Tag Archives: Buyer Financing Update

Finance Options: What First-time Homebuyers Should Know

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Finance Options: What First-time Homebuyers Should Know

First-time homebuyers have a lot to think

First-time homebuyers have a lot to think about, but probably the first thing is how they will afford a home. Fortunately, there are many programs designed to help first-time homebuyers make their dreams of owning a home come true. It all comes down to the amount of your down payment and your credit scores. Here are some of the options.

Low-cost Conventional Loans

Conventional loans are the more traditional loans, ones that are not affiliated with a government program but follow government regulated guidelines. If a homebuyer can qualify for a conventional loan, that’s great! Depending on the market rates, these loans can be some of the best around, especially now when rates are hovering below 4%!

With the relaxation of lending regulations over the past year, there are conventional loan programs available with as little as 3% down with no mortgage insurance premium! The applicant must meet the necessary guidelines, but this type of loan certainly is worth exploring.

FHA Loans
Loans that are insured by the Federal Housing Administration are known as FHA loans. These are loans given through private lenders, which are regulated by the FHA. FHA loans permit down payments as low as 3.5%. The most attractive feature for an FHA loan applicant is that FHA will allow for lower credit scores than those allowed for conventional loans. If your credit score is not pristine, this may be the place to turn.
USDA
The United States Department of Agriculture (USDA) has a singly family guaranteed loan program. The loan program helps approved lenders offer low and moderate income households opportunity to buy a primary residence in an eligible rural area. The loans cover building, rehabilitating, improving or relocating the home.
While these loans can be extremely helpful to those who might not otherwise be able to afford a home, there are restrictions. However, if you meet the guidelines, USDA financing is a great program for many first-time homebuyers!

VHDA

VHDA stands for Virginia Housing Development Authority. The VHDA is a non-profit organization, which was developed by the Commonwealth in 1972. The VHDA’s mission is to provide mortgages, specifically for first-time homebuyers and developers of affordable rental properties. The VHDA uses no state taxpayer dollars. Rather, the organization raises money in capital markets to fund loans.

VHDA offers a variety of loans with low down payments. Borrowers might even qualify for assistance with down payments and closing costs. Note, though, that the VHDA sets its own rules for income eligibility.

VA Loans

VA loans are granted through the Department of Veterans’ Affairs (VA). The program is open to eligible veterans, current service members and surviving spouses. VA loans are made by private lenders and guaranteed by the VA.

One positive of VA loans is that these loans offer low-cost refinance options. They also offer protection if the borrower has difficulty paying the loan. These loans do not require a monthly mortgage insurance payment; however they do require a fee to be paid at closing. VA loans come with low or no down payment and are attractive to many eligible service members and their families.

With all these options, first-time homebuyers have a good chance of finding a program that meets their needs. It’s important to compare and contrast the options, though, to find the best rates and programs. A good mortgage lender can help educate first-time homebuyers and lead them through the process. For more information on obtaining a lender or on buying a home, call Belinda Jacobson-Loehle at 703-338-9678 or email Belinda@JacobsonRealty1.com.

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Virginia Supports Homebuyer Savings Plan

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Virginia Supports Homebuyer Savings Plan

First-time homebuyer

It’s an exciting time to be a first-time homebuyer in Virginia! Why? Among other reasons, Virginia has a homebuyer savings plan!

Many people still have not heard of the Virginia bill (HB 331), the first-time homebuyer savings plan introduced by the Virginia Housing Commission. This is an amazing, relatively new piece of legislation that encourages saving for a home by reducing Virginia state tax.

Here is what you need to know to take advantage of this plan.

How does it work?

First, an investment or savings account is designated by a qualified, first-time homebuyer for the sole purpose of saving for a home. You can designate almost any existing account as a first-time homebuyer savings plan.

To create the plan, you include a form when you file your state taxes. The form will state that you should not be taxed on any earning (such as capital gains or interest) because the account is for a qualified, first-time homebuyer purchasing a home.

After you use the money towards the closing costs on a first home, you send in a different form to the Department of Taxation, showing that the funds were put toward an “eligible cost.”

The bill allows for individual income tax subtraction for income earned on contributions to the account if the funds are used for saving for a home.

Who is a qualified homebuyer?

A qualified homebuyer would be someone living in Virginia who has never owned property, individually or jointly, anywhere in the United States. The Virginia Association of Realtors says, “If you owned a home at some point but did not purchase one — e.g., if you inherited — you can still qualify.”

What are qualified expenses?

Qualified expenses are anything included on the settlement statement, such as a down payment, closing costs, inspections and lender fees.

How much money can be put into the account?

The bill limits the amount of principal that can be contributed to any account to $50,000 and limits the total amount that can be retained in an account at any time to $150,000.

What are the restrictions?

Money saved cannot be used for anything other than eligible costs without penalty.

If money is withdrawn from the account for purposes other than to pay eligible costs, any income previously subtracted would be subject to state tax, and a five percent penalty would be imposed.

Note, there are no penalties if the funds are withdrawn because of the death or disability of the account beneficiary, if there is a disbursement of assets protected under federal bankruptcy laws or if funds are transferred to another first-time homebuyer savings account.

How can I find out more?

Contact Belinda Jacobson-Loehle, real estate broker and certified home stager, at 703-338-9678 or via email, Belinda@JacobsonRealty1.com.

For information on Virginia homes for sale and for more real estate tips, visitwww.JacobsonRealty1.com or www.JacobsonRealtyandHomeStaging.com.

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FHA Financing Becomes More Costly!

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FHA Financing Becomes More Costly!

If you are a first-time buyer or a buyer planning to use FHA financing with a 3.5% down payment in 2013, you should be aware of the new changes. Effective April 1, 2013, the MIP ( mortgage insurance premium) charge for newly approved loans has increased. For a $250,000 loan, the monthly loan payment will increase by approximately $20 per month. This may not initially sound like a lot of money but over time (30 years) it adds up! Consult your mortgage loan officer to understand how it will affect you.

More importantly, effective June 1, 2013, the MIP charge will carry through the life of the loan! FHA currently allows the borrow to remove the MIP up charge after the loan amount has been paid down by 15 – 20%. You would simply make the request to your lender to have the charge removed, and upon verification, your loan amount would be adjusted to a lesser amount. This will no longer hold true after June 3, 2013.

The bottom line – Try to have a ratified contractor or lender case number issued by June 3, 2013, to save money that you can be used for home improvements instead of lending fees.

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