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Getting Ready to Buy a Home

Digitizing the Lending Process for Home Buying

November 2, 2018 By Tyler Plack Leave a Comment

Digitizing the Lending Process for Home Buying

What is Digitization?

Digitization is the process of converting analog information into digital data. This digital data is can then be used and processed by computers and other electronic devices. There are several advantages to digitization. It not only allows you to access your files remotely, but it also simplifies storage, streamlines data processing, and reduces overall operating costs. For all these reasons, digitization is now a must for most modern industries. This includes the loan and mortgage industry, which can enjoy major benefits from digitizing its lending process.

The ability of a lending institution to effectively compete will greatly depend on its ability to digitize its system. A paperless system will open opportunities for greater productivity, cost reduction, and improved customer service. Accordingly, this will eventually lead to increased customer acquisition, satisfaction, and retention.  

Unfortunately, for most loan and mortgage companies, the lending process is far from fully digitized. Paper forms and stuffed file cabinets remain the norm. Although some of these documents do end up being digitized eventually, the number of paper documents which are involved in the lending process will definitely surprise you.  

The Current State of the Digitized Lending Process

As of August 2018, the following milestones in digitizing the lending process have been achieved.

  1. Investigation of current income and/or employment status. There are a number of online services which allow lenders to verify the current employment status and possible income stream of potential lenders. The Work Number, for example, is an online service which provides data for employees working with Fortune 500 companies.
  2. Credit history and support obligations. Lenders can easily retrieve this information through credit reports; by filing a 4506-T form with the Internal Revenue Service (IRS); or by reviewing the borrower’s Form 1003. The 4506-T is a document used to request copies of prior tax transcripts which the taxpayer filed with the IRS. These tax transcripts provide the lender with valuable insight as to the financial position of the borrower/taxpayer, especially in relation to his level of income. The borrower/taxpayer, however, must still sign and date the 4506-T to allow the lender to retrieve his data. On the other hand, Form 1003, also known as the Uniform Residential Loan Application Form, is a standardized document developed by the Federal National Mortgage Association. This form contains all the necessary information that lenders need to review for mortgage applications. It includes a wide range of information designed to give lenders a bird’s eye view of the borrower’s finances. For example, sources of income, list of assets and liabilities, existing debts, prior foreclosures, and declarations of bankruptcy are all included in Form 1003. Fortunately, with the right software in place, these documents can easily be completed electronically. By doing so, the lender will no longer need printed copies of the 4506-T or Form 1003.
  3. Monthly residual income, income-to-debt ratio, etc. Similar to the above, all this information can easily be derived by analyzing the creditor report, 4506-T or Form 1003.

At first glance, it may seem that we’ve come a long way in digitizing the lending process. However, this is far from the truth. There are still several aspects of the lending process which are not fully automated.

  1. Appraisal. Unfortunately, there is currently no viable automated substitute for human appraisers. Real people need to go out and evaluate the present condition of the land or object mortgaged.
  2. Nonstandard borrowers. Automated systems operate by examining predetermined variables. Although this significantly streamlines the lending process, it also comes with its own limitations. For example, an automated system will probably deny a borrower’s loan application because the income stated in his latest tax return is too low. However, it does not take into consideration the possibility that the borrower may have improved his means between the time he filed his tax return and the time he filed his application. Thus, human intervention is still required to assess nonstandard borrowers.
  3. Legal compliance. The intricacies of Federal mortgage laws make paperless compliance extremely difficult. Most of the time, parties will be required to place their signature and/or thumbprint on a stack of documents. This is done so that lawyers and other legal professionals can retain hardcopies.

Craving for Change

Even though the lending process is very complicated and highly regulated, there remains a significant interest in digitization. Lenders can clearly benefit from the improved efficiency, cost savings, and other benefits of a fully digitized system. Borrowers, on the other hand, can benefit through faster approval times, electronic submission of supporting documents, and more.

But despite the advantages of a fully digitized process, the lending process will still benefit from a human touch. Majority of borrowers will still want to discuss their options with a lending officer before committing to a transaction. Meeting a lending officer has several advantages. It assures the borrower that the establishment cares about his business. It also allows the establishment to explain the specifics of the loan and assess nonstandard variables.

Taking the Lending Process from Paper to Electronic Documents

For a long time now, paper documents have dominated the lending process. In fact, one loan and mortgage transaction can generate about 500 pages of documents. These include years of financial records, across several employers, businesses, mortgages, gifts, grants, and personal household expenses. The borrower will have to make several appearances, while the loan officer has to scrutinize and verify stacks of documents. More often than not, additional documents will be needed and requested from buyers. To complicate things even more, borrowers are left in the dark on the progress of the loan application while the loan officer spends hours working on a single transaction. The seemingly inefficient lending process can be vastly improved through digitization.

The Path of Transformation

To automate the lending process is not no easy feat. With that said, however, it is also far from impossible. Some of the more difficult parts of the transformation involve the quality of the software; potential incompatibility of new and old systems; transition costs; and regulatory compliance. But despite the many difficulties, the potential benefits of a fully digitized lending process make the transformation well worth the effort.

Digitizing the lending process will obviously require the creation of new software that is specially designed for the task. This new software must not only answer the present and future needs of the lending establishment but must also intuitive enough to be used with little to no training.

Practical and Functional

In regard to functionality, the software must function as both a storage and analytical tool. Users should be able to save and access data easily through the software’s user-interface. Moreover, it must also be able to analyze the data, so that the critical information relating to the borrower will always be available. For example, if the lending officer needs to view the borrower’s income-to-debt ratio, the software should be able to display this information instantly. If the software is not capable of doing so, then the lending officer will be compelled to either compute the ratio himself or use another piece of software to do it for him. Either way, it will be a massive waste of time and effort. It is much more efficient to have everything in one place.

User-friendly and Intuitive

Additionally, user-friendliness is another important consideration. The software must be intuitive and easy to understand. If it isn’t, the lending establishment will need to incur additional expense in training its staff to use the software. This creates an added financial and technical burden on the establishment, which could have easily been avoided through proper software design.

Flexible and Adaptable

Finally, the software must be designed with the future in mind. It must be designed with future upgrades in mind, so that it can change or adapt readily to the upcoming needs of the establishment.

A fully digitized lending process should allow closed collaboration by all stakeholders: borrowers, lending officers, managers, technical personnel, and the third-parties. It is only when these participants are fully interconnected that the advantages of the software will start to trickle down to the borrowers.

For example, the easier the software is to use, the less time lending officers will spend on encoding or analyzing data. This extra time can be used to entertain other borrowers and thereby increase the profits of the lending establishment. This allows the lending establishment to save on the cost-per-transaction, which empowers the establishment to charge a lower rate for fees, if it so chooses.

The entire lending process normally costs the lender about $7,000 per average-sized loan. A large chunk of that goes to salaries for doing routine work like reading and sending e-mails, monitoring client requests, and receiving and filing paper documents. Most of these costs are passed down as fees to borrowers for the lending establishments to remain profitable.

