New Homes Guide Blog

One of the first items on your new home quest checklist should deal with your finances because getting a mortgage these days can prove to be challenging. We hear about the issue almost daily but what do YOU do to put yourself in the best position to obtain the best mortage? There are some basic steps you should take both to keep your credit looking good and to make sure your financial picture doesn’t change during the mortgage application process.

1. The very first step is to find out what your credit score is right now. You may have checked in the past year, but you may not be aware of changes that have posted to your credit report – either correctly or erroneously – that have affected your score. All three major credit bureaus (Equifax, Experian and TransUnion) must provide you with a free report annually so be sure to get a copy from each one. One of the easiest sites I’ve found to work with is AnnualCreditReport.com.
2. Do you pay your bills on time? Even 1 or 2 late payments can greatly affect your score so be sure to stay on track with your payments and due dates.  Setting up automatic payments is a great method to make sure you don’t ever miss a payment.
3. Your income should be steady and reliable. Sounds basic enough but realize that lenders really like to see at least 2 years of employment within the same field and you will need to provide the supporting documentation. If you hold a commission-paying job, you may need even longer time in that field.
4. Please don’t go out and buy that new boat (or car or motorcycle or any big ticket item!) as soon as you get loan approval! New loans can adversely affect your credit during the critical period from loan approval thru settlement so hold off until you’ve gone to settlement. And keep in mind, it’s not just new loans – you need to maintain a certain amount of reserves so paying cash for expensive items doesn’t necessarily help. If you must absolutely purchase something, talk to your lender.
5. A common theme I have often heard is that buyers want to close old credit cards. That’s not necessarily the best move so talk to your mortgage lender before doing so. The lenders want to see credit history and a reasonable amount of available credit - closing cards can affect both of those.

These are just a few tips to help you purchase your dream home this year. Bankrate.com offers additional advice as well so check out their recent article “12 Mortgage Moves to Buy a Home in 2012″. And of course your lender is one of the best resources to talk to them to get guidance tailored for you.

Happy House Hunting!

You would be amazed at the number of people who are eligible to use the VA loan program and don’t know it!  In my opinion the VA loan is the best loan going right now.

The VA loan program can make it much easier for veterans to secure a home loan by requiring little or no down payment. This home loan is available to veterans and is guaranteed by the Veterans Benefits Administration, a part of the US Department of Veterans Affairs. In addition, with a VA-guaranteed loan, there is no private mortgage insurance requirement.

You are eligible for a VA loan if you have previously served in the military or are currently on active duty or in the reserves. You can check to see if you meet the requirements at http://www.benefits.va.gov/homeloans/eligibility.asp .   VA loans offer 0% down payment options for loan amounts up to $625,500 in the Washington DC Metro area.  For loan amounts greater than that there will be a down payment required.

The VA loan offers flexible qualifying terms.  There is a VA Funding Fee that is applied to the loan and the amount of the funding fee is determined by the amount of down payment.  The funding fee can be financed into the loan amount or it can be paid in cash as part of the closing costs at the time of settlement.  In certain cases the VA funding fee can be waived if the veteran receives a VA disability award.

Leslie Wish

If you are unsure as to whether or not you are eligible for the VA loan please email me at lwish@mcleanmortgage.com or visit me online at http://www.lesliewishmortgage.com/ and I would be happy to assist you in determining whether you qualify for the VA loan.

Happy House Hunting!

It seems that there is one question that those either working in real estate or contemplating getting real estate have always asked: Is it better to buy or rent a home? This question comes up time and again regardless of the economy and real estate market so let’s look at a few of the pros and cons for both.

RENTING:

One of the big pros with renting is the caretaking and maintenance of your home. Sure, you should always take care of your home but to not have to worry about some major items such as HVAC, appliances, roof, floods and the costs associated with those purchases or repairs – well, that seems to be a huge plus to me. It would be quite nice to simply make a call to the landlord when you walk into your home and suddenly the AC is dead on a day when it’s 95 degrees. Phew!

Another pro is the flexibility of renting. Let’s say you’re new to the area and not quite certain where you want to live. Renting gives you the opportunity to live in the community and learn a great deal about what it has to offer and how it benefits (or hinders) your family, work and lifestyle. It would be terrible to buy a beautiful new home only to find out the schools aren’t that great, there is not a lot of local retail or it is inconvenient to get to work because you didn’t know traffic patterns.

Also, let’s not forget that often times rent is a lower monthly payment than a mortgage payment…at least that’s what we’ve always thought. These days, as many people suffer hardships with the economy, some areas have developed high demand for rentals as families can no longer afford their homes. High demand equals…you got it – higher rents. So if that is the case for you, let’s take a brief look at the benefits of purchasing a home.

BUYING:

You always hear people say that to rent is to throw money out the window. Ever wonder exactly what that means? The rental payment you make is just that – a rental payment. A mortgage payment is much greater. At this time, you are able to right off all the interest associated with your mortgage payment, some fees associated with closings and you’re making a payment towards full ownership of your home giving you equity. Those are some big savings and advantages!

