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Category Archives: Buyer Information

Information relevant to Frederick home buyers

Documentation for Your Frederick MD Mortgage Lender

Documentation for Your Frederick MD Mortgage Lender

Gather Your Documentation

Before you make a loan application, you’ll need to gather up some documentation for your Frederick Md mortgage lender. Each lender has their list of needed items, but most lists include these basic things:

  • Your landlord’s ( for the last 2 years) contact information. (First-Time Buyers)
  • W-2’s for each one on the mortgage
  • Recent paystubs for each borrower
  • The last 2 years tax returns for each borrower
  • If you are self-employed, an up-to-date Profit & Loss statement with the 2 previous years’ tax returns
  • Information on all outstanding loans, including credit cards
  • The last 3 months’ bank statements for all bank accounts
  • If you filed Bankruptcy within the last 7 years: You’ll need discharge documents, a written explanation of why you filed bankruptcy and proof of clean credit after filing.

Come Clean from the Beginning

Sometimes buyers try to withhold financial information from the lender, or forget about information that should be disclosed. With today’s record-keeping, it’s fairly certain that the information is going to surface during the loan process, so it’s really best to bring everything to the lender.

documentation for your frederick md mortgage lender

If you don’t disclose everything and some damaging information comes out during the process, it just creates a lot of drama along the way, and can have a negative effect on the loan process. Better to know upfront. Lenders are well-versed in the various problems borrowers can face and if they know in advance, they can come up with a possible solution that much sooner.

Two Main Players in the Loan Process

There are basically two parts to the loan process, the loan officer and the underwriter. Kind of a Yin and Yang. The loan officer is the salesman. He is “packaging” you so that you look your best to the underwriter. The underwriter is trying to find anything about your file that would warrant his denial of your loan. The checks and balances of this system work to make sure both parties, the bank and the borrower, are getting the best consideration.

Know Your Credit Scores

Before you begin the house hunting process, make sure to keep a close eye on your credit score. Credit is now more important than ever in getting the loan and getting the best rates. Remember that the credit score that a lender pulls is going to be different than the score you get from a service like Credit Karma, or similar tools.

Additional Reading: Credit Score Articles Credit Score first time buyers

You can and should get your free credit report from each of the three credit reporting bureaus every year. (Experian, TransUnion, and Equifax.) If you time them correctly, you can get a report every 4 months, which is sufficient to keep up with your credit. Checking periodically for fraud is just one reason to keep up with your report.

If you find that your score needs improvement, you can take steps to improve your score, with what is known as Credit Score Enhancement. By taking the correct steps, you can often improve your credit score in 6 months.

Getting a head start on the documentation for your Frederick MD mortgage lender will help you move through the process much more efficiently and quickly.

 


Contact Us for our list of preferred Frederick Md lenders. Chris Highland
301-401-5119
Additional Reading:

18 Locust Blvd Middletown, MD 21769 | Single-Family Home

18 Locust Blvd Middletown, MD 21769 | Single-Family Home

Single-Family Home for Sale in Middletown MD

Charming single-family home in the Coveted Middletown School 18 Locust Blvd Middletown MDdistrict! This 3 bedroom 2 full and 1 half bath home is beautifully updated and located at the end of the road. 18 Locust Blvd Middletown, MD 21769 has a traditional floor plan and many nice upgrades.

The large yard is more than a half acre with plenty of room for outdoor entertainment. The rear yard backs to a large open space.

18 Locust Blvd Middletown MDThe updated Kitchen has plenty of cabinet space, stainless steel appliances and a large eat-in area.  The baths are also updated, with custom tilework.

Shining wood floors grace the main level living spaces. A brick fireplace in the living room keeps the house cozy in the winter. There are several built-ins throughout. 18 Locust Blvd Middletown MD

The full english basement has a finished bathroom and is waiting for you to put your touch on it, and make a great entertaining or living space.

The rooms are full of light from the ample windows.It has an over sized car port and detached 2 car garage for the car enthusiast!18 Locust Blvd Middletown MD

Great location close to schools, shopping, golf, commuter routes and nicely situated in the beautiful Middletown Valley.

At the amazing price of $299,900, the question is:Why buy the townhouse when you can have this charming home?

