WHAT DO WE LOOK FOR IN A LOAN OFFICE TO RECOMMEND TO OUR HOME BUYERS IN MARYLAND AND NORTHERN VIRGINIA?

WE ARE REAL ESTATE AGENTS AND BROKERS
Homefinders.com does not own any interest in any lender or title company. Our interest and fiduciary is to YOU, the home buyer.

Homefinders.com takes our home buyers financing need very seriously. Since we represent many home buyers who purchase homes in many locations. Many home buyers begin their home buying adventure by contacting a mortgage company first. The buyer many not know their qualifying range. They may not know the types on loan that are popular or proper for the type of real estate they plan to buy. If you already have a relationship with a mortgage company or loan officer, Homefinders network agents work with many mortgage companies and many loan officers.

Don't know how much home you're qualified to buy?
Give me a call and I'll be glad to help you compute your qualifying range. This is helpful and, once you have a qualifying price range, you can search homes for sale in the town or city of your choice. Homefinders.com works and sells homes throughout the Washington, D.C., Maryland and Northern Virginia real estate market.

Your price range may help determine the best loan type for your home financing needs.

The FHA Loan
If your home price is less than $362,900, you may consider the FHA loan. This is a good loan for first time home buyers, buyers who have recently made repairs to their credit report, buyers who have recently changed jobs. Anyone can use the FHA loan, except that a person can only have one home financed with the FHA loan at a time. The FHA loan is insured by the Federal Housing Administration. Since it's insured, the FHA loan will often offer lower interest rates, easier qualifying and more flexible about the credit report. The FHA loan requires that the home buyer have at least 3% of the purchase price for a down payment. FHA loans are assumable for qualifying buyers. FHA offers Adjustable Rate Mortgage, ARM, that permit payments to start lower than the fully indexed loan amount. FHA ARM loans can only adjust up by 1% in any 12 month period. Further, the FHA ARM offers a lifetime cap of 5%. This is a good loan, especially if you know that your income will increase over the years.

The VA Loan
If you have VA eligibility, the VA loan may be the best option. The VA loan is the only real ZERO DOWN mortgage and is limited to home buyers with a VA Certificate of Eligibility. The loan limit is $417,000 for the No Down Payment mortgage loan. VA loans are advantageous to eligible home buyers because they offer good interest rates, easy qualifying ratios and VA loans are assumable for qualifying home buyers. The VA loan also permits sellers to pay all closing costs for the VA buyer. The VA loan offers flexible mortgage types to suit borrower's needs such as the Va Hybrid ARM what provides for a loan that is fixed for 3 years or 5 years and then adjusts. This is a good loan for eligible home buyers.

Conventional Mortgage Loans - Conforming to the Fannie Mae, Freddie Mac limits. If you are considering buying a home with a mortgage of more than $417,000, the Conventional Loan is the loan for you. There are many, many loan types for Conventional Loan borrowers. For instance:

Jumbo Mortgage Loans - Luxury home buyers financing mortgage loans of $417,000 or more will be offered a limited number of loan types. The ratios, however, of income to debt, will often permit a larger percentage of your income for housing. Interest rates for Jumbo loans are usually 1/4 to 1/2% higher than conforming conventional loans. Jumbo loans are often held in the lender's portfolio and, since the lender is assuming additional risk, they charge a slightly higher interest rate.

30 year fixed mortgages - the interest rate is fixed for the life of the loan. Payments may change if the cost of taxes or insurance increases and are held in escrow by the mortgage company and paid in the monthly payment.

15 year fixed mortgages - the interest rate is fixed for the life of the loan. These loans are amortized for 15 years which makes the payments higher than the 30 year fixed loans, which are amortized over 30 years. The interest rate for the 15 year loan is usually 1/4% lower than the 30 year fixed mortgage.

7/1 ARM mortgage - fixed for 7 years, then adjusts to market, or to a 1 year arm or balloons and become payable. Popular with home owners who plan to own the home they're buying for 7 years or less.

3/1 ARM mortgage - fixed for 3 years, then adjusts to market, or to a 1 year arm or balloons and become payable. Popular with home owners who plan to own the home they're buying for 3 years or less. Or, in a falling interest rate market, home buyers may plan to refinance in a year or two.

1 year ARM mortgage - Usually carries a lower interest rate than other loans. Will usually balloon at the end of the year when the owner must refinance or pay off the loan. Most 1 year ARMs will have an automatic adjustment that increases the interest rate by no more than 2% per year for a period of 6 years. While the start rate for 1 year ARMs may be low, they can quickly adjust upwards to a high interest rate.

40 year amortization loans - Most loans are amortized for a period of 30 years. By amortizing the loan over a period of 40 years, the monthly mortgage payment is lower, but continues for 40 years rather than 30. The lower mortgage payments are attractive for home buyers whose income will be rising in the near future.

Pay Option Loans - You pay the loan by selecting a payment method each month. You may pay interest only and add a principal payment to the mortgage balance. Safe only in a market where home values are rising. Or, you may pay the fully amortized amount. Or, you may be offered a minimum payment for a period of 12 months. Any principal or interest not included in your minimum payment will be added to the mortgage balance. Risky over a long period of time or in a falling real estate market.

