Tag: Loan Origination

5 Things to Consider When Buying an Investment Property

Posted on by Emily Gregory

Buying an investment property can be a great financial decision; whether you want to purchase a primary residence, flip a property and sell it, or rent it out to make a profit. If you have chosen the latter option, here are a few things to take into consideration.

Down Payment: Be ready to put down a larger down payment on the house – at least 15-25%. Expect higher interest rates and slightly more restrictive guidelines.

Property Management: Are you ready to be a landlord or will you have a property management company handle the busy work? If you are taking on the task of being the landlord, be prepared to be available 24 hours a day. If something stops working in the middle of the night or while you are on vacation, you will be responsible for finding a solution to the problem in a timely manner. If you plan to hire a property management company, they will take care of the paperwork, finding tenants, fixing repairs, and more, but it will come at an added cost to you.

Expected Rental Income: Will the investment property make a profit or end up being a money pit? If this house is currently being rented out, ask the owners how much they charge in rent each month. Check out other rentals in the neighborhood and see what the average monthly rental income is. If it isn’t high enough to cover the mortgage and other expenses attached to the property, it may be best to pursue a different property.

Expenses and Costs: Do you have the funds for an extra expense account in case any problems emerge in the house? You never know when a problem will crop up. Whether the AC unit breaks or the refrigerator stops working, make sure you have enough funds to pay for sudden repairs and replacements.

Risks of Renting: If you don’t have tenants for a month, will you be able to pay the mortgage? If the current tenants damage the property, will you be able to afford the repairs? What happens if you go to check on the property and your tenants flew the coop?

Buying an investment property is a big decision, but if you do your research and are prepared for any and all possibilities, it can be a great investment and pull in some extra income each month! Talk to a loan officer near you for more information.

What’s the Best Home Loan Option for Me?

Posted on by Emily Gregory

As a homebuyer, your mortgage is specific to your situation and lifestyle. There are many different factors to consider when thinking about which home loan option is best for you. While one buyer may be comfortable paying a 20% down payment, another buyer may need down payment assistance. How long you plan on living in your home can also play a role in which type of home loan to choose. We will give a brief overview below of some options, but it is best to reach out to one of our loan officers for the full breakdown.

One loan option to consider is a fixed-rate mortgage. A fixed-rate mortgage has an interest rate that stays the same for the entire life of your loan. This offers a predictable monthly payment for a term of 10-30 years. This type of loan is best suited for a buyer who intends to stay in their home for a long period of time. Highlights of a fixed-rate mortgage are

  • Interest rate security
  • Monthly payment stability

Another option to consider is an adjustable-rate mortgage (ARM). An ARM is a mortgage in which the interest rate is adjusted periodically based on an index. An ARM is a good option for buyers who are planning to move into a different house within the next few years. Depending on the type of ARM, the interest rate and monthly payment will fluctuate every adjustment period. An adjustment period is a period between each rate change, such as 5/1 – meaning the first-rate reset takes place after five years and continues to reset each year for the life of the loan. Highlights of an adjustable-rate mortgage are:

  • Low starting interest rate
  • Lower monthly payments during the initial term

Buyers who need assistance with up-front fees may consider Down Payment Assistance (DPA) Loans. State Housing Finance Agencies offer state-specific programs to residents who need help purchasing a home. These programs can be in the form of a loan or grant and assist with closing costs, down payment, and even student debt relief. Highlights of DPA loans are:

  • A lower amount of money is required up-front
  • State-specific programs to assist most buyers

First Home Mortgage offers a variety of loans that can meet your needs. While reading about different loan types online is a great way to get started, to know exactly what option is best for you, it is wise to talk to a mortgage professional. Get in touch with a First Home Loan Officer near you to fully outline your situation and goals and tailor a plan.

What Causes Home Prices to Fluctuate?

Posted on by Emily Gregory

The median sales price of a house in the United States is currently between $188,900- $279,500. There is such a large price range because many different factors can play into a home’s sales price. If you are looking to buy or sell soon, keep the following factors in mind when determining costs.

The price of a home can vary depending on the location. A more populous area, like a downtown neighborhood or a highly sought-after suburb, can boost the sales price because there is a high demand for borrowers wanting to live there. A less popular area, or even an up-and-coming neighborhood, may show lower home prices, even if the homes are similar in size to those in more expensive areas.