Enjoy our video of 18 Locust Blvd Middletown, MD 21769:

Contact Chris Highland for a personal tour of this great home:  301-401-5119

18 Locust Blvd Middletown, MD 21769

Check out all the details on 18 Locust Blvd Middletown, MD 21769:

We're sorry, but we couldn't find MLS # FR10024283 in our database. This property may be a new listing or possibly taken off the market. Please check back again.


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About Middletown

Check out our Middletown Maryland Real Estate Guide for more information on Middletown.

The beautiful Middletown Valley is a coveted community, with high ranking schools and lovely views of the surrounding mountains.

People who live in Middletown often remark about the friendly small-town charm and the local events that make the community special. There are several local events throughout the year, like family movie nights, Middletown Heritage Days Festival and Christmas in the Valley, and many more.

2017 is the 250th anniversary of the founding of Middletown, so check out the Middletown website for details on all the activities.

With a population of under 4500, the town government consists of a Burgess and Commissioners. Learn more about Middletown MD Real Estate.

Tips for Making A Mortgage Application

Tips for Making A Mortgage Application

Many first time buyers may not be familiar with much of the mortgage application process. There is some preparation involved, usually starting weeks or even months before a buyer decides to purchase a home. Here are 5 helpful tips for making a mortgage application that will end in success:

Five Tips For Making A Mortgage Application

1. Credit Scores Count. Before making a loan application, probably months before, do everything you can to shore up your credit scores. If you see an error on your report, get it corrected immediately. If you’ve made a late payment, contact the creditor to see if you can resolve the issue.

Sometimes buyers need professional help in credit enhancement. A credit specialist can make a difference in a relatively short amount of time. Sometimes hiring a specialist, who has the experience and knowledge of the credit industry, can make a big difference in your ability to get financing, as well as your ability to get better mortgage rates. (We know a very good credit specialist who has helped a few of our clients.)

You should be monitoring your credit report regularly. With each of the three credit bureaus you may have one free credit report per year, so getting a free report every four months is advisable. Checking for errors and fraud is now a task that must be accomplished regularly.

See today’s mortgage rates

2.  Be prepared with documentation when you apply. At the first meeting with the lender, they’ll give you a list of items you’ll need to bring when you make the formal loan application. You should bring everything they ask, and be prepared to supply more information later, if required.

Sometimes buyers get weary of the amount of paperwork that is often required. If you start to feel encumbered, remember that the lender is about to put a lot of money out and they want to be assured that you are creditworthy, and that the home is worth what they are lending. (Remember the Golden Rule – He who has the gold makes the rules:)

Disclose: to make known; reveal or uncover; allow to be seen

tips for making loan application


3.  Disclose Everything when making a mortgage application.
Lenders will find out everything, so it doesn’t do any good to withhold information, thinking it may not come out. The loan officer will submit an IRS form 4506 (tax return request) and will know all about your income and deductions. To ensure a successful loan approval, it’s better that they find out any issues early on, rather than along the way or even worse, days before settlement. Then they will have time to figure out how to handle the issue. Loan officers are problem-solvers. You might as well be upfront and avoid any last minute problems.

Additional Reading:

Here’s a good checklist of documents you may need when you apply for a mortgage: Mortgage Checklist, from Gene Mundt, American Portfolio Mortgage


4. Be Patient.
Mortgage underwriting has become more complicated during these “post-bubble” days. It can take longer to be approved and it definitely takes more paperwork. Don’t add to the process with delays caused by dragging your feet on paperwork. The number one tip for making a mortgage application is timeliness.

tips for mortgage application


5. Be ready
to provide more documentation. Lenders often ask for more information, beyond what Fannie Mae, Freddie Mac or FHA/VA require. It doesn’t mean anything is wrong, or that your loan is in danger, necessarily. It just means the lender needs to document something else. Don’t stress about it and keep your eye on the prize.

Bonus Tip: Do not make any big credit purchases between the time you make loan application and settlement! No furniture, no cars, nada. These kinds of purchases will often knock your credit score down, just at the time when you don’t want to do anything to rock the boat.

Related:

Choose a reputable local lender, with a loan program that fits your needs. Contact us for our list of preferred local lenders.

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photo credit to miong on Flickr creative commons 2.0

What’s Going On with Mortgage Interest Rates?