Investing in digitizing of the lending process can significantly lower these costs by automating routine jobs. Other intangible benefits of digitizing the lending process involve the value-added service that lending officers can further provide to the borrowers. By delegating more of the remedial tasks to the machine, the lending officers can focus on account management, customer acquisition, and other client-focused activities. Hence, productivity can be increased, and costs can be reduced in one fell swoop.

Moreover, the digitalized Lending system can be easily audited. All transactions between the borrower and the lender are automatically filed chronologically, leaving no room for deception and manipulation. This technological ability of the system further paved the way to speed up the lending process. With documented real-time evidences of borrower’s consent and intent to proceed, the loan will go directly into the pipeline for processing. Confusions, miss-understandings and uncertainties are immediately put to end.  

Technical Challenges

Unfortunately, it’s not all sunshine and rainbows. There are also some very serious technical challenges when it comes to digitizing the lending process. The most obvious challenge is data privacy or security.

Data security is a critical concern for any business establishment. However, this issue is doubly true for lending establishments. In fact, one wrong move can spell disaster, especially if it involves a leak of personal or sensitive information, such as the borrower’s social security number.

To address these security concerns, most establishments that intend to digitize their lending process are looking into new technologies like blockchain and advanced security systems. Blockchain, in particular, seems to be gaining increased interest over recent years, especially after it has proven itself in the realm of cryptocurrencies.

Aside from ensuring data security, lenders must also comply with strict banking regulations. One such regulation is the TILA-RESPA Integrated Disclosure (TRID) rule. The TRID rule significantly simplifies the loan process for borrowers. It also requires lenders to strictly track data and to notify borrowers on loan estimates and fees. With the help of modern technology, borrowers are notified promptly and automatically once the lender receives the necessary data. This is a major improvement from the traditional and error-prone system, which relied solely on the technical prowess of the lending officer.

Government Support

Just recently, in early August of 2018, the United States Treasury published a report entitled, “A Financial System That Creates Economic Opportunities: Nonbank Financials, Fintech and Innovation.” This report promoted digitization of the lending process and stressed the need for a special regulatory structure for the same. They emphasized certain issues that need special attention from rule-makers.

All in all, the Treasury’s outlook on regulations seems very promising. It encouraged rule-makers to draft laws that will encourage the development of new technologies that will increase customer satisfaction, make the lending process more efficient, and improve overall security.

Conclusion

With all that said, it is easy to see why lending establishments need to digitize the lending process. Digitization will not only improve speed and efficiency but will also reduce costs. However, a proper balance must still be observed. While a large portion of the lending process may be digitized, lending officers still need to add a personal touch to these transactions for the sake of client relations.

Several steps must be taken and numerous technical challenges must be overcome before the proper level of digitization can be achieved. While the process may be difficult, it is far from impossible. Nevertheless, if the loan and mortgage industry truly intends to improve itself, there can be no better investment than digitization of the lending process.

Incentives for Home Buyers in Maryland

October 26, 2018 By Tyler Plack Leave a Comment

Incentives for Home Buyers in Maryland

Are you ready to move on from where you are currently living in? They say that nothing good can truly last forever, and this can apply even to those who are already settled in cozy homes. There may come a time when you will have — or even prefer — to sell your home and move forward elsewhere. Although this is not a decision that anybody can ever take lightly, the same can also be said for those who are on the opposite end of the situation. Looking for and purchasing a home can be among the most important purchases that anybody will ever make. The implications for doing so are huge; there is the prospect of stability and greater control over the lives of those who are looking to buy. Due to the competitive nature of house selling, there is a need for you to provide as much incentives for home buyers as possible.

By definition, an incentive is more or less another term for perks. Some can be quite big and then there are those that are comparatively small. You may have heard about a few truly outlandish stories in your own time, like wealthy sellers that threw in a car along with the house or negotiating with a bakery to provide a year’s worth of cookies to go along with the sale. Those are the ones who tend to end up making headlines; there is no need for you to go that far. Should you have trouble in the selling of your home, there are simpler — and better proven — incentives that you can provide for those looking for a brand new place to call their own in Maryland. Below are a few things that you may want to read about some more:

Incentive for Home Buyers # 1: Interest Rate Buy-Down

Have you ever heard sellers say that they ‘pay points?’ If so, this is exactly what they are talking about. A buy-down is a mortgage financing technique where buyers do what they can to get a much lower interest rate for the first few years of their mortgage. As the seller, it is up to you to provide payments towards a mortgage lending institution, and this will domino into a much lower monthly interest rate for the buyer and a lowered monthly payment as well. The period this would affect will range from the first year all the way up to the fifth year of said mortgage.

With all of that being said, anybody can clearly see how this can be a very attractive option. Buyers will feel a lot less pressure when it comes to figuring out which day they need to lock in the interest rate, which many often cite as a very common and incredibly serious source of stress. It will also send the message that in purchasing your home, they will have beaten the market rate, which is a proud and great statement for anybody to receive. Buy-downs that are seller paid also have the added benefit of being tax deductible for the next time taxes are being filed. You may even notice some cases where the seller is not involved in the least, making this strictly between the buyers and the lenders.

For the seller, the question of whether or not this should be done is a very important question in itself. Your own answer to this may be based on how much it would cost for you to buy the rate down in the first place, as well as how long term your plan is when it comes to keeping the loan. The smart thing to do would be to find a rate sheet that can help you in making a final choice. Take note that a large number of mortgage programs are known to employ a system that allows sellers to pay specific fees in exchange for specified changes in the interest rate, which may be an incredibly enticing thought for some people. Concerning rate sheets, they may look a bit like this:

Interest Rate – Price

  •         6.375 percent – 0.375
  •         6.25 percent – 0
  •         6.125 percent – 0.25
  •         6 percent – 0.5
  •         5.875 percent – 1
  •         5.75 percent – 1.75

Each rate will have its own corresponding price that is displayed as a loan amount percentage. For the example written above, the expected par rate is at 6.25 percent since it possesses an associated price that is zero. Also take note that there isn’t a single specific ratio and it will also vary from bank to bank or lender to lender. It is therefore crucial to find a sweet spot where your rate buy-down is suitably justified by its cost. Keep in mind that you must first do the math and figure out the rate that makes the most sense based on your own long term plans.

Incentive for Home Buyers # 2: Closing Cost Credit

What would you say if someone told you that paying off part of a buyer’s closing cost isn’t as counterintuitive as it may initially seem. Those who look for closing cost credit tend to be first-time home buyers. Some may obtain a FHA loan or a VA loan, which are programs with generous terms that allow people with little upfront reserves to achieve their dream of finally becoming homeowners. Federal Housing Authority loans will require people to shell out a down payment of just 3.5 percent of what they would be paying for the home purchase and Veterans Affairs loans won’t even bother with any down payment in the least.

