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Will The Presidential Election Impact the Home Buying Market?

It’s no surprise that people within the real estate industry are wondering what could potentially happen in regards to home prices now that Donald Trump is the President elect. After all, there are a lot of unknowns surrounding his presidency. As both a real estate investor and a President, Trump could have a very big impact on the real estate market.

Large Pent Up Demand For Homes

Not long ago, Trump provided an example for the poor economy by bringing up the fact that American home ownership was at 62.9 percent in the second quarter of 2016 – the lowest rate in 51 years. However, this stat may not actually be a bad thing, as a number of experts have pointed out. Millennials make up the largest demographic in the United States–and many of them have either not yet reached the age for home ownership, or they currently reside in multi-family housing as they settle into careers and families.

In the future, as millennials grow their savings and have families, these households are more likely to move from rental properties to homes. Assuming no major economic woes occur in the next four years, there are millions of millennials that will be looking to purchase homes.

How Trump Could Affect The Housing Market

One of Trump’s priorities as President is to cut taxes and spend on infrastructure. If this is something that he ends up doing, then the short-term prospects of the housing market should be good. If his transportation and infrastructure plan come to fruition and work out as planned, it should create jobs as well as increase wages for workers across America. This should, in turn, lead to greater demand in the housing market.

However, the demand for housing is ultimately reliant on consumer confidence.  Those who do not have confidence in Trump’s ability to help the economy may not want to risk an investment in a new home, where as those that do will believe that investing in property now could lead to a profit later.

Rising Interest Rates

Mortgage rates could have a big impact as well. Rates have been rising since the election and many investors have begun pulling money out of U.S. Treasury Bonds and investing them into Japanese and European bonds as a reaction to the uncertainty of a Trump presidency. The long-term state of mortgage rates will depend heavily on the pressure that Trump puts on the Federal Reserve.

Impact Can be Difficult to Determine This Early

It’s difficult to pinpoint how Trump’s presidency will affect home prices–it’s simply too early to determine whether his policies will be a boon or a bust for the economy, or somewhere in between. One thing is for certain, the home buying market today remains extremely strong and interest rates remain very low.

For more information concerning real estate or home mortgages, be sure to contact Alex Echeandia today.

Will Interest Rates Rise in 2017?

Mortgage Interest Rates in Maryland, Virginia, & Washington, DC

One of the things that you’re going to want to look into before you make the decision to take out a mortgage and buy a home is what the interest rates are going to be like in the foreseeable future. Knowing whether interest rates may go up or down can have an effect on whether you decide to buy a home now or in the future – or whether you decide to go with a fixed interest rate or a variable interest rate.

Will Interest Rates Go Up?

At the moment, mortgage rates are still favorable. This means that if they are expected to go up, you’ll probably want to try and lock into that favorable interest rate, especially if you’re planning on getting a fixed-rate mortgage. There are a number of factors that play into where mortgage rates may be in the future. A good way to predict future mortgage rates is by looking at how rates trended this year as well.

In the beginning of 2016, interest rates stuck around the four percent mark. Towards the  middle of the summer, rates fell by half a percent. The fear concerning the economy in the wake of Brexit as well as this year’s election caused the rates to stay where they were in the summer. The Fed also decided to delay its decision to increase short-term interest rates because economic growth had yet to justify an increase.

There’s also a bit of uncertainty surrounding the results of the election. In fact, many people fear that his policy proposals will have a negative impact on the country’s economy, which actually resulted in interest rates having their worst day in three years by reaching a seven month high following the end of the presidential election. A particular worry among investors is that more government spending could hurt mortgage rates.

Overall, many experts believe that mortgage rates will rise somewhat over the course of 2017. It’s almost impossible that they don’t just because of the fact that interest rates are historically low at the moment. Many experts believe that 15-year rates will be in the high three percent range, while 30-year rates will be in the low to mid four percent range. This is, of course, assuming that nothing drastic happens with the economy over the course of the next year.

Get Pre-Approved for a Mortgage in Marlyand Today

Interest rates are most likely going to go up throughout the next year, but only because of how low interest rates are at the moment. The increase in interest rates shouldn’t be too dramatic according to most experts – although there are a number of different factors at play. For more professional advice concerning interest rates or for advice in regards to mortgages in general, be sure to contact Alex Echeandia today.