What’s Going On with Mortgage Interest Rates?

Mortgage rates have been up and down between the high-3% and low-4% numbers recently. We often hear the question from potential buyers (and those refinancing) asking what the near future is for mortgage interest rates.  Disclaimer: Neither Chris nor I are mortgage experts. But we know a few people who are, and like to pass the question on to them. I reached out to one of our favorite lenders for some info:

What About These Historic Interest Rates?

“We have seen mortgage interest rates reach new historic LOWS this last two years,” explained Bob Drake, Branch Manager of Integrity Home Mortgage in Frederick, one of our preferred lenders. “Thanks in part to world events like Brexit, we watched rates bounce around in the mid-3% ranges last year, unheard of since rates have been tracked.”

And how does that affect the market?

“Due to historically low rates, we’re seeing a continual stream of buyers enter the market. We’re doing our best to educate buyers, especially Millennial home buyers, on how low these rates really are,” says Bob. “We haven’t seen rates this low in 60 years…and then, our grandparents were paying 4%, which is still higher than today’s 3.7% rates. People need to understand that their buying power is the highest it will probably ever be.”

What About the Future of Interest Rates?

The Fed raised the benchmark interest rate at the end of last year, and we’ve been hearing for months that the Fed is going to raise it again, that we should be ready for higher mortgage rates. But it hasn’t really happened, at least not significantly. And when rates have moved up, they’ve come back down again.

What can we expect for the near future? Most experts agree that there are reasons why rates are not higher and probably won’t be going up significantly for the remainder of 2017:  “Even if the Fed raises rates,” explains Bob, “it most likely won’t raise mortgage rates. Rates will remain low until the international market becomes stable. Honestly, predicting mortgage rates is nearly impossible these days because so many factors influence our financial system today.”

Internationally, things are not resembling stability.

For your research

Here are several sources of information on mortgage rate activity:

Bankrate.com has an interactive graphing tool that shows you what rates have done over a period of time. When you compare rates to several years ago…wow, you see what Bob was talking about above!

In most years, rates rise in the summer, and drift lower in the fall and winter.   Without big economic news, this holds true, according to the writers at The Mortgage Reports Blog. One has to admit, we’ve had some big economic news recently and often.

Generally, mortgage rates go down when the economy is performing weaker than expected, and they go up when the economy heats up.

Some news that will affect mortgage rates:

  • Housing markets are up in sales, and many markets are reporting increasing values.
  • Consumer Confidence is not only up, but more than predicted.
  • Builders Confidence is up.
  • The Fed is positive about economic activity improving.
  • Interest rates and oil prices tend to move closely together, according to Dan Green at The Mortgage Reports.

See Today’s Rates

Advice for Buyers When the Real Estate Market is HOT!

Advice for Buyers When the Real Estate Market is HOT!

In many towns and cities across America right now (Spring 2017) the market is hot… meaning the demand is high and the inventory is low. It can be a tough market for buyers, so here’s some advice for homebuyers in a hot market from industry veterans:

Setting the Stage for Homebuying Advice

Before I even begin, let me give you a word picture to get you in the right frame of mind: You set out on a nice day-trip from Frederick County, to visit some sights in Washington D.C. You know, take in some monuments or the Smithsonian. You head south at a nice leisurely pace, because, you know…Frederick County. As you get deeper into Montgomery County, you notice the traffic picks up, but that’s ok. You can maneuver just fine in the right lane, pass a slow-poke here and there.

Eventually, though, you’re going to have to face I-270, or the “Big-Ugly”, and then the beltway…I-495.  As you merge into oncoming traffic, it can feel like you’re about to enter the Indy-500…cars are whizzing by.. You (should) realize that if you don’t step into it, you’ll end up in a ditch.

Entering into a hot real estate market is very much like a NASCAR driver coming out of a pit stop at top speed. When competition is high and the number of available homes are low, you must be ready for a fast-paced market. You have to be ready to act quickly and decisively. You Must Bring Your A-Game!  What does it mean to bring your A-Game?

Proper Expectations

When buyers know what to expect in the market, they are better equipped to get the house they want. When they don’t give heed to their agent’s advice, we (agents) often resign ourselves to the fact that we’re going to write a couple of offers with them. We’ll watch them lose out a couple of times in a competitive market. Tip: If you believe that your agent is unqualified to provide you with strategic advice, get a different agent.