Many of these buyers may not have the cash needed to pay off closing costs, but it is worth noting how they will vary in terms of the municipality. The better-heeled buyers may also be lacking in liquidity to pay off the closing costs, especially if they have already made the usual 20 percent down payment that is required by typical mortgages. Keeping these type of buyers in mind will give you an idea on which ones are going to be interested in this particular incentive.

It may be in a seller’s interest to include the offer of paying off a certain percentage of the home’s sale price in their home listing. Considering what is now known regarding what different types of buyers may be looking into in terms of options, this would be a strong differentiator that is likely to make your home considerably more attractive compared to the other listings. Should you be going for this incentive, there are some approaches that you may want to take into consideration, such as:

  • Going for a bigger purchase price: Agreeing to a higher price is perhaps the most common way buyers can get sellers to agree to paying off a closing cost credit. As an example, should a specific home be listed at a price of $300,000 and its potential buyers will have a figure of 3 percent in the closing costs. By dividing the price of sales by .97, the equal sum would be $309,278.

Buyers would then offer to pay off that amount, contingent on getting a credit that is worth around $9,278. Even with that credit being paid by the seller, they would still net the $300,000. Kindly take note that a major drawback to this approach exists in the form of the buyer’s lender potentially not appraising the home at the higher amount. Should that be the case, sellers would be stuck with a payment that does not include the perk of netting the expected amount.

  • Negotiating credit through a fast close: This is yet another popular tactic that buyers can use to get sellers to pay off the closing costs, and this time, it relates to escrow, which is the tense period that is between the contract signing period and the deal’s completion. Sellers would prefer buyers who are both qualified and trustworthy enough in regards to not causing any problems during the aforementioned period. Should a buyer offer to accept the house in its present condition, then the seller may be encouraged to agree to certain credits, which is a small price to pay in exchange for any assurance that the escrow will close minus any tiresome hassles.
  • Various other trade-offs: As a seller, offering credit is not always an immediate — or even an attractive — option. Buyers may ask for certain things like halving the home’s down payment or even earnest money, which leaves funds for its closing costs. Another alternative trade off would be asking for a small discount regarding the overall price, which will lead to lowered closing costs anyway. Sellers may not even want to pay off the full closing cost amount anyway, but buyers could still possibly negotiate for a smaller percentage.

Take a look at the pie chart below and see how it sums up the whole topic:


Incentive for Home Buyers # 3: Homeowners’ Association dues credit

Is your home part of a homeowners’ association that comes with monthly or annual charges? If so, then you may recall buying that home some time ago and possibly feeling quite overwhelmed with the immense number of expenses that came with it, which definitely included HOA dues. Fast forward to the present, you can now utilize those stressful HOA dues to your advantage as a seller. How can this be done, you may be asking? The answer lies in the same dread you had years before and what awaits any potential buyer of your home going forward.

If you want to stand out from all other sellers, then you have the option of offering a credit at closing which would cover your buyers’ HOA dues for a specific time period. Said time period can be up to six months, one full year, or perhaps even longer if you so desire. The best way to accomplish this would be to sit down with your agent and discuss this at length. Come up with a solution that benefits everybody and one that offers a maximum lure your potential buyers whilst not running afoul of any particular guidelines for seller credits as imposed by your buyers’ lenders.

Incentive for Home Buyers # 4: The inclusion of Window or furniture coverings

The purchasing of furniture may prove to be a hidden expense to real estate. Some owners may renovate their homes and then choose certain furniture to match the new look. In fact, there are some homes that show so well, buyers end up wanting to not only buy the house, but also all the furniture within. How’s that for a surprising and highly effective incentive? Those who have homes with special and customized furniture may want to include all that as part of the sale offer. As much as you may want to take all of that furniture with you, there is always the chance that it may not really match well with the aesthetics of your next home, so why not strive to make your potential buyers happy and entice them with it? It can serve as a win-win scenario for all involved, making everybody that much better off in the long run.

Incentive for Home Buyers # 5: Pay for appraisals and home inspections

How a home shapes up to expectations is a very important consideration for buyers. Everything may look fine on the surface, but you never know what kind of trouble you may encounter later on once the deal is completed. People need to know as much as possible what they are dealing with. To this end, offering an incentive of home appraisals and inspections can help put your buyers’ anxious minds to rest. Both serve separate yet highly related functions and offering to pay for both is a great way to pique the interest of potential buyers.

Regarding home inspections, the reasons for doing so are quite easy to comprehend. Any house you encounter is bound to have some issue that needs to be resolved. Home owners who do not pay close attention to said issues may find themselves blindsided one day and become suddenly forced into dealing with something terrible. By having the property properly inspected, buyers will be made aware from day one about all the problems that the house comes with. From there, they can make the decision of whether the home is worth it or not. Having a home inspected isn’t just an attractive incentive, it is also an act of responsibility on the part of the seller.

Examples of common problems would be leaky faucets and ripped carpets. Those things are fairly minor and often prove to be nothing more than an annoyance that pops up from time to time. Things to really look out for would be roofing or plumbing issues. Anything that hampers the safety of a home’s inhabitants will also greatly lower the value of the property itself. Speaking of value, this is the part where home appraisals come in.


An appraisal is considered a very vital component of any mortgage lending process, yet it can be endlessly confusing to many home buyers. Questions will be raised, such as ‘is the home’s value truly what is agreed upon between the seller and the buyer?’ and ‘Is it really the tax assessment value, or perhaps it is the price that the home was last sold for?’ Those can only be answered by the unbiased reporting buyers get from appraisals, especially when they are conducted by trained and licensed professionals. The differences between home inspections and appraisers can be quite numerous as well. These would include:

  • Inspectors tend to provide buyers with repair cost estimates concerning any known damages or issues that can influence the negotiation of home purchase prices. Appraisers are not known to do this sort of thing.
  • What appraisers are, in fact, known for would be checking of prices in various and recent comparable house sales within the same area.
  • Inspectors will provide both buyers and lenders with reports that detail all their findings and any repair recommendations, which does not fall into an appraiser’s job duties or responsibilities.
  • What does fall into the duties and responsibilities of appraisers would be providing buyers, sellers, and the lenders with reports that will detail how much calculated value the home in question truly and fairly has.

For home sellers, it must be noted that it is the lender that typically arrange for appraisals and it is typical for the buyer to be the one responsible for all the costs. However, if you are to utilize this as an incentive, you may want to know that appraisal fees tend to fall between a range of $450 to $750. The specific costs will depend on where your property is located and how big or small it is.

When it comes to the factors that will ultimately determine your home’s value, the following are particularly notable:

  • Any known damage done to the home by termite, water, or mold.
  • Whether the furnace remains in particularly good shape or not.
  • Whether the plumbing is known to leak or not.
  • If the home will require any major restructuring or replacing, like with some houses with roofing issues.