The season may also have an impact on home prices. Once the spring buying season starts heating up, there will be a larger demand for homes to purchase. Prices may also increase because there is a higher chance the home will be bought. With a hot buying market, bidding wars may ensue, which can also increase the price of a home. In colder seasons home prices may decrease since fewer people are shopping for a new home. Since the demand is low, sellers may consider a lower price tag, giving way to a better deal for borrowers.

A strong or weak economy can also impact home prices. When a strong economy is present, individuals and families may have a more secure financial mindset. With this in mind, buyers are more likely to feel comfortable obtaining a larger mortgage, which could lead to higher home prices. In an unstable economy, prices tend to be lower.

If you aren’t sure whether now is a good time to buy a new home, get in touch with one of our loan officers to learn more about the current market. We are happy to help and answer any questions you may have.

Top Loan Originators in the Country 2018- Mortgage Executive Magazine

Posted on by Emily Gregory

Once again, Mortgage Executive Magazine compiled a list of the nation’s Top 1% of Mortgage Originators. To be eligible for such an achievement, each Loan Originator was required to produce a minimum of $30 million in 2018. These leading mortgage professionals continually dedicated their time and energy and worked extremely hard to make sure their clients received the utmost service throughout the 2018 year.

For the 2018 year, 20 Loan Officers from First Home Mortgage were included in the list!

CONGRATULATIONS  to:

Mike Archer, Anne Borghesani, Heather Devoto, Ann Flaherty, Alex Jaffe, Tammi Lewis, Rob Mercer, Jim Moran, Mike Nadeau, Jason Nader, Matt Nader, Ryan Paquin, Todd Pede, Ayaz Rahemanji, Jake Ryon, Kari Story, Scott Story, Mike Taylor, David Toaff and Gabe Tuvek

Mortgage Executive Magazine also recognized the Top 200 Originators In America 2018. These Loan Officers were ranked by their total yearly mortgage volume. Congratulations to Ryan Paquin and David Toaff on this fine achievement!

New Down Payment and Closing Cost Assistance Loans

Posted on by Emily Gregory

First Home Mortgage is excited to roll out a new program to assist first-time homebuyers, community partners, and veterans with down payment and closing cost assistance.

The FHLB program provides loans up to $7,500 to homebuyers that can be used towards the down payment and/or closing costs of their new home. These loans are forgivable after 5 years, meaning no repayment is necessary! There are 3 separate programs available:

First-Time Homebuyer Product– Maximum loan assistance of $5,000, minimum borrower contribution of $1,000.

Community Partners Product– Maximum loan assistance of $7,500, minimum borrower contribution of $1,000, non-first-time homebuyers are eligible, available to law enforcement officers, educators, health care workers, firefighters, and first responders.

Veterans Purchase Product– Maximum loan assistance of $7,500, no minimum borrower contribution, non-first-time homebuyers are eligible, available to homebuyers who are currently serving or have served in the U.S. military, their spouse, or their surviving spouse.

These programs are only available on conventional, fixed-rate purchase loans. Funds are provided on a first-come, first-served basis until funds are depleted. There is mandatory Homebuying Counseling for borrowers.

Reach out to your Loan Officer to learn more!

Can You Buy a Home With Student Debt?

Posted on by Emily Gregory

According to The Institute for College Access & Success, about 65% of college seniors who graduated in 2017 had student loan debt. In Maryland, the average amount of debt was $29,314. Many potential homebuyers think with a mound of student debt it will be nearly impossible to purchase a new home. Luckily, there are options for those with debt to buy homes. The Maryland Mortgage Program created the SmartBuy 2.0 program, which helps to qualify homebuyers to pay off student debt during the purchase of their home.

The terms are pretty simple.

You must have minimum existing student debt of $1,000 and the loan must be in your name. The program offers up to a maximum of $40,000 in financing to be used towards paying off your debt. The full, outstanding balance of the student debt must be paid off as part of closing; partial loan payment is not permitted. The student loan may be in repayment or deferred status.

Financing for student debt relief will be in the form of a 0% interest, deferred loan with no monthly payments. The loan is forgivable over 5 years; meaning if you are still living in the property after 5 years, your debt is forgiven, and repayment is not needed. If you choose to sell or refinance the property within 5 years, the remainder of the student debt loan will be due.

This is a great program to utilize if you are a first-time homebuyer and have accrued student loans over the past few years. Contact one of our loan officers today to see if you qualify.