  • “No,” we tell them, “you’re probably not going to win in a competitive situation when you offer that much below list price. You might even have to offer more than list price to win.”
  • “Well,” we say, “you need to at least have your house listed on the market if you expect to win in a multiple offer situation. You’ll probably even stand a better chance if it is already sold.”
  • “Ok, but if you wait until next week to see it, I can’t promise that house is even going to be on the market anymore.”
  • Actually,” we try to counsel ahead of time, “the inventory is pretty low, so there might not be another one like this next week. Keep that in mind when you write up this offer.”

We get it. You need to learn to trust us. We will work hard to earn your trust. We know that often, the third time is a charm (most of us figure it out by then, no matter what we’re trying to accomplish.) In a hot market, the best homes, when priced well, will go in days. And they’ll most likely have multiple offers. That’s the way it is.

Additional Reading:

  • Lynn Pineda, real estate agent and blogger in South Florida, among many good tips, also agrees with me, “When you locate a home that meets your wants and needs, don’t lollygag…” in her blog post, How to Buy a Home in a Seller’s Market.
  • Angela Duong, Northern Utah real estate agent, in her article 13 Things Buyers Need to Know in a Seller’s Market, has some good tips, like staying flexible and creative. Thinking outside the box can help you win in a competitive situation.
  • In his article Buying a Home in a Seller’s Market, Kyle Hiscock, real estate agent in Rochester NY, points out several considerations buyers should make to help them decide whether buying a home during a sellers market makes sense.

Pre-Approval

When you might face a multiple offer situation, you need to have every advantage. We advise buyers to speak to a local lender (we know a few good ones) before you even start your house hunting. Start the approval process, get your paperwork to the lender and at the very least get a pre-qualification…preferably even a pre-approval. When a seller gets 3 offers and one of them is from a buyer who is already approved, that buyer stands out and is a safer bet for the seller. Take the time to talk to a lender before you begin. You’ll know what you can afford, and you’ll know which loan product is right for you and for each situation. Take time to get your A-game on.

What about cash offers? It’s true, sometimes you’ll get beat out by a cash offer. But not always. It depends on the offer and the situation. The cash offer, as long as it’s within the seller’s expected price range, will be the winner. Everyone has different motivations, and they all play out in the negotiations.

Additional Reading:

  • Joe Samson, Calgary real estate agent, explains that if you’re serious about buying a home in this market, you’ll need to consider getting a mortgage pre-approval, in his article, Reasons Why You Need A Mortgage Pre-Approval
  • Tony Mariotti, mortgage lender and founder of RubyHome, explains the difference between a mortgage pre-approval and a pre-qualification, and why a buyer will be at an advantage with a pre-approval in his article, Mortgage Commitment Letter: How to Seal the Deal

Offer Your Highest and Best

When a buyer is in a multiple offer situation, we always ask them, “if you miss out on this house because you didn’t offer $5,000 or $10,000 more, will you be ok with it next week, or will you be upset? Because the difference of $5000 may only mean $25 to $50 on your monthly mortgage payment.”

If you really want the house, you’ll need to offer your highest and best. When there are multiple offers you can bet that someone else really wants the house, too. This won’t be the time when you get a bargain. You will need to offer current market value to win. This is the time when you have to know your mind, and decide, “how much do I want it?”

Additional Reading:

House to Sell?

If you have a house to sell before you can buy, many times in a hot market, you will find yourself competing with buyers who don’t have a house to sell. Certainly in price ranges below the median, which is about $300,000 in Frederick County right now. Often, in the move-up price ranges, you will find other buyers putting their best foot forward, many times with their home already on the market, maybe even already sold. Again, you’ll want to have every advantage on your side.

real estate successWe advise having your home listed on the market, or at the very least scheduled to go on the market within a certain time frame. Better yet, having the home sold gives you an even greater advantage. In a market with high demand, you can rest assured that your home will probably sell, given it’s in good condition and priced well for the market.

We understand that it is difficult to sell and buy at the same time. But remember, an experienced real estate agent has been helping people buy and sell for years, day in and day out, in all kinds of markets. We can help you thread that needle and maneuver through the process with the best possible results.