Another nice thing with buying a new home – you’re the first owner. You’re the first one to use your appliances, enjoy your yard or deck, and yes, I’ll say it – use your bathroom! You don’t have to worry about who the previous owner or occupant may have been because everything really is brand new, not “like new”.

There’s the design aspect to. You say you’ve always wanted a jetted shower? Well, if the rental doesn’t have it, I doubt you’re going to invest in one given that you’re not taking it with you when you leave. But with a new home purchase, go for it because it’s yours forever. You get to design your new home so that it fits your needs and desires instead of living with something where you just have to “make it work”.

Ginnie Mae (the organization that guarantees mortgage-backed securities and is supported by the government) has published a fantastic guideline to help you determine if you should rent or buy because the bottom line is what’s going to work best for you and what do you want out of it. Check out their page and use the “buy vs. rent” comparison chart, the buy vs. rent calculator and also determine what is affordable for you.

Good luck and Happy House Hunting!

Our blog has a guest writer this week to help you out with your questions regarding PMI. Leslie Wish (CMPS), Senior Loan Officer with McLean Mortgage Corporation gives you information and guidance on this important detail relating to your mortgage:

Oftentimes buyers will come to me asking about mortgage insurance and why they have to pay it. To help you understand some of the extra costs associated with your mortgage, this is a breakdown of what factors determine whether or not you need mortgage insurance.

Private Mortgage insurance (PMI) is required by a lender if you make a down payment of less than 20% for conventional loans.  This insurance protects the lender in the event a borrower defaults on a loan.  The PMI can be paid as a part of your monthly mortgage payment, or as a lump sum at closing, or possibly rolled into your interest rate. 

FHA loans require mortgage insurance (MI) regardless of your down payment amount.  The MI is usually paid as an upfront lump sum equivalent to 1% of your loan amount.  FHA also requires MI to be paid as part of your monthly payment.

Veteran’s administrations (VA) Loans do not require mortgage insurance.  The VA does, however, require a funding fee, which is paid upfront in cash or financed into the loan amount.  In cases where the veteran has a disability, the VA funding fee will be waived.

It is important to talk to a lender to figure out which program will best fit your individual situation.

I would be happy to assist you with all of your mortgage lending needs! Please email me at lwish@mcleanmortgage.com  or visit me online at www.lesliewishmortgage.com so I can help you best determine which program works for you.

We hope you find this information useful!

 Happy House Hunting!

We keep hearing that now is the time to buy, partially because interest rates are so low right now. However, unless you are purchasing an inventory new home, today’s rates might not be what your rate is when you go to settlement. What to do?

The most important thing to realize is that no one has a crystal ball and no one can tell you without a doubt what will happen with interest rates over time. Fortunately, there are some indicators that can give you an idea of where they could be headed – the economy, inflation rates and the Federal Fund Rate. Unfortunately, we aren’t all Economists so understanding how all of these factors affect your interest rate can be complex.

I found an article that very nicely explains all of this. While a bit lengthy, the article How Interest Rates Work really breaks everything down in very simple terms. If you really want to know how everything is woven together, I would suggest you check this out. The forecast right now is for rates to stay relatively low but how long that will last is anyone’s guess. But…if you can at least understand the forces behind the rise and fall of interest rates, maybe it will give you some peace of mind with what to expect. And if that peace of mind isn’t quite enough, it never hurts to ask your lender if they extend rate locks!

http://money.howstuffworks.com/interest-rate3.htm

Happy House Hunting!

Every day we hear about people trying to decide if now is the right time to buy. They weigh their pros and cons and either talk themselves into or out of purchasing a new home. A lot of the points that I hear being made relate to very tangible things that affect the buyer right now…home prices, incentives, interest rates, etc. But what about some long terms things? What about some of the intangibles?

I came across an article recently - “Five Great Things about Homeownership” – that I want to share with you. While there are a couple points that I’m certain you’ve heard time and again, there were a few others that I think are great reminders of why owning a home is part of the American Dream. To whet your appetite to read the whole (short) article, here are the five points:

1. Equity
2. Relationships
3. Predictability
4. Ownership
5. Great Deals

Check the article out – it’s worth a quick read and reminder that’s buying a home is not just about interest rates and incentives:

http://www.linkedin.com/news?actionBar&articleID=883528767&ids=0VcPgMc3AVdPwIdPoTe38RcPwUb3wSe3gVdzkTe2MSdzAPczAOdPwIcj8PdzkPcPsU&aag=true&freq=weekly&trk=eml-tod-b-all-44&ut=0lykmBb8v9NAY1

Happy House Hunting!

You’re almost ready to settle on your beautiful new home but you have one more very important meeting with the Builder – the Pre-Settlement Walk-Thru. I know you’ve got a ton of things on your mind as you prepare to move in, but this is a very important meeting as you prepare for settlement. I can recall telling my buyers to plan on 2-3 hours for this walk and being given the “are you serious?!” look…I’m serious! You’ve invested quite a bit of time, effort and money into this particular investment so you want to make sure that not only is the house completely finished but that you know how to take care of your new “baby”.