*Student debt information pulled from the Institute for College Access & Success website: https://ticas.org/posd/home

5 Home Loan Milestones

Posted on by Emily Gregory

Buying a home may seem a bit complicated, and sometimes it can be. It is important to understand what to expect when preparing to buy a home, and what to expect during the home buying process. Below we’ve provided a short outline of the five main milestones of the home buying process.

Pre-Qualification

You’re ready to buy a home, congratulations! The very first step to take if you are ready to start your new home search is to get pre-qualified. This is a no-cost, no-commitment, 10-20 minute analysis that will give you a great starting point for your new home loan. You can do this in-person or on the phone with a loan officer, or in most cases complete an online form. Your lender will be able to determine an estimate of your maximum monthly mortgage payment and how much you can borrow. Pre-qualifying for a loan before you go home shopping helps you set a budget and strengthen your negotiating position when making an offer.

Application

Once you have found a home, you will make an offer to buy it from the seller. A real estate professional will conduct negotiations and a contract will be submitted to purchase, accompanied by the pre-qualification letter. Once your offer is accepted, you will receive your initial disclosure package and you will begin the application process. You will most likely need to provide your loan officer and processor with updated income and asset documentation, such as pay stubs and bank statements. To ensure your loan stays on track, you’ll want to have your docs completed quickly and thoroughly.

Processing

In this step of the process, your appraisal and title work will be ordered. Once all necessary documentation is present, the processor will review everything for completion and accuracy. He/she will verify information on the title work, appraisal, credit report and any additional docs needed. Once the processor has completely reviewed the full application package, he/she will pass it on to the underwriter. Your loan officer will keep you informed, answer any questions and navigate you through the loan processing stage.

Underwriting

Once your loan gets to this milestone, the underwriter will review the entire loan package to determine if your loan meets the guidelines for approval. Your underwriter will review your disclosures, credit, asset documentation, employment, appraisal and additional documents along with the loan program’s guidelines and regulations. Once conditions have been met and any contingencies on the loan have been cleared, the underwriter will give the clear to close/final approval and the loan is sent to closing. Once the loan gets through underwriting, you’ve rounded the last turn and are in the home stretch!

Closing

You are now in the final home loan milestone, closing! A date, time and location should have already been confirmed for closing. At least 3 days prior to closing, you will receive your closing disclosure (CD). This document shows your closing costs, terms of the loan and how much money you need to bring to settlement. Once at settlement, documents will be signed, funds will be distributed and ownership of the property will transfer from the current owners to you. The house is finally yours!

It may seem like a long process, but we strive to make it as seamless as possible. If you are ready to start your home buying process, contact one of our loan officers today!

Why Is a Home No Longer Pending?

Posted on by Emily Gregory

A pending sale means the seller has accepted an offer but the deal hasn’t closed yet. A property is placed in pending status when the contract is executed; when the contract is executed, in other words, the property is no longer defined as an active listing. A home will remain pending until all legal work has been processed and the loan closes. If your dream house is currently listed as pending, don’t lose all hope. Some sellers will still allow offers to be made on the house, just in case the deal falls through. Here are a few reasons a deal may fall through.

Finances

Homebuyers are often not aware of how an innocent transaction, such as making a large credit card purchase or moving cash from one back account to another, can jeopardize the mortgage process. Applying for any new kind of credit or accruing any new debt can affect your eligibility to continue with the loan. If any type of financial transaction is made that disqualifies you from continuing with the loan, the pending sale will fall through and the home will likely go back on the market. Always discuss your financial situation with your loan officer during the loan process.

Title Issues on the Property

Once a contract has been written up and the buyers start the loan process, title work on the property will be reviewed. Sometimes there are delinquent liens/bills on the property from the current owner, among other issues, that can affect closing. If the liens are not taken care of by the seller and cleared from the title, a lender will not allow the sale to go through. Errors of public records on title work can also stop a sale from continuing. Clerical or filing errors of the deed or survey of the property can cause financial strain to resolve, so they are not taken care of and the sale falls through.

‘Subject To’ Conditions

A smart buyer will have a property inspection done on the house before closing. An inspector will take a look at the foundation of the house, roof, attic, appliances, and list of other items to make sure everything is in working condition. If issues are found in the house that need to be fixed, the borrower may list “subject to” or “contingent upon” conditions on the contract. If these items are not fulfilled by the seller, the borrower is allowed to exit the contract, thus removing the pending status.