The final step that will be taken will be the issuing of a final report. Both sellers and buyers will want to know things such as the actual and overall size and condition of the home to be sold; comments regarding serious structural problems; permanent fixtures which will include ceiling fans, lights, and plumbing; any renovation details; lastly, there are the comments regarding the home’s surrounding areas, which will include both positive and negative features.

Incentive for Home Buyers # 6: Broker incentives

Lastly, there is the option to go for broker incentives. There are going to be a few savvy home sellers out there that will opt to take a much different route than others, a route that will involve offering to pay for a bonus percentage point. What makes this well and truly different is the fact that the payments are not for the direct benefit of the buyer, but to the agent or broker. This will go on top of all the commission that they will receive anyway. Such an option makes a lot of sense when you take into consideration the fact that the vast majority of buyers these days are already being represented by agents and brokers. By going for this option, you can cut through as many unnecessary and tedious steps as you possibly can.

The offering of a broker’s incentive is both a quick and an easy way to ensure that your home will stand out among all other listings, at least to the agents and brokers whose job it is to place property tours together. Technically speaking, this is not really even an incentive for buyers, but it does more or less the same job of boosting the potential number of buyers who are bound to take a look at what you have to offer. In turn, this will boost the chances of your home getting an enticing offer.

In conclusion, there are multiple and feasible options for you to undertake as a seller if you are truly serious about offering incentives to potential home buyers. There is clear merit in each one and what is left for you to do is just decide on what move you will make next. Before you make a decision, take note of your current assets and what it is you can realistically offer. Keep that in mind as you also take into consideration all of your long term plans. For some people, it may be worth going after just a single of these incentive options, or perhaps it can work best to mix two, three, or even more together. Do not be afraid to experiment; after all, the success of selling your home may depend on what you ultimately choose to do.

What Credit Score Should You Have to Buy a New Home in Maryland – A Complete Guide

October 12, 2018 By Tyler Plack Leave a Comment

What Credit Score Should You Have to Buy a New Home in Maryland – A Complete Guide

If you are planning to buy a new home, knowing your credit score can give a fair idea of how much you can afford, whether you will be eligible for a mortgage, or how much interest rate you will have to pay. All these are directly related to your credit rating, which is one of the primary documentation that determines your creditworthiness. In addition to optimum debt-to-income ratio and financial stability, lenders will review your credit report to determine whether to approve or reject your home loan application.

So, what credit score you should have to buy a new house?

The answer is – it varies depending on the type of mortgage and interest rate you are considering.

Minimum Credit Score Required for New Home Loan

Considering the USA’s current economic scenario, many home buyers are apprehensive about whether they will qualify for a mortgage loan or not. However, for conventional home loans, lenders require a middle FICO score of minimum 620.

  • FHA Loan Credit Score Requirement

Don’t have a credit rating of 620?

The good news is that the Federal Housing Administration (FHA) has lower credit rating requirements, approving mortgage even to home buyers who have a poor score. Typically, FHA provides loan assistance to first time home buyers by offering lower down payments. If your FICO score is 580 or more, you can be eligible for only 3.5% down payment on your mortgage loan.

However, FHA also offers bad credit home loans, i.e., offering mortgage loan to buyers who have a score lower than 580. In such cases, as per latest FHA policies, the buyer is liable to pay 10% down payment of the total loan amount.

The objective is to provide everyone with the opportunity to buy a new home, irrespective of their credit background. This is because bad credit does not necessarily disapprove of the buyer’s financial credibility. It may be due to the factors beyond one’s control. For instance, unable to make monthly payments, say from after one year, because of huge medical bills, loss of income, etc.   

Nevertheless, credit score is not the only factor that FHA considers to determine your loan eligibility. Your application for a mortgage loan should be backed by substantial evidence of the current financial condition, reduced debt-to-income (DTI) ratio, number of on-time payments done earlier, and other aspects.       

So, whether you are ready to pay a higher down payment or want to use it to improve your credit report is up to you to decide.

  • Other Bad Credit Home Loan Requirements

There are several other banks, financial institutions, and mortgage companies that offer home loans ideal for buyers who have a lower credit rating, high DTI ratios, lack of income proof, or who had a credit event such as bankruptcy, foreclosure, late payments or credit card settlement. They may not qualify for conventional loan products, but have a good chance of getting approved by mortgage agencies specializing in bad credit loans.

For such type of mortgage loans, the credit score requirement will vary based on the loan amount, DTI ratio, and necessary documents available with the buyer.

For instance, if the home buyer is able to provide full documentation as required by the mortgage company, the score eligibility may be 580 and even less. If the buyer provides alternate documents such as 12-months personal bank statement, 1 year tax return and 1 year W-2, the minimum FICO score requirement may be 620 or less.

It also depends on the loan amount you are considering. A minimum of 500 scores is also acceptable if the loan amount is more than $1 million but less than $2 million, has cashed out of 65%, and purchase & L/T of 70%. If you have a debt-to-income ratio as high as 50%, the minimum score requirement may be 620. However, if the DTI ratio is 55% or more, the FICO requirement may be 680.  

The minimum credit score requirement varies from lender to lender and depends on several factors. Often, you may have to negotiate by paying a higher down payment or higher interest rates to secure a mortgage loan with bad credit. It is advisable to shop around to get the best offers.

 

Typical Mortgage Types & Minimum FICO Score Requirements

 As we discussed earlier, the minimum FICO score requirement varies depending on the type of mortgage loan you are planning to have. Here is a brief outline of different standard mortgage types and their minimum score requirements:

  • Conventional Loan: 620+
  • FHA Loan: 580+ (You can also get approved with a lower FICO, but by agreeing to pay a higher down payment)
  • USDA Loan: 640+ (No down payment loan requires a higher score)
  • FHA 203K Loan: 620+
  • VA Loan: 580 – 620+

To know your credit score or to apply for a home loan with bad credit, talk to an expert today.

How to Get Home Loan with Bad Credit?

Mistakes happen. Maybe you missed paying the monthly payments for your loan, or recently reviewed your credit report and discovered errors. Whatever it may be, you now have poor credit to deal with unless you take steps to improve the same.

Getting a bad credit home loan is not impossible. In fact, there are several lenders who have loan products especially for people with a pitiable FICO score. In such cases, however, the interest rate payable is much higher, or you have to pay a higher down payment amount.   

Thankfully, there are institutions such as FHA who have some of the lowest FICO score requirements, offering loans at 580 with only 3.5% down payment. For a higher down payment percentage of 10%, they approve loans with the score as low as 500. The Department of Veterans Affairs also has low credit score eligibility requirements, offering a little as 0% down payment on the property for military veterans.  