 

Winter Home Buying Tips

The peak home buying and selling season tends to be in the summer and spring. This time of the year generally boasts nicer weather and is less busy for both buyers and sellers since there are no major holidays to contend with. However, this doesn’t mean that you shouldn’t shop around for a new home in the winter. In fact, because the winter is an off season, it could actually be beneficial. You won’t have as much competition and sellers may be more anxious to sell, which means they could be more willing to negotiate. If you plan on buying a home in the winter, then keep the following tips in mind:

Pay attention to the home’s heating capabilities

The winter is the perfect time to find out how a home holds up to the cold weather. Does the heating system seem to be working well? Are there cold spots in the home? Do you feel drafts near the windows? These issues can not only make the home less comfortable, but could result in higher heating bills.

Find out why the owner is selling

Because the peak selling time is generally in the summer and spring, find out why the owner is selling in the winter. There’s a good chance that they have to sell quickly, whether it’s because they need the money or they are relocating for a new job. Knowing why they are selling could benefit you when it comes to negotiating the price.

Ask for a home warranty

It can be a little more challenging to get a thorough inspection done on a home during the winter. To protect yourself from investing in a house that has costly problems that the inspection failed to uncover, ask the owner for a home warranty. A home warranty will cost between $300 and $500 and will cover the HVAC system, electrical system, plumbing system and some appliances.

Get pre-approved for a mortgage

Like many other people, odds are that you are keeping relatively busy during the winter with the holidays. The last thing you want to do is waste your time, which means you won’t want to look at homes that it turns out you can’t afford. Make sure that you get pre-approved for a mortgage before you begin looking. This way, you’ll know exactly how much you can afford and you won’t waste your time looking at homes that are outside of your price range.

Having a mortgage pre-approval also shows sellers that you are serious in your intent and that you are ready to commit, which can help give you a leg up on any other buyers that may be interested.

Negotiate with your lender

Sellers aren’t the only ones willing to negotiate. Lenders may be more willing to reduce your closing costs because of the fact that it’s a slow time of the year.

Be sure to keep these winter home buying tips in mind and contact Alex Echeandia with Eagle Creek Mortgage for more information about home mortgages today.

 

FHA Loan Alternatives

FHA Loan Alternatives

When it comes to taking out a mortgage, there are numerous types of loans available. One of the best types is the FHA loan, which is a mortgage loan that is insured by the Federal Housing Administration. Because the loan is insured, lenders are more likely to offer better terms, like lower interest rates and smaller down payment requirements. The only catch is that the borrower has to pay mortgage insurance.

However, the FHA loan is no longer just the only game in town. There are a number of solid alternatives to FHA loans worth exploring. Lenders like Fannie Mae and Freddie Mac now also have loan programs that rival the FHA loans and other government backed loans (such as VA loans) in regards to terms. In fact, some of their mortgages even have more flexible guidelines than FHA loans.

Why Choose Alternative Loans

One of the drawbacks of the FHA loan, besides the need to pay mortgage insurance, is the the fee that’s rolled into the loan. This fee can be upwards of four percent of the total loan. Conventional loans do not tack such a fee onto the loan.

Types of Alternative Loans

The following are a few of the alternative loans that you should consider that have similarly flexible guidelines as the FHA loan but don’t charge a rolled-in fee:

  • Fannie Mae HomeReady Mortgage – This mortgage program allows borrowers to put down as little as three percent for their down payment. If you have access to a personal gift or down payment grant, you can use it to cover your entire down payment and all of your closing costs. But one of the biggest advantages of the HomeReady loan is that you can use the entire household income for your mortgage approval – typically, you’re only allowed to put down the income of the borrower listed on the application.
  • Fannie Mae Conventional 97 – Like the HomeReady loan, borrowers are only required to put down a three percent down payment with a Conventional 97 loan. Borrowers are also not required to pre-purchase home buyer education. The big difference is that the Conventional 97 loan is aimed more at borrowers who don’t need all of the additional flexibility that a HomeReady loan offers. The qualification for either loan is determined by the lender and not the borrower.
  • Freddie Mac Home Possible Advantage – This loan is more similar to the Fannie Mae Conventional 97 loan. It too only requires a three percent down payment from its borrowers. The biggest difference between the two is that Freddie Mac’s program doesn’t require as much mortgage insurance. For example, based on a $250,000 loan, the Home Possible Advantage loan requires about $40 less per month in mortgage insurance than the Conventional 97 loan.

Discuss your Options with a Licensed Mortgage Lender in Maryland Today

These are a few conventional loan alternatives to the FHA loans that you may want to consider. For additional information and advice regarding both conventional loans and government-backed loans, be sure to contact Alex Echeandia today.

 

Can I Use a Cosigner on a Mortgage Loan?

Can I Use a Cosigner on a Mortgage Loan?