While it is not common for a deal to fall through once a contract is written up, it could happen. It’s a good idea to still follow the sale of the home and keep it in the back of your mind. Contact one of our loan officers if you have any questions, they will be happy to help!

What is Homebuyer Education, and Why Do You Need It?

Posted on by Emily Gregory

Homebuyer education, also called housing or pre-purchase counseling, helps homebuyers prepare for the process of purchasing a home and the challenges of being a new homeowner. Some loan programs, like the Maryland Mortgage Program (MMP), require homebuyer education courses.

Recently, the Maryland Mortgage Program has made updates to their homebuyer education requirements to simplify and standardize the process. Effective for MMP reservations dated on or after October 1, 2018, the following will be implemented:

  • Homebuyer education may be taken online or in person, individually or with a group, as long as the class has been approved by HUD, Fannie Mae or Freddie Mac.
  • For Baltimore City and Baltimore County, the above flexibility will apply, but the homebuyer education must be completed prior to signing the sales contract.

The homebuying process is complex and if you are a first-time homebuyer (someone who has never owned a home, or has not owned a primary residence in the last 3 years) it can be a little confusing. This is why homebuyer education courses are so important. They help new homebuyers understand the process and what to anticipate as a homeowner. Below are some of the topics you can expect to learn about during your pre-purchase counseling.

  • Process of purchasing a home- You will be given an overview of the entire homebuying process, from application to closing, exploring each step more in-depth.
  • Budgeting- Buying a home will be one of the biggest purchases you will make, so knowing how to afford your mortgage and budget for extra expenses will be covered.
  • Shopping for a mortgage- Different types of home loans will be reviewed and what you will need for pre-approval. Your credit score, and ways to raise and improve it, will also be covered as a topic since this can help determine which type of mortgage and rate you qualify for.
  • How to maintain a home- Upkeep and regular maintenance of your home lowers the risk of major problems down the road; it is essential to know how to maintain your home and the budget you should keep for maintenance.

Even if you aren’t a first-time homebuyer, taking a homebuyer education course can be beneficial, since the mortgage industry is always changing and new programs are emerging. Additional one-on-one homebuyer counseling is available, and it is sometimes required, depending on the state/county you are purchasing in or loan program you are using. It’s better to have more information than not enough, especially when it comes to buying a home. Please reach out to any one of our loan officers if you have questions.

Buying a Home in a Gig Economy

Posted on by Emily Gregory

A gig economy refers to a workplace in which temporary or flexible jobs are the norm, such as freelance or contract work, as opposed to permanent, full-time jobs.  There is no fixed salary, so income may be irregular and sometimes it may not even be documented.  Future income is also unpredictable while working freelance or contract jobs.  This may lead to some complexity if you are trying to obtain a mortgage, but it’s still possible.

So how do you get a mortgage when you don’t have a standard, full-time job?

First thing’s first; it’s time to get organized.  Start by getting your paperwork together.  You will need to provide copies of signed federal tax returns from the last two years and a year-to-date profit and loss statement.  You will also need a list of your debts (monthly payments such as car loans, credit card debt and/or student loans) and assets (checking and savings accounts, stocks, bonds and other securities).  Two years’ worth of documented income will also be reviewed.  Additional paperwork will also be required; the loan officer will keep you in the loop of what is needed.

Keep adding to your down payment.  Having a larger down payment will lower your loan-to-value ratio, or LTV.  The LTV is the relationship between the amount of the mortgage loan and the value of the property. The lower this ratio is (the larger amount you put for a down payment), the less risk you are as a borrower to repay your loan.

Pay down your debt.  Work to eliminate all of your debt, or get your balance as close to zero as possible.  Having a lower amount of debt will lower your debt-to-income ratio, or DTI.  Your DTI measures your ability to manage monthly payments and repay debts.  The lower your DTI is, the less risk you are as a borrower to repay your loan.  Repaying all of your debts, on time, is also a key factor in keeping your credit score high and healthy, which is important when obtaining a home loan.

Contact one of our loan officers to see how to get the ball rolling.  Having an informational conversation will educate you on what to expect during the home buying process and what type of paperwork will be required.  Having this initial conversation does not require you to apply for a mortgage, but it will give you the insight needed when you are ready to purchase a home.

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