Additional Reading:

  • As Jeff Knox points out in his helpful article, Best Tips to Win in a Bidding War, having the strongest possible offer is the only way to win in a bidding war, which means you’re less likely to win it with a long list of contingencies.
  • Being as prepared as you can be ahead of time will always work to your advantage when buying a home in a hot seller’s market. Bill Gassett, Realtor in Greater Metrowest MA, has 20 tips for buyers in his article, 20 Things to Do Before Buying a House.

Trust Your Agent

The average consumer buys and sells a home every seven years. I’ll bet each time they buy or sell, the market is different, so their previous experience is often not relevant to the current market. An industry expert has helped people buy and sell hundreds of times, in all kinds of situations. Find a buyer’s agent who you can trust to guide you through the process. Your agent wants to be your trusted adviser, because they don’t win unless you win. In fact, they don’t even get paid unless you win!real estate agent trusted adviser

Work with an agent you have confidence in. If you aren’t convinced that they know how to navigate the rapids of a hot market, then move on. You need to work with someone you can trust. You need to trust that they have the knowledge and experience to help you get where you want to go, no matter what the current market looks like. You need to trust that they are giving their best to help you win. You need to trust their advice.

Get a good referral. Ask friends, co-workers and, yes, even family. Read online reviews and do your homework. This is probably the most expensive purchase most people make in their lifetime. Choose a trusted adviser. Choose wisely.

Use an Experienced Buyer’s Agent

Interview agents about their understanding of the current trends in the market. Are they familiar with the inventory, time on the market, and year over year trends? Your local real estate market is always changing. A veteran buyer’s agent has helped homebuyers in many different types of markets, whether a buyer’s market or a seller’s market, or transitioning markets. A buyer’s agent will negotiate on your behalf, representing your best interest. The best part is, the seller pays for the buyer’s agent in most situations.

Today’s consumers have a huge number of resources at their disposal with the many real estate portals on the internet, with handy apps and demographics at their fingertips. Many want to keep their anonymity until they are absolutely ready. But far too often, that anonymity costs them when they haven’t gotten ready to “merge onto the real estate highway.” They find the house they love, but they haven’t even talked to a lender, they don’t know what they qualify for, and if they have to sell their home first, they’re not ready.

Buying and selling real estate is a process, not an event. There is no need to go it alone. You can take the advice of a buyer’s agent from the beginning. They can help you find the home that is right for you. They can help you get the loan product that is right for you. They can help you navigate through the best offer strategy. They can help you negotiate in a hot market. Let a buyer’s agent do the heavy lifting for you!

Additional Reading:


Building Trust

The Highland Group has over 25 years of experience helping homebuyers and homesellers in the Central Maryland Area. Our specialty is helping clients successfully navigate the ever-changing real estate journey.


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About the Author: The above Real Estate article, Advice for Buyers When the Real Estate Market is HOT! was provided by Chris Highland, Realtor® and Regional Leader for eXp Realty. Chris can be reached via our contact form, or by phone at 301-401-5119. Chris has helped people move in and out of Central Maryland for the last 25+ Years.

Thinking of selling your home? Put our team’s marketing expertise to work for you, to get your home sold.

Real Estate Terminology – What is Absorption Rate?

Real Estate Terminology – What is Absorption Rate?

What is “Absorption Rate”?

The Absorption rate is roughly how long it will take the current homes on the market to sell. It’s an estimate, based on  the current number of listings and current sales. Because those two factors fluctuate from month to month,  absorption rate is a rough estimate. It’s an average of how many homes sell each month, based on a 6-month calculation, because anything less than 6 months is too small a sample, and anything greater than 6 months wouldn’t give an accurate picture of what’s going on with values in an area.

If I get the total number of homes that have sold for the last 6 months in an area, say a Frederick zip code or a Frederick County town or, better yet, a neighborhood, and then divide by 6, I’ve got an absorption rateAverage number of homes that sell each month.

If I take the total inventory, or how many homes are on the market in a given area, and divide by the absorption rate, I get the months of inventory, or how long it will take to sell all of the homes in the chosen area (if no more homes were listed).

Why is Absorption and Months of Inventory important?