Not everybody is in the perfect position to qualify for a mortgage. If your credit isn’t in the best shape or you have other factors that are counting against you but are at a place in your life where you want to become a homeowner, one option you have is to use a cosigner in order to get approved for a mortgage loan.

What is a cosigner?

A cosigner is a second individual that puts their name on your mortgage. Basically, they are staking their credit reputation on your ability to pay your debt. If you do not pay your mortgage payments and you default, then the cosigner will be held responsible for paying what’s owed.

Cosigners are more commonly used for smaller purchases, such as for vehicles, but they can be used for homes mortgage loans as well. One of the reasons that they weren’t used as often in the past was because qualifying for a mortgage was a little easier before the housing market fell off during the economic downturn.

Why use a cosigner?

There are a number of reasons why you might want to consider having a cosigner if one is available to you. The following are a few situations in which a cosigner can be beneficial:

  • If you’re of a younger age and you’ve only just begun to establish your credit but are financially capable of purchasing a house and paying your monthly mortgage payments.
  • If you’ve recently experienced a financial setback but are back on your feet and shouldn’t have problems paying a mortgage. For example, you recently went through a stretch of unemployment or you went through a divorce in which your spouse ruined your credit.

In some cases, you may want to use a cosigner even if you are able to qualify for a mortgage loan. This is because the use of a cosigner can help you obtain better mortgage terms, such as a lower interest rate, a higher loan amount or a smaller down payment.

Just keep in mind that if your credit is extremely poor, then a cosigner may not help. Lenders will often make their decision based on who has the poorest credit score of the two – the primary borrower or the cosigner. This means that if you have a foreclosure or a bankruptcy on your record, having a cosigner might not help.

Who to use as cosigners?

Most borrowers will look to their family to act as cosigners, such as their parents – especially younger borrowers who are just starting out. Sometimes, adult children will cosign for their parents if their parents have just retired. You should always make sure to use a cosigner that you can trust and vice versa.

Be careful about using friends as cosigners as you can end up ruining your relationship if you default on your loan.

Apply for a Mortgage Loan in Maryland Today!

For more information about cosigners or applying and qualifying for home mortgage loans in general, be sure to contact Alex Echeandia at Eagle Creek Mortgage today.

Tips for Home Buying in a Seller”s Market

Buying a house in a seller’s market can be a real challenge. A seller’s market means that you’re at a disadvantage, leverage-wise. It means that there is a high demand for real estate in the area that you are looking, but that there are a limited amount of sellers. This, in turn, means that the seller has the upper hand – they are more likely to have multiple buyers bidding on their property. You’ll have more competition and less of a chance to negotiate on the price.

However, this doesn’t mean you have to overpay or that you’re never going to find what you’re looking for. The following are a few tips to help you buy a home in a seller’s market:

Get pre-approved for a mortgage before you go house hunting

When you get a mortgage pre-approval, you’ll know exactly how much you can afford. When you make a bid for a home, the seller will consider you a much stronger candidate over any buyers who haven’t gotten a mortgage pre-approval because they know that you can back your bid. If you don’t get pre-approved for a mortgage, you may be in for a unpleasant surprise if you don’t qualify after you’ve made a bid – or you qualify but not for the amount that you bid.

To apply for pre-approval, click here.

Make a list of your needs and your wants

Be able to separate your needs from your wants. In a seller’s market, there’s a good chance that you’re going to have to make a compromise since it’s going to be difficult to find a house that has every single one of your needs and wants – if you do, you may end up getting in a bidding war. Be willing to sacrifice some of your wants.

Use a real estate agent

A real estate agent can be incredibly helpful in a seller’s market. This is because they have numerous connections within the area and will be able to not only help you find what you’re looking for as well as guide you in terms of whether certain houses are priced properly, but they’ll also be able to let you know as soon as new properties are put on the market, thereby giving you a head start over other buyers.

Be careful about getting into bidding wars

Always stick to your budget when you bid on a house. The last thing you want to do is get yourself into a bidding war and end up going way over your budget. Bidding wars are tough because you don’t want to lose – but in some cases, you may have to cut your losses and move on.

Sweeten the deal

If you’re competing with another buyer, there are ways to gain an advantage. For example, paying in cash, waiving mortgage or inspection contingencies or go without a seller-provided warranty.

Use these tips to navigate a seller’s market. For financial advice concerning the purchase of a home, such as home mortgage advice, be sure to contact Alex Echeandia today.

VA Loan Misconceptions

For American veterans, military members or their surviving spouses, the VA loan program is incredibly beneficial. It makes it easier for veterans and those that are currently serving to purchase property at extremely good terms, including low to no down payment and low interest rates. However, there are a few misconceptions about VA loans that may be preventing you from attempting to take out a VA loan.