See below to know what options you have:

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While there are several new bad credit home loan programs out there in the market, you may also choose to wait and improve your score before actively participating in buying a new home. Discussed here are some excellent ways to improve your rating:

  • Pay All Your Credit Card Bills: Sounds challenging, but it is the easiest way to improve your score. Before you apply for a mortgage loan, make sure you pay all outstanding and current credit card bills for at least one year. Recent and on-time payment history holds more value to lenders than a three years old record.
  • Pay Your Utility Bills on Time: The objective is to showcase your financial stability to the credit bureaus and the potential lenders. For this, it is vital to strike a balance between your income and expenditure. Create a monthly budget based on what you earn. That will make more sense for you.
  • Save More for Down Payment: If you are able to pay at least 20% down, you can get instant approval for your home loan even if your score is wretched.

Today, there are better options than ever for home buyers with poor credit. For a majority of borrowers with lower FICO, FHA is the best bet. And if you are a military veteran or ready to pay a higher down payment, VA loan or Non-QM loans are good options for you.

Getting a Home Loan After Foreclosure

Many people who have gone through foreclosure often wonder whether they will be able to repurchase a home. Yes, your credit report can be badly hit after foreclosure, and you might have to wait long before you can apply for a home loan again. Having said that, there are options to get a home loan after foreclosure; thanks to the less stringent policies issued by the lenders today.

Discussed here are different options and waiting period to get a home loan after foreclosure:

  • To qualify for FHA bad credit home loans, you have to wait for three years from the time your foreclosure case ended.
  • For Fannie Mae/Freddie Mac loan, you have to wait for seven years after a foreclosure before you can get another loan. However, the waiting time can be shortened to three years if you fulfill the following requirements:
  • Provide in writing that the foreclosure was a result of unexpected or adverse situations
  • Show that the new loan will be used either to buy your personal residence or for limited cash-out refinance. It cannot be used to buy an investment property or second home
  • Highlight that the maximum LTV (loan-to-value) ratio of the new loan is 90% or what is listed in their eligibility matrix, whichever is higher
  • For a conventional home loan, the waiting period may vary from 2 – 8 years, depending on the percentage of down payment or a higher interest rate
  • For VA loans after foreclosure, the waiting time is two years

Buying a Home After Bankruptcy

To be declared as bankrupt isn’t a death sentence. You still stand the chance of getting a mortgage loan to buy your new home. Follow the below steps:

  • Discharge your bankruptcy, which releases your liability from specific types of debts, and prohibits the lenders to take any collection action against you on the discharged debts.
  • Rebuild your credit as discussed in the previous sections of this article
  • Wait for a certain time span as required depending on the type of loan you wish to apply for

As your creditworthiness improves over time, you can achieve your dream of buying a new home by getting the best loan offers.

Contact an expert today to help you get to buy a new home with bad credit.

   

Mortgage Pre-Approval Calculator – A Complete Guide

October 5, 2018 By Tyler Plack Leave a Comment

Whatever it may be, one thing is true that for any big decision, being informed gives you the power to be more confident to take a decision. A mortgage pre-approval calculator provides you an in-depth picture of your financial condition, and you feel more confident because it will also help determine what kind of mortgage you are eligible for.

 

What is Mortgage Pre-Approval?

Mortgage pre-approval is the process of evaluating your creditworthiness, how much you can mortgage, and what type of mortgage you will be able to get. In the pre-approval process, the lender will typically assess your financial report, i.e. your financial background, credit rating, and credit report. Based on this, the lender will provide an estimate of how much loan you are eligible for depending on your income and liabilities. By assessing your eligibility using a mortgage pre-approval calculator, you may also have an idea of what rate of interest you may receive.   

The mortgage process is a lengthy one, and getting pre-approved is an excellent way to speed up the process. A mortgage pre-approval letter indicates your sound creditworthiness, and that you are a serious buyer. Being pre-approved, you know how much house you can afford. This makes the home-buying process less cumbersome for you because you can choose from the homes that meet your eligibility criteria. It also puts you a step above other buyers who might be interested in the same property.  You are in a better place to negotiate with the property seller because the likelihood of closing the deal is higher if you are pre-approved.

Need mortgage pre-approval? Calculate what you qualify for first! Use a mortgage pre-approval calculator today.  

Mortgage Pre-Approval vs. Mortgage Pre-Qualification

Mortgage pre-approval and mortgage pre-qualification are often used interchangeably, though, they are two different terms.

Mortgage pre-qualification is just the initial step of having a loan. It does not dig too deep into your financial condition, and only considers factors such as your annual income, credit score, employment status, what kind of mortgage you are considering, interest rate and mortgage term, etc. Based on the assessment, the lender provides a rough estimate of how much loan you are likely to qualify for.

On the other hand, a mortgage pre-approval calculator evaluates your financial situation comprehensively, including your credit report, credit rating, proof of assets, tax records and other parameters. Based on the calculation, your financial credibility is determined for the type of mortgage you are looking for. Having a pre-approval letter means you are able and ready to make a purchase; however, a pre-qualification does not.

Getting pre-qualified does not guarantee pre-approval. Even if your credit score is good, but your financial documents do not support the same, you can still be turned down for a mortgage.  

 

How to Use a Mortgage Pre-Approval Calculator?

The pre-approval calculator can provide you with an idea of what to expect when you are planning to get a mortgage. Different lenders use different types of pre-approval calculators, but they commonly include the following parameters:

  • Your annual income
  • Annual income before taxes
  • Other income sources if any
  • The mortgage term you are considering
  • The rate of interest for your mortgage type
  • Credit score range
  • Your expenses – car loan EMI, credit card, other loans
  • Details of bankruptcy or foreclosure if any
  • Number of dependants

Based on the above parameters, the calculator will derive an approximate loan amount. Some lenders also provide an estimate of monthly repayments and total interest amount payable.

Here, it is essential to understand certain things. Firstly, different types of mortgages have varying Debt-to-Income (DTI) prerequisites. For instance, standard home loans have DTI regulations different from that issued by the Federal Housing Administration (FHA). The estimated loan amount that the mortgage pre-approval calculator provides will vary depending on the DTI requirements of the type of loan you are considering.

Secondly, a smarter way is NOT to borrow 100% of what the lender offers. Several lenders provide a higher loan amount in addition to the estimated amount. This ‘maximum’ amount is based on the ‘absolute most’ that your finances can afford. If anything happens unexpectedly – say you lose employment or have a massive medical bill to pay – it might turn out difficult to repay the loan.  

 

Benefits of Mortgage Pre-Approval Calculator

Need pre-approval to secure a home loan? Let a mortgage pre-approval calculator determine your financial credibility, and what you can afford. Learn more.