These numbers are important to buyers as well as sellers. An absorption rate of about four to six months indicates a balanced real estate market.   Balanced means a market that does not favor the buyer or the seller.  An absorption rate of less than four months indicates a seller’s market.   An absorption rate of more than 6 months indicates a buyer’s market.

Home Sellers

To a seller, these numbers tell them whether their home is positioned correctly in the market. If they need to sell in 3 months and the absorption rate in their neighborhood is 6 months, then they will need to price their home to sell, without taking months to adjust the price as they test the market.

The absorption rate tells the seller what the normal time on market is for their current market. If their home doesn’t sell in the time that the average comparable home sells, then they know that something is amiss. They will know how accurate, or inaccurate, their pricing is when they find themselves still on the market after the average time for their area.

Home Buyers

For a buyer, the opposite can be discerned. If they see a home that has been on the market for longer than the average time for that neighborhood or community, they will think either two thoughts: 1) something is wrong with the house, or 2) the house is overpriced.  These homes often receive low-ball offers because of these perceptions.

Understanding real estate terminology, absorption rate for one, helps to navigate the market, negotiate and have proper expectations. Both buyers and sellers can learn how to get the best possible outcome in their market by understanding local market trends.

Contact us for a consultation to find out how much your home is worth in today’s Frederick Real Estate Market.

The Highland Group
Chris & Karen Highland 
301-401-5119
eXp Realty – 410-777-5714

Should I Get A 15 Year Or 30 Year Mortgage?

Should I Get A 15 Year Or 30 Year Mortgage?

Should I Get A 15 Year or 30 Year Mortgage?

This past year has continued to be a time of new lows in mortgage rates; the 30-year fixed-rate mortgage averaged below 4% for last year (2016), setting a new all-time record lows. The 15-year fixed rate also averaged at historic lows, under 3%. With these super low rates, should you consider the difference in a 15-year or 30-year mortgage?

In 2017, rates are projected to go toward the mid- to upper-4% range. Even so, these are still super low rates historically.

There are many choices in mortgage products today, not just the 30-year mortgage and a 15-year mortgage. When rates are so low, many buyers can take a second look at something other than the typical 30-year mortgage. Many buyers, after seeing the list of mortgage rates, wonder, should I get a 15 year or 30 year mortgage? Good Question.

What is the difference between the 15-year mortgage and the 30-year mortgage?

Besides the obvious pay-off being half the number of years, the difference between the two is mostly experienced by home owners in the monthly mortgage payment. An example of a $300,000 home:

Sample Scenario of two $300,000 mortgages:

$300,000 Home Monthly Payment Life of Loan
Total Interest Paid
30-year-fixed mortgage = 3.5%   $1,347    $484,968   $184,968
15-year-fixed mortgage = 2.8%    $2,043    $367,741     $67,741
% Difference 48% higher payment 24%  savings  63% savings

 

You can use this handy mortgage calculator from Bankrate to see the difference in the two mortgage products. You can see that this 30-year fixed mortgage has the advantage of more reasonable payments, while the 15-year fixed mortgage is geared towards long-term savings overall.

The choice between a 15-year or 30-year mortgage comes down to your comfortable monthly tolerances. Some people tell me they don’t want to be “house poor”, or to say they don’t want to have only a little left at the end of the month after paying their mortgage. The 30-year fixed mortgage is the tool that will give you the lowest monthly payment possible by stretching out those payments over 30 years. The cost is more money payed to interest over those 30 years.

With a 15-year mortgage you are paying more towards the balance each month than you would with a 30-year mortgage. Some people live comfortably with higher mortgage payments and less expendable income. Some people buy well below the maximum of what they can afford, using a 15-year mortgage. There is an advantage to having your mortgage paid off in 15 years. The caveat to this payment arrangement is that your tax write-off will be less with a lower amount going toward interest each month.

It’s a lifestyle choice. It’s a subjective choice.

Paying Off Other Things

Part of the decision of which mortgage to choose is the consideration of other obligations you may have. If you have other debts with higher interest rates, you may want to consider paying those first, saving money in interest and payments the long run. In our example, the $700 extra you’d have each month by choosing a 30-year mortgage could be used to pay down debt.

