet the traditional guidelines for a typical mortgage loan. They provide us, as your lender, a way to ensure that we have a solution to the issues or obstacles you may encounter in trying to obtain a mortgage. Non-conventional loans are often used for purchasing private residences and for building or renovating them. This blog discusses the non-conventional loan. Three types of non-conventional loans that we offer and will be discussing are:

·         Construction Loans

·         Renovation Loans

·         Bridge Loans

A construction loan takes a borrower through lot acquisition, construction, and conversion to a permanent loan upon completion of the project. A construction 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 by not having additional closing costs from multiple loan settlements.

A Renovation Loan is a construction loan for a primary residence that the applicant already owns. This program allows the homeowner to borrow funds based on the fully renovated value.

Bridge Loans facilitate a non-contingent contract for the purchase of a new primary residence using equity in a borrowers existing primary residence.

We provide conventional and non-conventional loans, and would be happy to assist you in either process. Contact me for aquality lending relationship and experience.

More Loan Programs We Offer

Obtaining a mortgage is probably one of the most significant things we can acquire. There are multiple types of mortgage loans; just as we’ve discussed in previous blogs. This blog will be discussing three more specific types of mortgages we offer.

The three loan programs we will be discussing are:

• Interest Only Loans
• Buydowns
• Balloons

Interest Only Loans are offered to provide for mortgage payment flexibility by not requiring the borrower to pay principal on a monthly basis. This can be advantageous for qualifying purposes or for the individual who has the financial where-with-all to pay principal at their discretion. They may choose to use the money that would be applied to their principal for other purposes such as paying off a second trust or other debts. Interest Only Loans are available for only a select few mortgage products.

Buydowns offer a lower interest rate for the first 1, 2 or 3 years of the loan. This allows for easier qualifying and for the borrower to gradually ease into their increased final mortgage payments. The buydown is typically accomplished by the use of points which can be paid by the purchaser, seller or builder. Your loan officer can provide a specific breakdown for your financing needs.

A balloon mortgage is one that has a regular monthly payment fixed for a specific period of time - usually 5 or 7 years. These loans are amortized typically over 30 years. At the end of the fixed 5 or 7 year period, a final lump sum (balloon payment) may be due. In some circumstances, the loan can continue for the remaining 30 years based on current market rates. Please consult with your loan officer about these possible provisions.

As you can see from this blog and a few previous, we offer many options to help you achieve your next home. Intercoastal Mortgage Company is perfectly poised to assist you in not only the purchasing of the home, but all the necessary things involved with it. All it takes is a phone call to begin the process of pre-approval which will be followed by you and us finding the perfect home for you. Contact me to start the process and obtain your first or next home through a quality lender that strives to be the best. 

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.