Typically a Builder will hold this walk within 1 week of going to settlement so the house is complete with only a few finishing touches needing to be done. My guess is that you may have seen the house a few times (or every weekend!) since it started construction but now is the time to go over it with a fine tooth comb. Here are a few tips to help you have a successful meeting.

1. Bring a notebook and pen! You will be given a great deal of information from the Superintendent and you will want to keep notes for future reference. You will be discussing a variety of warranties, how equipment and appliances work, how to winterize the home, etc. along with many helpful maintenance tips which you will probably want to jot down.
2. Bring your selections paperwork to compare what you selected with what is actually in your new home, including any electrical maps you may have done. As many times as the home has been walked thru, it is still possible that something you selected may have been missed and now is the time to note that.
3. Carefully look for the cosmetic flaws. Prior to settling on your home, most Builders are going to fix scratches, drywall flaws, finish imperfections and such. Once you move in, the Builder will address drywall nail pops and cracks usually one time within the first year but other cosmetic defects will more than likely not be fixed. The reason: there is no way to prove whether this flaw was present before move in or caused after. Once the Builder has turned over your home to you, it is your responsibility to take care of it.
4. Ask questions! If you don’t understand something or are not clear, now is the time to ask. You have an expert on your home at your disposal so use that resource.

You will benefit and learn a great deal by following these simple tasks. The walk-thru should be a positive experience teaching you how your home works and what you need to do to keep it happy and healthy. Relax and enjoy…your next step is owning your new home!

Good news and bad news…I will start with the bad: Purchasing a home ranks in the top 5 of most stressful things you will do in life. Doesn’t that make you just want to run out and buy a home?! But remember, I said there was good news too: There are many things you can do to make your purchase much less stressful and the enjoyable experience it can and should be. Our first time buyers would help themselves out quite a bit by checking out some of these tips that should demystify the process and help you get as much out of it as you can.

1. Really think about what your long term goals are and how a new home fits those goals. What type of home should it be? How will a mortgage affect your budget? What do you really qualify for – not what the bank will qualify you for on paper but add all those extraneous costs on as well.
2. Search…a lot.  There are tons of wonderful builders and many of them have beautiful models to look at – take advantage of that to see everything they have to offer. Get cost estimates for realistic pricing.  Use New Homes Guide to know all the builders out there! Enlist help from realtors, friends and family. What style and options do you really need – put together your wish list.
3. Realize that there is a lot of paperwork involved but understand that it is important and is there to protect both you and the seller. Ask questions if you are not clear on something before you sign. And above all – keep your copies!
4. Talk to lenders and learn the best programs out there to suit your needs. Today’s mortgage market can be very challenging but if you start your search after having talked to a lender, you will be that much ahead of the game. Know that many builders have preferred lenders they like to work with and that’s not a bad thing – that lender will be very familiar with the builder’s practices and needs and be able to keep your loan on target.
5. Have some fun! Don’t try to see every new home there is out there for you in one or two days. I can recall many clients walking into the model with that “deer caught in headlights” look because they have just seen way too many homes, everything is starting to look the same and they were just not happy. Take pictures or write notes as you’re visiting models so you can remember the highlights of each place.

Hopefully, these tips will make your adventure a little bit easier. As always, you can send us questions if you need some help! Email me at nicole@newhomesguide.com and allow me to be your new home search assistant!

Happy House Hunting!

One would think you could call up a lender, tell them you’d like to get a mortgage and have a pretty straightforward and clear conversation. Same would go for talking to the Sales Reps in the model, right? Sure…until they start throwing things at you such as:

1. Lender:  Are you interested in an ARM?  You:  Hmm…I have two, do I need more?
2. Lender:  Would you like a loan that has a balloon?  You:  Ummm…will the balloon have cash in it?
3. Lender:  Maybe you would like the type of loan that has convertibility options?  You:  Well, would that mean I can change the type of loan when the weather is nice?
4. Sales Rep:  We will need earnest money with the contract.  You:  What kind of money is that?!
5. Sales Rep:  We offer 2 walk-thrus of your home while under construction.  You:  Won’t I be walking thru my home a lot while it’s being built? (By the way, not without a sales rep or production supervisor. Please don’t wander thru the house at any given time without permission!)
6. Sales Rep:  We have seen great appreciation for our homes in this community!   You: I hope people appreciate these homes…they’re beautiful!

Ok, so maybe those aren’t exactly your thoughts but there is a world of terms and acronyms out there specifically related to purchasing and financing a home. It is important to familiarize yourself with these terms so you can have that conversation and not be left in the dust while trying to figure out what everyone is talking about.

Here is an article with a brief dictionary of the most common terms you will encounter brought to you by the National Association of Home Builders. Become familiar with these terms and remember, if you don’t understand something you’re told, ASK! The last thing you want is to find out you signed on to something and it’s not what you were expecting.

http://www.nahb.org/generic.aspx?sectionID=125&genericContentID=351

Good Luck and Happy House Hunting!