As a home buyer, you can enjoy several benefits of using a pre-approval calculator before you get into the talking terms with the lenders. Here are some of the advantages:

  • Mortgage Pre-approval: If you are planning to buy a new home, a pre-approval calculator can help speed up the process by evaluating your creditworthiness and debt-to-income ratio. Simply fill up the important fields, and the calculator will provide you with an estimated mortgage amount, monthly repayments, etc. This way you are being pre-approved for the mortgage, i.e. the lender ensures you are a qualified home purchaser. Having pre-approval can make the mortgage process hassle-free and quick in most cases.
  • Know How Much You Can Afford: One of the most significant benefits is that you can know how much house you can afford. A pre-approval calculator tells you an approximate amount you can borrow. So, you will know your budget precisely. There are many home buyers who waste time considering properties for which they will never get approval. However, if you are pre-approved, you know what fits into your budget and how much you can afford.
  • Negotiate Better: When you have a pre-approval letter from your lender, it gives you an edge over other property buyers because the likability of closing the deal is higher with you. Pre-approval assures you are a serious buyer and is financially stable to aid the buying process. You will have better offers, while you will be in a better position to negotiate harder with the seller or real estate agent. A seller is likely to accept your offer because they know it is a sure thing. Thus, your odds of buying a home that you want would be greater.     

Can I Get Mortgage Pre-Approval with Bad Credit?

Can I get mortgage pre-approval with bad credit – this is one question that many home buyers are worried of.

To be honest, if your credit rating is poor, your likelihood of getting pre-approved is slimmer. You might even find it difficult to qualify for FHA loan pre-approval if the credit score is below 500. But bad credit score is not the only reason that can prevent you from getting mortgage pre-approval. In fact, there are several lenders who offer pre-approved mortgage even where the credit rating is bad.

In such cases, a mortgage pre-approval calculator will fetch your credit report and offer an estimated loan amount with higher rates of interest than normal. You may have to explain your poor credit rating, but that is fine if you get pre-approval for a home loan. However, it takes longer to get pre-approved if you have bad credit. Typically, the waiting period may be somewhere between 60 – 90 days. And in the meantime, if your credit score improves (courtesy certain measures you take to improve your credit report), you can negotiate with the lender to have lower interest rates.       

The bottom line is – you are still eligible to get pre-approved for a mortgage even if you have a bad credit score. However, be ready to pay higher interest rates. But that is good until you are able to achieve your dream of buying a new home.  

 

Will Mortgage Pre-Approval Hurt My Credit?

You might be happy declared as creditworthy by pre-approval calculator, but do you know what impact it can have on your credit report?

When you seek mortgage pre-approval, the lender will pull your credit report to evaluate your financial stability and whether you are worthy of paying off a mortgage. This is called “hard inquiry.” And a hard inquiry can show up on your credit report.

While you might consider it something troublesome, there is good news for home buyers. Major credit bureaus understand the importance of comparison shopping when you plan to get a mortgage for your new home. Home buyers may compare interest rates and other factors from different lenders when securing a home loan. Every lender will evaluate your credit to pre-approve. That may ding your credit report. But in such cases, often the credit bureaus leave a certain amount of flexibility for the homebuyers. After all, not all hard inquiries mean you have a poor financial background or there is something to worry about.   

 

Conclusion

If you are planning for the big investment – buying a new home – it is ideal to first determine what you can afford and how much you can pay off. A mortgage pre-approval calculator is your best bet to have a win-win situation, both in securing a home loan that fits your budget and also negotiating with the seller to have the best buy. Speed up the mortgage process with getting pre-approval today.    

Important Tips: Dos & Don’ts for the First Time Home Buyers in Maryland

September 26, 2018 By Tyler Plack 2 Comments

Your home is one of your most prized possessions. For the first time home buyers in Maryland, this article can prove to be very informative and useful. If you are one of the first time buyers, then there are certain important aspects which you need to take care of. The fact of the matter is that your home is the most precious asset of yours. You must have dreamt of having a dream home for a long time and did all you could do to get hold of the required fund. Now that you are ready to get one, you need to be sure that you have taken the right decision and have made every single penny of your worth.

What do the First Time Home Buyers need to know?

As someone who is looking to buy a home for the first time in Maryland Region, there are certain important aspects which you need to take into consideration. Here are a couple of useful tips which you might find to be useful.

  • Buyer’s Agent: Most of the times, people are reluctant to opt for a buyer’s agent. One of the reasons is their lack of understanding of how an agent operates in the entire process. An agent plays a significant role in the whole episode. He has the experience and is aware of the ins and outs of the entire fraternity. It is an agent who would help you to narrow your search down based on your budget, locality, and other preferences. Once you deploy an agent, he would be obliged to represent you legally.

One of the most important reasons as to why you should opt for an agent is because he would make this entire process hassle-free for you. It would be his responsibility to negotiate the contracts and facilitate the entire process of home buying for you. When it comes to buying a new home, it involves lots of steps and processes like arranging for a packer and mover, fixing an attorney, arranging for the inspectors and others. It is your agent, who would take care of the entire arrangement for you. An agent is indispensable for to this entire process.

  • Mortgage Professional: When it comes to acquiring a new home, it can be a daunting and stressful endeavor. However, things can turn out to be a bit easy for you if you have an experienced and competent mortgage broker by your side. The main responsibility of the broker would be to assist you with different types of financial matters, especially the one pertaining to loans. He would educate and guide you about the different kinds of loans to can have access to. These are very vital and pertinent information to have when you are planning to buy a new home. Once you are armed with all the required information, the thing would turn out to be far easier for you. 

Ideally, it is your agent who should arrange for a reputed and experienced mortgage broker for you. One of the primary duties of the broker is to investigate your financial background and ensure that you are looking for a new property within a price range that would suit you. There is another important reason as to why a mortgage broker is important. You can acquire a pre-approval letter from him. This letter would help you to avoid disqualifications at the last minute.

  • Find your Dream Home: it sounds easy to go out and find your dream home. However, there are a couple of blunders which you are likely to commit to being a first-time buyer. With the image of your dream home in your mind, you would think of finding the “perfect home”. However, as a first-timer, you must understand that finding a “perfect home” can be very difficult. This is particularly true if you have a budget constraint.

There isn’t any checklist available which would help you in finding your dream home. It’s all about your imagination and vision. Besides, you should also have the ability to improvise and make use of the property to good effect.

  • Go for a Contract: This is another reason as to why it is absolutely essential to have a buyer’s agent, especially if you are one of the first time home buyers in Maryland. The agent can run a thorough search of the market, particularly in the region where your home is located at. This means that they would carry out extensive research on the existing market price of the home in that area.  

With this information under your belt, you can easily decide on the amount you wish to offer for the property. While buying a home, it is very important to have good negotiating skills. In case of certain new buyers, they expect to get a discount of a certain percentage out of the quoted price, which is not always realistic. If the price of the property is reasonable in terms of the existing market price, in that case, there are virtually no chances of negotiation.

  • Hiring an Inspector: When it comes to buying a new home, a full and thorough inspection needs to be carried out. Inspection at times can be quite expensive; however, it is worthwhile spending that amount of money.  A property can look to be very attractive and appealing at the first go; however, there can be numerous underlying issues which might cause you serious concerns in the days to come. In order to avoid such unnecessary stress, it is absolutely imperative that you carried out a proper inspection before finalizing the deal.

