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.