Should I pay points? | Maryland home purchase, refinance

Are you planning on keeping your home for a while? Then it may make sense to "buy" a lower interest rate by paying one or more "points."

Even if you're unsure of how long you plan to keep your mortgage before you move or refinance, paying points now for a lower rate may make sense. Choice Finance® and John Burley are dedicated to provide you with all the options available to you and your situation. Your life style may change for the better or worse as time goes by. We want to ensure that your mortgage is providing you the security you need for now and the future.

I will be happy to help you sort it out. I t's part of my goal to find you the right loan.

A point -- which equals one percent (1%) of the total loan amount... so $2,000 on a $200,000 loan amount -- is an up-front fee that lowers your interest rate. A one point loan will typically lower your interest rate .25% in interest rate. When you pay points you trade off paying money later in favor of paying money now. I'll show you how much money you save every month by paying any points, and then you can decide if it's worth it to you.

In this buyer's market, the odds are good you can get plenty of Seller help to pay your closing costs. FHA will allow up to 6% help. With 4% usually more than enough to cover your closing cost and prepaid items, try and use 1 or 2% to buy-down your interest rate for you. When you buy a home, your closing costs and any points paid can be written off in the year you buy your home. With a refinance, you can write-off these points over the term of the loan... so 1/30th every year if you have a 30 year amortized mortgage.

John Burley, Maryland loan officer
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burleymortgage.com

Your debt to income ratio is simply a way of determining how much money is available for your monthly mortgage payment after all your other recurring debt obligations are met. There is generally a debt limit associated with each type of loan, such as a 28/36 qualifying ratio for a conventional loan. These qualifying ratios are guidelines. An excellent credit history can help you qualify for a mortgage loan even if your debt load is over and above the limit.

Typically conventional loans have had a qualifying ratio of 28/36. Usually an FHA loan will allow for a higher debt load, reflected in a higher 29/41 qualifying ratio. FHA will allow cash out and let you borrow 85% of your home's appraised value to get cash back at closing... If you don't choose to get 'cash out', you can refinance up to 96.50% of your home's value. Credit scores in the high 500's may still have a chance to get approved. At minimum, you should have a 580 mid credit score. Late payments will require proof, and your mortgage must be current at loan approval. Bankruptcy BK- Minimum 1 year only if you have extenuating circumstances such as illness or loss of your job, and it will require an explanation and proof. More than likely you will need at least 2 years since your BK was discharged and a legitimate and thorough explanation.
-A foreclosure will require a minimum of 3 years and an explanation.
-No government loan defaults, such as student loans, allowed. If you have no credit established, talk with me about building alternative credit to show at least 3 tradelines and a 12 month history minimum.

The first number, your 'front end ratio' is the maximum percentage of your gross monthly income that can be applied to housing (including loan principal and interest, private mortgage insurance, haz insurance, property taxes and hoa dues). The second number, your 'back end ratio' is the maximum percentage of your gross monthly income that can be applied to housing expenses PLUS your recurring debt. Recurring debt includes things like car loans, child support and monthly credit card payments. Anything with less than 6 months remaining will not count, unless it's a car lease which is assumed to be renewed once it's up.

I'll be happy to pre-qualify you to determine how large a mortgage loan you can afford and so you will have your Financing letter when you shop for real estate.
John Burley, Choice Finance
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Maryland closing costs

There are certain standard costs associated with closing the sale of a house. In Maryland these fees are split between the buyer and the seller, as spelled out in the sales contract.

As I analyze the sales contract for you, I will not only work to get the mortgage program and rate you want, I will also work to limit the number of closing costs for which you will be responsible.

I will walk you through the closing costs, answering any questions you may have explaining which costs are yours and which are negotiable. I will send you a Good Faith Estimate of closing costs which will itemize your costs and also show you how much you will need at settlement, and how much your monthly payment will be.

Here is a great article on avoiding Junk Fees in your Good Faith Estimate
and you can find your Maryland costs here.

Relocating, your home and retirement | MD DC VA

Many retirees are looking not just for a life without regular employment, but for a completely different lifestyle. This may mean a move to a resort location, such as a beach or mountain area (some of these areas are sporting the lowest prices in years!). Or it may mean a small town with a slower pace and lower housing and living costs.

A new program that permits an older homebuyer to use a reverse mortgage to purchase a primary residence could be the perfect vehicle for a relocating retiree purchaser. If you are planning a move to a retirement community, you will probably find that they have been hit less by foreclosures than some surrounding communities with younger populations. The reason? Older homeowners were less likely to take on exotic mortgages than more inexperienced homebuyers. Still, check the foreclosure rate and financials to make sure higher fees won’t be needed to offset those not paying.

Check out the Home Equity Conversion Mortgage to purchase your home. This is a reverse mortgage and can be used to purchase your principal residence.

Shopping for your Maryland mortgage | John Burley

The Federal Reserve issued some tips for shopping for a mortgage. Here are some bullet points and commentary:

1. What can I afford?

Do not go off of what you can qualify for. My goal is to help you buy a home that you can live comfortably in for years to come. A comfortable guideline would be to make sure your existing overhead "debts" do not exceed 40% of your income.

2. Call referred lenders and shop around
Did you know that you can see rates from 8 different lenders at http://www.choicefinance.net/mortgage-rate.htm

3. Understand your Good Faith Estimate/Cost of your loan
I will explain every fee line by line. I have no junk fees. I only charge fees for services that are actually performed.

4. Know the risks and benefits of loan options

Adjustable or Fixed rate? When will it adjust and by how much? Which loan program is the best for you. I will be happy to give you side-by-side comparisons to help you make that decision. Did you know FHA will allow you to put only 3.5% down on Jumbo money?


5. Get advice from a trusted source

Don’t just take my word; seek out the advice of my references that I have readily available to give you. Use the many resources available online. You will find that my 30+ years of finance experience to be a great resource for you!

Find out more about Maryland loan officer, John Burley and/or go to www.choicefinance.net/apply to start the process of buying your home today!