If any serious issues surface during the inspection, then the agent of the buyer can push the seller to fix them before closing the deal. If the issues are complex and too much time to consume to be fixed quickly, in that case, you should consider yourself to be lucky. Being a new buyer, it can be difficult for you to get hold of an experienced and reputed inspector. Your agent would help you find one.

Arranging Finance for the First Time Home Buyers In Maryland

While purchasing a new home, there can be numerous obstacles one may have to encounter, especially the new buyers. If you are applying for a mortgage in Maryland, then there are certain factors which you need to be aware of. Basically, there are four of them.

  • Collateral: In case of purchasing a home for the first time, there isn’t too much collateral to be worried about. Typically, the price of the home would be on par with the market value; therefore, there is very little collateral one needs to deal with. It is the lender who has an increased risk in the entire transaction.
  • Capacity: This basically signifies the ability of the buyer to repay the mortgage. Determining the debt-income ratio is the first step in this process. All the monthly debts will be taken into consideration and they will be divided by the monthly income of the borrower in order to determine the debt to income ratio. The job history of the borrower is also looked at while determining the capacity. It is seen whether the buyer is a frequent hoper from one job to another or not. If he is, in that case, he could be a high-risk candidate.
  • Capital: The liquid asset of the borrower is also taken into consideration. Various factors like stocks, I.R.A, bonds, savings and checking account balances are being looked into while determining the capital. The sum total of these accounts is known as reserves. In case of standard mortgage lending, six months reserve has become a standard.
  • Character: Prior mortgage history plays a major role in determining your chances of obtaining one. Since you are a first-time buyer, you are a spot of bother as there are no background data to check with. In that case, it is your rental history that would be taken into account. It is your credit history that would be extensively scrutinized in order to determine your character.

What to Look for?

If you are buying for the first time, in that case, it can be a bit tricky for you to figure out the ideal home for you in Maryland, as there are so many different options available. However, if you have a clear picture in your mind as to how your dream home should look like and what the ideal location should be, in that case, things can be a bit easier for you.

  • Location: This is the most important aspect which you need to take into consideration while looking for a new home. What sort of location are you looking for? Do you prefer a buzzing and happening neighborhood or would you like it to be quiet and peaceful? It all depends on your taste and preferences. Besides, you should also take into consideration whether you have easy and quick access to all the basic services.
  • Size: In terms of the size of the property, it is all about your budget and taste. If you are looking for a relatively bigger house, then you should have enough budgets to fit into it. On the other hand, if you feel that an average sized house would suffice in that case you need to make sure that it is big enough to accommodate you and your family.
  • Price: You need to be very careful while finalizing the deal. Make sure that you aren’t paying more than what it deserves.  Therefore, it is very important to have a clear idea and understanding of the existing market price in that locality. Your agent can play an important role in this regard to help you find the best rate.
  • Condition: Even if a house meets the aforementioned criterion, it is not enough to put money on it. You would be investing a huge amount of money and in some cases; it could be your life time-saving. Therefore make sure that the property is in perfect shape in terms of its conditions and you would have to invest virtually nothing on the renovation. The best way to assess the condition of the house is by engaging a civil engineer, who would instantly spot any defects if there are any. 
  • Legalities: This is another significant aspect which needs to be taken care of. When it comes to purchasing a new house, there are various legal formalities and obligations that need to be met. Therefore, it is very important to make sure that you have an attorney who specializes in real estate dealings and would facilitate the process of the transaction for you.

5 Important Tips for First Time Home Buyers In Maryland

If you are searching for a new house in Maryland and this is your first time, then here are a couple of useful tips for you, which you might find handy.

  • Think about the Future: If you are looking for a new home which would match your taste and preferences, in that case, it is absolutely essential for you to take into consideration your future.  Remember, it is not only a financial investment, but at the same time a commitment of time as well. Ideally, you would want to spend the rest of your life in your house for years to come.

At present, you might have a small family, which can encourage you to go to a cottage or something small and cute. However, in the future, if you have kids, in that case, it is not going to suffice. You must have enough provision to accommodate additional members of your family you are most likely to join in.

Your present lifestyle and how it might change in the days to come is an important consideration that needs to be made while purchasing a new house. Always remember that it is a long-term investment, therefore you need to be very careful and the same time wise while selecting one.

  • Realtor: Selecting a good and an experienced realtor is perhaps the most crucial step in the entire process.  A reputed and experienced real estate agent can make things fairly easy for you. These agents are the professionals who know what exactly you are looking for in terms of location, design, and budget.

The real estate agents are particularly important in the case of first-time purchasers. Some of them offer special packages for the first timers by offering special discounts on down payments, special mortgage programs, and tax credits. Some of them even offer cash back rebate to the buyers.

  • The Mortgage Type: What kind of price range you can afford depends on various factors like your debt to income ratio, your credit score. You need to know your budget from the perspective of the lender so that you are not wasting your time on properties which do not fit the lender’s criteria as well as your budget. This is where a seasoned realtor comes into the picture. He can assist you with the process of mortgage pre-qualification, which would make you ready to place your offer on the property and at the same time would enable you to get hold of a loan and close the deal successfully.

There are certain real estate markets where an offer would not even be considered by the seller if the buyer doesn’t have a pre-qualified certificate which is to be provided by a lender. A realtor, who is usually affiliated with different lenders, can help you acquire a pre-qualifier. Moreover, you will be also in a position to negotiate in the selling price of the property.

  • Other Expenses: There are other expenses which need to be taken into consideration along with the monthly payment for your home. As a first time buyer, you might not have thought through it. While preparing the budget, it is important to prepare a list of all the different types of expenses which you might have to incur in the form of repairing and maintenance.

For instance, you might have to make sure that your yard is maintained as per the standards set by the homeowners association. This would mean that you will have to invest a considerable amount of money on lawn maintenance. Besides, there are other recurring expenses like the gas bill, electricity bill and others should also be taken into consideration.

  • Resale Value: While purchasing a new house it is always very important to consider the resale value of the property. There are numerous factors that determine your property’s resale value, like the location, age of the building, its current price and etc.

This is where an experienced realtor comes into the picture. He would be well versed with the area’s resale value and would suggest you the best deal. It is very important that you considered this particular aspect carefully, as it would ensure that you have a fair amount of value to back you up.

Mistakes you must avoid

As a new buyer, you are likely to make some mistakes while deciding on your new home in Maryland. The fact that it is your first time as a buyer, you could allow your impulse to get the better of your senses. You must be very careful while making your choices. There are a couple of common mistakes which you are likely to make as a new buyer. Here are some of them which you avoid.

  • Impulsive Buying: While buying a new house, there are chances that your excitement and greed overpower you. This is what triggers impulsive buying, which can be quite fatal in certain cases. You must make sure that you didn’t take a decision by having a look at one property. You can get attracted by setting your eyes on it, but you never know, there could be far better options that are waiting for you!