The following are some of the VA loan misconceptions to watch out for:

You need to have perfect credit

This is nowhere near true. VA loans are way more flexible than traditional loans when it comes to the credit score required to qualify. Most lenders require a minimum FICO score of 620, which is considered a fair credit score that’s just below good. In order to receive the kind of terms that VA loans provide on a traditional loan, you’ve got to have very good to excellent credit.

VA loans take a long time to close

When the VA loan program first started out, this was somewhat true. However, it’s no longer the case. VA loans have become very efficient and VA appraisals tend to come back within ten days on average. For the most part, VA loans take just as long as traditional loans to close.

VA loans will cost more

Some people think that because of the low credit scores and low interest rates that they’ll be charged more for other aspects of the loan, such as the closing costs or the mortgage insurance. The VA actually limits what lenders can charge in closing costs, which takes care of that potential problem.

Then there’s the mortgage insurance – lenders typically require you to pay mortgage insurance if your down payment is less than 20 percent of the home’s cost. However, even the no-down payment VA loans don’t require mortgage insurance.

You won’t qualify if you’ve experienced bankruptcy or foreclosure

If you’ve had to file for bankruptcy in the past or have been foreclosed on in the past, then you probably think that there’s no way that you’ll be approved for a VA mortgage. This isn’t true. VA loans are very forgiving compared to other loan products – and a conventional mortgage only requires a three-year waiting period following a foreclosure and a two-year waiting period following a bankruptcy.

VA loan lenders only require you to wait two years after a foreclosure or a Chapter 7 bankruptcy before you can apply for a VA loan – and only 12 months following Chapter 13 bankruptcy as long as you can prove a history of on-time payments during that period.

VA loans lead to a higher foreclosure rate

The VA actually ensures that applicants can weather financial bumps and stay current on their mortgage. In fact, they have a foreclosure prevention team that reaches out to homeowners at the first signs of danger.

VA Mortgage Loans in Maryland

Avoid these misconceptions and be sure to contact Alex Echeandia today if you need information or advice about applying for a VA mortgage loan in Maryland, Virginia, or Washington, DC.

Does Refinancing Hurt My Credit Score?

Refinancing can be a good idea if your current mortgage is forcing you to pay a high interest rate. By refinancing your existing loan, you can take advantage of lower interest rates. However, before you jump at the chance to pay less in interest, you may want to consider the effect that it could have on your current credit score.

What is refinancing?

Refinancing is a process in which you take out a second mortgage that contains better terms than your first mortgage. You then use that second mortgage to completely pay off the first mortgage, leaving you with only the second loan to pay off. You can end up saving money by doing this.

Can refinancing hurt your credit score?

There are some cases in which refinancing your mortgage could end up doing a bit of damage to your credit score. This isn’t something you’ll want to take lightly, especially if you’ve worked hard to maintain a strong credit score. The following are some of the ways in which refinancing could potentially hurt your credit score:

Credit checks

When a lender checks your credit score, it appears on your credit report. The problem is that the more often your credit score is checked, the more of a negative impact it can have on your score. This can be an issue if you’re shopping around for different refinancing options in order to compare terms.

Whenever you apply for a loan of any kind, it results in a hard inquiry that lowers your score by a few points. Fortunately, to remedy this issue, FICO changed its scoring system a little bit to avoid penalizing you too harshly. If you submit all of your applications within a single 30 to 45-day period, it will treat all of these inquiries as a single credit pull, so it won’t have as big of an impact on your credit score.

Paying off your old loan

It’s good to have some debts on your credit report – as long as you are paying them off on time, of course. It allows for a long-standing payment history on a single debt.

However, if you pay off your old mortgage using a refinancing loan, you lose that established debt and you replace it with a newer debt that doesn’t have a steady payment history yet – this can end up being worse for your credit score.

Cash-out refinance

A cash-out refinance is when the loan is more than what’s needed to cover your original mortgage. The difference is then given to you in cash. Not only could you affect your credit score by paying off your older mortgage, but the larger loan balance could also increase your credit utilization ratio, which makes up 35 percent of your FICO credit score.

Refinancing your mortgage could end up affecting your credit score in a negative way. However, if the benefits outweigh these potential negatives, then it’s still probably worth doing. If you need professional refinancing advice, contact Alex Echeandia today.

 

Are Mortgage Interest Rates Expected to Rise or Fall?

There are a lot of things to consider when taking out a home mortgage loan. One of the most important elements of a mortgage is the interest rate, and whether you choose to take out a fixed-rate or a variable-rate loan. The current and future interest rates can have a big impact on what type of loan you choose and what you end up having to pay.