Investing Elsewhere

Another consideration is the choice of investing that $700. Could you invest somewhere with a greater return than in your home? Using this IRA Investment Calculator from Bankrate, you would have $147,884 in your IRA after investing the maximum $5,500 a year for 15 years. (Subtract the $67,000 you might have saved if you had a 15-year mortgage and you’re still ahead.)

***This is where our DISCLAIMER goes…we are not financial advisers, we are REALTORS®. We’re just raising questions for you to ask your accountant or financial adviser.***

Colin Robertson writes a very informative blog, The Truth About Mortgage, with 10+ years of news about the mortgage industry. He has some great charts to compare the payments with different interest rates. Use his handy charts to compare rates: [click image to enlarge]

15 year mortgage rates

30 year fixed mortgage rates

“Should I Get A 15 Year Or 30 Year Mortgage?” It’s nice knowing you have choices, right? Knowing the numbers helps in making the choice.

Thanks to The Truth About Mortgage for these excellent interest rate charts! Be sure to read Colin Robertson’s blog for great information about mortgages.

Colin makes some other points that make sense when you consider them, but might not think about at first:

  • It is also possible to choose a rate for a 15-year mortgage.
  • The lower the interest rate, the smaller the difference in monthly payment. As rates move higher, the difference in payment becomes more substantial.
  • Higher mortgage rates are more damaging to larger loan amounts. If you look at the 30-year chart, the payment on a $400,000 loan amount at 3.50% is cheaper than the payment on a $300,000 loan at 6%.
  • Remember, this chart shows principal and interest only. There are often other items to consider, like Mortgage Insurance, property taxes and homeowners insurance. HOA fees and condo fees can also add to the monthly amount you need to consider.

Check out Colin’s blog for more great information. Another good read for those who want to dive deeper:  learn how are mortgages calculated.

Thanks, Colin, for these useful charts!


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The Highland  Group
Chris & Karen Highland   cell   301-401-5119
eXp Realty  410-777-5714

Interest Rates and Home Affordability

Interest Rates and Home Affordability

The Impact of Interest Rates on Home Affordability

The total cost of a Frederick home is really determined by two factors:  the price of the home and the cost of financing, assuming the buyer is not paying in cash, which is about 90% of the time these days. The effect of interest rates on home affordability is larger than any other factor.

While many homesellers are chiefly concerned about the price of their home, home buyers should pay special attention to interest rates. As interest rates go up, the cost of borrowing goes up, and borrowing power goes down.

Interest Rates and Home Affordability

The interest rate plays a big role in determining your monthly mortgage payment. But how big a role?  This chart shows how the payment is impacted as interest rates go up:

 7.00
$1,198  1,231  1,264  1,297  1,331
 6.75  1,167  1,200  1,232  1,265  1,297
 6.50  1,138  1,169  1,201  1,233  1,264
 6.25  1,108  1,139  1,170  1,201  1,231
 6.00  1,079  1,109  1,139  1,169  1,199
 5.75  1,050  1,080  1,109  1,138  1,167
 5.50  1,022  1,050  1,079  1,107  1,136
 5.25     994  1,022  1,049  1,077  1,104
 5.00     966     993  1,020  1,049  1,074
 4.75     939     965     991   1,017  1,043
 4.50     912     937     963      988  1,013
 4.00     859     883     907      931     955
 3.50     808     831     853      875     898

 $180,000
-10%
 185,000
-7.5%
 190,000
    -5%
 195,000
   -2.5%
 200,000

 

You can see that as rates go up, the monthly payment goes up. If the interest rate goes up 1/2 %, you can afford roughly 2 1/2% less in the home value. (These are general numbers, calculated on a mortgage calculator.)

You may have delayed your home purchase decision because of concern over where PRICES may be heading. OR, you may be trying to save for a higher downpayment. Many would-be home buyers are under the mistaken notion that they need to have 20% of the purchase price saved in order to buy a home today. This is a false notion, as there are many loan products available today that require much less than that amount.

FHA loans currently require a downpayment of 3.5%. There are also many conventional loan products that require 10%, 5%, and even as low as 3% down, with contributions from family allowed. And lastly, VA loans are truly no money down loans available to Veterans.

To make the best financial decision for you and your family, also take into consideration where the overall COST of the purchase may be heading. The chart really makes clear the correlation between interest rates and home affordability.