We can refer you to a good lender for the type of mortgage that you need.
Contact us at 800-711-7988 and we'll refer you to a good reliable lender. We can quickly determine your qualifying amount and refer you to a lender specializing in your loan type. If you already have a lender relationship, that's fine too. Let's go look at some homes.

THE GOOD NEWS ABOUT MORTGAGE LOANS IN MARYLAND AND NORTHERN VIRGINIA

* Mortgage rates for homes purchased in Maryland and Virginia are generally lower than rates in some other areas of the country.

* Local mortgage companies offer good rates, a varieties of loan instruments and good service.

* Homefinders.com will assist you in locating a good lender with experience, good rates and good loan types.

* Buyers with good credit can qualify for 100% loans.

THE BAD NEWS ABOUT MORTGAGE LOANS IN MARYLAND AND NORTHERN VIRGINIA

* Real estate in Maryland and Northern Virginia is expensive. Most loans are conventional loans.

* FHA and VA loans are rarely accepted by sellers in Maryland and Northern Virginia due to the more difficult appraisal guidelines.

* There is often competition between home buyers for properties in more popular communities and they are sold "above appraisal" prices.

Contact us for more information about mortgage loans, qualifying, rates and any other help you may need. We'll be glad to qualify you by phone and arrange for a tour of homes once you have a qualifying amount.

FINANCING A HOME IN MARYLAND OR VIRGINIA

To help you prepare for your loan, the information below will help you understand the mortgage loan process for buying and financing
real estate in Maryland and Virginia.

Buying a home can be exciting, but it can also be daunting, especially for the first time home buyer. Many home buyers start the home buying process with no more information than what they have heard from family and or friends, not always a reliable source of information about buying a home in Maryland or Virginia in today's market with changing mortgage types and an often fast moving mortgage rate.

You will need to be prepared with certain documentation, have to learn new terms to describe the loan and the procedures required to qualify and
be approved for a home loan in Maryland or Virginia.

Be Prepared To Make A Loan Application
The lender can be located in any area in the Maryland or Virginia real estate market. Most local lenders are licensed to make mortgage loans in all areas in Maryland and Virginia.

Homefinders.com will gladly make lender referrals depending on the loan type you prefer. Or, we are pleased to work with any lender you select. We don't receive any compensation for any loans and, as long as your selected lender is cooperative with the appraisal process and closing procedures, we have no interest in whom you select to finance your home purchase in Maryland or Virginia. We do prefer that Maryland or Virginia home buyers select to work with Maryland or Virginia lenders, but it isn't required. The benefit of working with local lenders is because, when you make an offer on a home, the listing agent and seller will receive your Pre-qualification or Pre-approval letter more positively if it came from a local lender.

You can make a loan application by telephone or in person. The lender will send you the loan application forms and disclosures for your completion
and signature(s). The lender will also process your home loan without ever meeting with you. As long as you will submit documentation quickly, there is no reason to discuss your loan except for minor details during the approval process. Everything will be verified and approved and the loan package sent to the title company for settlement along with your mortgage money. We sell and settle many homes without the buyer and lender ever meeting.

Selecting The Loan Type, Rate
Once you have a Contract of Sale, a copy of the contract will be sent to the selected lender. Then you and the lender will determine the best loan type to finance that property. Your income, available cash, expected occupancy in the home and other factors will help in determining the very best loan type for your needs. Once the loan application is completed, the lender will then proceed with the verifications of information.

Verification of Information
Your selected lender will have to verify, either by written confirmation or documentation, the information contained in your loan application. Your employment, income, credit cards, automobile loans, personal loans, student loans, etc. will be verified by a review of your credit report, billing statements, pay stubs, employment letters, and other documents to verify your assets and liabilities. If you are in the process of moving, be sure to reserve important bank statements, pay stubs, Form W-2 or Form 1099 to verify your income. If you are self employed, you'll need copies of your income tax returns for the past 2 years.

A part of the loan application will be the GOOD FAITH ESTIMATE which will be provided by your lender and will show you the amount of money you'll need for settlement, which will be a combination of your down payment and closing costs. At this time, your lender will explain the closing costs and make sure that you have funds available to close the loan.

Your lender will also explain any loan fees to you and how they affect your interest rate. For instance, you can pay points, which are really prepaid interest, and finance your home purchase with a lower interest rate. Points are paid to reduce the long term interest rate. Other fees that lenders charge, document preparation fees, underwriting fees, etc. are also known (depending on how much it adds up to) as "junk fees". Homefinders.com does not refer buyers to lenders with high junk fees.

Make sure your lender gives you a Good Faith Estimate when you make the loan application. This is required by law and it helps you understand the fees and know what your closing costs are going to cost.

To Lock or Not to Lock
The answer is simple. In a rising rate market, lock as soon as you can. In a falling rate market, float the interest rate until shortly before settlement.
There are many loan/point combinations available today. You can select the instrument that best suits your needs. For home buyers that plan to own
the home they are buying for many years, over 7 years, you may wish to pay a point or two to lower the interest rate. These cost of the points (1% of the loan amount) may be spread over many years and will be worthwhile. On the other hand, if you only plan to own the home for a short time, 2-5 years, it doesn't make good financial sense to pay points up front because you'll not realize the benefit from the lower mortgage payments in a short time.

Contact Lenn Harley, Broker for Homefinders.com at 800-711-7988 if you have any questions or would like for us to make a lender recommendation.