Do not ever get tempted by the pictures. This is one big mistake widespread with the new buyers. Before deciding, make sure that you had a physically been to the property and carried out a thorough investigation. There is no problem in going with the property you have set eyes on; however, it is important to ensure that you have made the right choice. This can only be done by following certain steps which have already been mentioned.

  • Being too choosy: You must realize that there is no end to it!!! The more you look, the more you would get confused as there are so many options available to you. Like impulsive buying, being too choosy is equally harmful as you might end up taking a wrong decision. In order to pick the right house, you must have a clear picture in your mind as to what exactly you are looking for. 
  • Exceeding your Budget: This is another common mistake made by the new buyers. You get so mesmerized by a property that you might not hesitate to go beyond your budget. You might be able to arrange for the required funds and eventually acquire the property; however, it is important for you to remember that the extra burden of loan which you had to arrange for in order to get hold of the required funds can bring down severe financial crisis on you in the days to come. Therefore, it is essential that you stuck to your budget, a slight deviation is always welcome; however, it shouldn’t be alarming.

As a new buyer in Maryland, you need to be very cautious and cannot afford to make any mistakes. Thankfully, there are resources available to you which would help to facilitate the entire process, starting from a search of a new home to finalizing the deal. All you need to do is to follow the set path and use your common sense to make the right decision.

Being a first-time buyer, you are likely to face many challenges, but there is nothing to worry about, as you have some of the best service providers to assist you in every possible manner. So, if you are one of the first time home buyers in Maryland, all you need to do is to allow the experts to take charges and as far as you are concerned, you just need to arrange for funds and take the final call.

First-Time Home Buyer Programs in Maryland

September 21, 2018 By Tyler Plack Leave a Comment

Purchasing your first home is daunting, intimidating, and one of the most important decisions you will make in your life. It is a considerable investment, and you need to have an in-depth knowledge of different types of loans and assistance available. Maryland offers a plethora of options for the first-time home buyers to choose from. Here are all the Maryland first-time home buyer programs that you can take advantage to buy your first home.

 

Maryland Mortgage Program

The Maryland Department of Housing and Community Development offers a more accessible and genial mortgage program for all the first-time home buyers. The program offers a 30-year fixed rate home loan to buyers who have not owned any residential property for the past three years. The program is created explicitly for struggling buyers and offer numerous down payments and closing cost assistance to make the entire process accessible and more reachable. It even includes non-repayable grants which are great news for all the amateur home buyers out there. Some buyers can also avail rate discounts and tax credits, but it depends on the lender.

The Maryland mortgage loan requirements are quite lenient. Your income needs to be under the required guidelines, which is often different for different locations and house sizes. The property needs to be your primary residence, and all your liquid assets need not exceed the limit of 20% of your home’s purchase price. While the program is mostly for first-time home buyers, a repeat buyer may be eligible If the property is located in an economically distressed target area and he meets certain income limits.

 

Maryland Mortgage Premier

One of the first individual programs under the Maryland Mortgage Program, Maryland Mortgage Premier, is best known for low mortgage rates and significant assistance with down payment and the closing cost. It offers a 30-year fixed rate mortgage with competitive interest rates to all the first-time home buyers in Maryland. Moreover, the buyers can avail a no-interest deferred loan up to $5000 for down payment and closing cost assistance.

One of the best things about Maryland mortgage premier is that you do not have to repay the loan until and unless you make the final mortgage, sell your home, or refinance. Although the income and asset limits are quite strict, it is perfect for homebuyers who cannot afford a reasonable down payment because of limited income and saving.

 

Maryland Homefront Mortgage

Similar to the federal VA loans, Maryland Homefront mortgage is specifically availed to servicemen and military veterans. It offers a significant low-interest rate discount of 0.25% for a 30-year, fixed rate Maryland mortgage program. Only current and former military members, spouses, and other beneficiaries are eligible to take this loan. It includes all the servicemen in the reserves and national guards as well as any who have been honorably discharged. Although you need to have liquid assets lower than 20% if the purchase price and the income in accordance with the limit, the loan requirements are quite lenient and flexible.

Get pre-approved today to enjoy its benefits. 

 

You’ve Earned It Mortgage

For all the first-time home buyers out there, yes, it is the name of a mortgage. Great for homeowners still struggling g to pay their outstanding student loan, You’ve Earned It mortgage offers substantial low mortgage rates and down payment assistance. The loan offers an interest rate discount of 0.2% along with a $5000 down payment assistance for your Maryland first-time home buyer programs. You can even combine its benefits with the Maryland mortgage tax credit program to save some more money. It can help your avail tax savings up to $2,000 annually.

To qualify for You’ve Earned It mortgage, you need to have student debt of at least $25,000. Other requirements include the loan to be strictly in the borrower’s name, and the home to be in one of the sustainable communities. If you do not know what sustainable communities are, they are regions where the government, communities, and businesses coordinate investment for overall sustainable growth. You will have to choose your home from this sustainable community to be approved.

 

Maryland Preferred Rate Mortgage

Maryland Preferred rate mortgage offers one of the lowest possible interest rates for homebuyers who are looking for an affordable home loan. It is specially created for applicants who lack the savings that one needs for high-interest loans but can afford the day-to-day costs of owning a home. The program allows you to combine it with the Maryland Home Credit tax break and save you some money. Unfortunately, you cannot combine it with any down payment or closing cost assistance. The loan requirements are similar to all the other home loans under the Maryland first-time home buyer programs.

 

Maryland SmartBuy

For people who are unable to buy their dream house because of outstanding student loans, Maryland Smart Buy is the right choice. The program allows applicants with more than $1000 of student loans to purchase rehabilitated home under the state of Maryland. Although the program requires you to repay all the outstanding student loan by closing, you also get to avail 15% of the home’s purchase price for the student loan repayment purposes. Maryland SmartBuy also offers low-interest rates and can easily be combined with other upfront financial support programs under Maryland Mortgage programs. Know more to get approved today!

 

4% Grant Assist

The 4% Grant assist allows you to receive 4% of the mortgage amount to put in as the down payment or even use it for the closing cost. Home buyers who are getting the advantage any of the programs mentioned above are eligible to enjoy this grant. Not only does this grant assist homeowners in saving money upfront but also helps them contribute to their savings amount for the future. As this fund qualifies as a grant, you do not have to repay the amount. But availing this program will constrict you from utilizing payment assistance grants from any other programmes.

 

Maryland HomeCredit

Maryland offers HomeCredit program to make homeownership ever more accessible and affordable. This program allows borrowers to receive an annual federal tax reduction or tax credit which is equivalent to 25% of your mortgage interest and up to $2,000 a year. Homeowners can claim this credit every year and save tens of thousands of dollars of their loan amount.  You do need to pay a standard fee to the state and the lender, but the benefits are more than worth it.

 

Conclusion

Before you start your home buying process, make sure you analyze and understand all your options before choosing the one that best suits your needs. Hire an expert and get professional help. Know more to get intricate information on Maryland first-time home buyer programs.

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