Interest Rates are Headed…

After several years of historically low interest rates, the Fed raised the benchmark federal funds interest rate this week (December 14, 2016).  Even with Wednesday’s 0.25 percent hike, interest rates remain at near-record lows. Many mortgage experts are projecting that rates will continue to rise, but not rapidly. As they go up, affordability goes down.

As the economy strengthens, rates tend to go up…although today’s markets are increasingly global. Many things effect rates, not just or own economy. It’s never easy to predict today. Check out Bankrate for rate trends, calculators and general information.

Contact us for our list of preferred lenders to see how much you qualify for today.
The Highland Group     

eXp Realty
Frederick, Md 21701
301-401-5119

How Changes in Maryland Real Estate Laws Will Affect Home Buyers

How Changes in Maryland Real Estate Laws Will Affect Home Buyers

Changes in Maryland Real Estate Agency Laws

If you’ve purchased a home in Maryland any time since 1999, then you should have been made aware of Maryland Agency Laws – who represents whom in a real estate transaction. Maryland has been on the leading edge of consumer advocacy for many years, so the Maryland Real Estate Commission has worked hard to protect the consumer. They’ve created laws to ensure that home buyers, as well as home sellers are aware of the opportunity for representation during the home buying process. Many states in the country still don’t have laws to address to the subject for Buyer Agency.

On October 1, 2016, new laws regarding agency have taken effect, and they will have an impact on home buyers. Here’s what home buyers need to know:

As of October 1st, there will be three types of agency:

  • Agents who represent the seller – including the Seller’s Agent and the Subagent (can assist the buyer in purchasing a property, but his or her duty of loyalty is only to the seller.)
  • Agents who represent the buyer – the Buyer’s Agent
  • Dual Agents – dual agency arises when the buyer’s agent and the seller’s agent both work for the same real estate company

What has changed since the 1999 Agency Laws were put into place? On October 1st, there will no longer be the type of agency called “Presumed Agency”. For the last 15 years, when a buyer met with a real estate agent, and didn’t want to sign a Buyer’s Agency agreement, the agent could continue to help the buyer by providing services as a Presumed Agent. That presumptive representation is no longer recognized in Maryland.

What Does this Mean for A Home Buyer?

Before the advent of Buyer’s Agency Laws in 1999, every agent worked for the seller, and represented the seller’s best interests. The Maryland Real Estate Commission wants to ensure that Home Buyers know their rights and understand that they have Buyer Agency available to them. Consumers need to understand that ALL agents are mandated by law to represent the seller’s best interest when there is no Buyer’s Agency Agreement in place.

Please be aware that all real estate agents are required by law to give “Fair and Honest” real estate services, but without a written buyer’s agency agreement, the law states that the agent represents the seller.

After October 1st, home buyers are now presented with a disclosure which explains the various forms of Agency in Maryland, as well as a Buyer’s Agency Agreement. It is the law. When visiting an open house, a new “Open House Disclosure”, notice will be placed visibly, which explains that the agent conducting the open house represents the seller. Real Estate agents are required to educate buyers and sellers on their rights upon the first meeting.

Agency is More Than Information

Today’s home buyers are well aware that this is the “Information Age”, and are able to obtain vast amounts of information on houses, neighborhoods and lifestyles. But this is the important part about Buyer Agency: Without a written agreement, you cannot get any information that is tailored to your interest. Buyer Agency is designed to give the buyer representation. Immediately upon reading these statements, many home buyers will have questions…

  1. “What if I don’t want to make a commitment, I just want to see a house?” Consider that a real estate agent has expertise that comes from hundreds, if not thousands, of real estate transactions over their career…why not take advantage of that knowledge? Especially appealing should be the fact that the knowledge can be used for your interests.
  2. “What if I don’t like that real estate agent?” All Maryland contracts are required to have a cancellation clause. You can hire a real estate agent for an hour if you really want to.
  3. “I just met the agent 2 minutes ago, I really don’t want to sign something.” That is your right. The law is in place to let buyers know their rights and options. Buyers have the right to enter a home purchase agreement unrepresented.

This is a cursory overview of the changes in Maryland Agency Laws. For a full explanation and view of the documentation, visit the Maryland Real Estate Commission Website:  https://www.dllr.state.md.us/license/mrec/