Fixed-Rate Loans

When you choose a fixed-rate loan, it means that the interest rate will stay the same throughout the duration of the loan. This can be both a good thing and a bad thing. Keep the following in mind about fixed-rate loans:

  • If the interest rates fall, your mortgage interest rate will stay the same. This means that you could end up paying above what the current interest rates are.
  • If the interest rates go up, your mortgage interest rate remains the same, which means you could actually be saving money since you’ll be paying less than what the current rates are.
  • You’ll always know how much your mortgage payment will be since the interest rate will always be the same.

Variable-Rate Loans

Unlike fixed-rate loans, variable-rate loans change according to what the current interest rate is. If interest rates drop, this is a good things since your mortgage payments will end up going down as well. However, if interest rates rise, you’ll end up having to pay more.

Not to mention that you’ll never know how much your mortgage payments will be since they will fluctuate, which can make it hard to budget.

Interest Rate Predictions

Because of the uncertainty over growth in Japan and Europe – specifically the recent vote by Britain to leave the European Union – the Federal Reserve is not likely to raise interest rates at any point during the rest of this year. In fact, the predicted diminished growth in Europe as a result of “Brexit” and the possibility of Japan entering a recession because of the high value of the Japanese Yen could actually cause interest rates to drop.

However, short-term interest rates, such as the bank prime rate, may be raised at least once by the end of 2017. This will be partly because of the start of upward wage pressure, which will cause inflation expectation to rise just a bit – something that will strengthen the case for slightly higher interest rates.

As far as fixed-rate mortgages go, it’s expected to remain low throughout next year, making it a good option for buyers who don’t feel comfortable with the fluctuation associated with a variable-rate mortgage. Fixed-rate mortgages are expected to stay around 3.5 percent through 2017 – and some fixed-rates may even drop a little bit lower.

Mortgage Lender in Maryland, Virginia & Washington, DC

Interest rates look like they’ll hold steady for the next year or so, although there may be a slight bump next year in correlation to potential wage increases and inflation. For more information about interest rates or mortgages in general, be sure to contact Alex Echeandia today.

 

Do I qualify for a VA loan?

There are a number of different mortgage options that you may want to look at if you’re seriously considering the purchase of a new house. Regular loans often have unfavorable terms depending on the buyer’s credit rating. For example, these loans may require larger down payments, higher interest rates and the payment of monthly mortgage insurance. However, specialty mortgage loans, such as the VA loan, could help you to secure more favorable terms.

What are VA Loans?

VA (Veterans Affairs) Loans were created specifically to help veterans, service members and surviving spouses to become homeowners. Over 21 million people have been assisted by the VA Loan program. The following are a few of the benefits of VA Loans:

  • Lower than normal interest rates that aren’t nearly as dependent on credit scores as standard mortgage loans are.
  • The removal of down payments in many cases.
  • The removal of mortgage insurance (typically, you have to pay for mortgage insurance if you don’t provide a down payment of at least 20 percent)

Are you qualified for a VA Loan?

Those that are eligible for VA Loans have VA Loan entitlement. VA Loan entitlement is a specific amount of money guaranteed by the Department of Veterans Affairs. It’s that entitlement that provides lenders with the confidence to provide VA Loan financing with such favorable interest rates and terms.

In order to be eligible for a VA Loan, you must meet one of the following conditions:

  • You’ve served for at least 90 days consecutively during wartime.
  • You’ve served at least 181 days during peacetime.
  • You’ve served at least six years in the Reserves or the National Guard.
  • You were married to a service member who died in the line of duty or who died as a result of a service-related disability.

Even if you’ve met one of these conditions, you will also need to meet the following requirements to be eligible:

  • You will need to obtain a Certificate of Eligibility to provide to your VA approved lender in order to verify your eligibility for a VA Loan.
  • Only certain properties will be eligible to be purchased using a VA Loan. Almost all single-family homes are eligible. However, some condominiums and townhomes are not eligible – the entire complex must be approved by the VA before you can finance a condo or townhome using a VA Loan. Manufactured homes can be difficult to secure financing for as well since they are considered depreciating property.
  • You will need to meet basic credit and income requirements. Your credit score will need to be at least 620. You will also need to have a debt-to-income ratio of at least 41 percent. Both of these requirements are much less strict than regular mortgage loans.

VA Loans in Maryland, Virginia, & Washington, DC

A VA Loan can be a great way to obtain financing at favorable terms for your new home as long as you qualify. For information on obtaining a VA Loan or any other type of home mortgage loans, be sure to contact Alex Encheandia today.

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