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Government-Backed Loans Mortgage Advice

The Advantages of a Maryland VA Loan

When making a major financial decision such as mortgaging a home, it is important to take advantage of all of the applicable assistance programs available. For our country’s veterans, there exist several benefits that can be applied to a mortgage that will make buying a home much more affordable and easier to secure. Today, we will be going over who is eligible for a Maryland VA loan, the advantages that come with it, and finally, other loan programs available for veterans in Maryland. 

What is a VA Loan?

A VA loan is a loan program where the loan is offered by a private lender, such as a bank or mortgage company, and is guaranteed by the Department of Veterans Affairs. VA loans were created with the purpose of offering affordable home buying options for veterans to mortgage a home after a specific term of service. The VA guarantees a portion of the loan which will allow the lender to offer more favorable mortgage terms. Before getting into the many advantages of a VA loan, one must determine if they fit the criteria for eligibility. 

Who is Eligible for a VA Loan?

Eligibility for a VA loan is not simply attained just from being an active service member as certain credentials have to be met. It can depend on how long you served and when, for example, if service members served for 90 consecutive days during or were active during wartime, served for 181 consecutive days during peacetime, or served for six years in the National Guard or Reserves, then you are eligible. For veterans, minimum service requirements depend on when you served. Refer to the Veterans Affairs website for a detailed list of previous conflicts that the United States was involved in. You can also find the application for a Certificate of Eligibility or a COE on the VA website. Finally, if you are the spouse of a service member who passed away while in the line of duty or due to service-related issues, you also qualify for VA loan eligibility.

Advantages of a VA Loan

There is a long list of benefits and advantages that come with a Maryland VA loan that makes mortgaging a home much more affordable and streamlined. One of the most attractive benefits of a VA loan is that there is no down payment required. Being one of the most difficult initial steps in a mortgage, not having to pay a down payment opens up the possibility of taking on a mortgage for many veterans. Another advantage, and cost reducer, is the ability to defer having to pay mortgage insurance premiums or PMI. When taking out a Maryland VA loan, average interest rates are significantly lower than normal mortgage loans. Having lower interest rates means that the cost of the loan will be much less over the duration of the loan term. Veterans will also enjoy lower closing costs as well as no prepayment penalty. Combine all of these advantages and it is easy to see how a VA loan can easily be an affordable and beneficial financial expenditure.

Other Maryland VA Loan Programs

While the VA loan program offers a multitude of advantageous mortgage benefits, there are other programs in place for veterans that can be utilized to get the most out of your mortgage. While these programs aren’t specifically reserved for veterans, they may still qualify for these programs.

The Maryland Mortgage Program

The Maryland Mortgage Program or MMP, is a 30-year fixed rate home loan for first-time home buyers who are purchasing in Maryland. This program offers competitive rates when compared to other loan terms. To gain full access to the program, applicants must qualify as first-time buyers, however, those not technically considered first-time buyers can still qualify in specific areas in Maryland. This program is intended to assist those who can’t quite afford to purchase their first home as income limits and purchase price caps apply.

Maryland SmartBuy 2.0 Program

The Maryland SmartBuy 2.0 Program assists home buyers that have qualifying student debt in purchasing a home through the Maryland Mortgage Program and deals with homes that are owned by the state of Maryland. It does so by financing up to 15% of the home purchase price for the borrower to pay off their remaining student debt. This helps veterans who have outstanding student debt and are attempting to finance a home. 

Disabled Veteran-Friendly Maryland State Tax Credit For Adaptive Housing 

For veterans with service-related disabilities, the disabled veteran-friendly Maryland State Tax Credit for Adaptive Housing is a program that offers tax breaks for expenses spent on home improvements necessary for adapting the residence to be suitable for the disability. These can include any adaptations to a home that assists in making the disabled person more independent or improving daily functionality. Utilizing this tax credit can add up to immense savings on your annual tax returns.

Property Tax Exemption

Last but certainly not least is the property tax exemption for disabled veterans. This exemption applies to veterans with a service-related disability that is rated 100% by the Veterans Administration. It entails a total exemption from property taxes on the dwelling and surrounding yard. Some un-remarried surviving spouses may also be eligible and spouses of service members who lost their lives in the line of duty indefinitely are eligible.  

Maryland VA Loan to That Help You Succeed

Taking advantage of the many mortgage benefits available for veterans, along with the generous offerings that come with a Maryland VA loan, veterans enjoy a major edge in being able to pay for a mortgage. Using these benefits paves the way for a successful mortgage loan and makes the entire process lighter of a burden on veteran home buyers. When searching for a Maryland VA loan be sure to find a mortgage broker that finds the best deals for you. Federal Hill Mortgage will be by your side every step of the way, ensuring that we secure the best rates for the home of your dreams. Apply now today to get started on your mortgage journey!

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Government-Backed Loans Home Buying Advice Mortgage Advice Uncategorized

What Are USDA Loans in Maryland?

With the rising cost of homes in the United States, it is highly important to take advantage of every opportunity to lower the cost of buying a home and make the mortgage process easier and a lighter burden on the buyer. When considering taking on a mortgage loan, a hefty down payment, high-interest rates, and a limited selection are all things that might prevent or deter a potential buyer from beginning the process. For qualifying individuals, some programs exist to make mortgaging a home a much more realistic ambition. Today, we will be discussing USDA loans in Maryland, what they are, who is eligible, and the many advantages that come with this program.

What is a USDA Loan?

A USDA loan is part of a Rural Development program by the U.S Department of Agriculture that is meant to assist lower-income families and individuals in being able to afford a mortgage in rural areas. The loan comes from the USDA Rural Development Guaranteed Housing Loan Program and is one of the least known, yet highly advantageous mortgage programs in the country. Want to know know what areas are eligible? The USDA has a useful tool that allows you to look up area maps or input a property address directly to see its eligibility.

Advantages of a USDA loan

The first and most attractive feature of a Maryland USDA loan is that it requires zero down payment. Without having to come up with a lump sum of cash to initiate the mortgage, those who could not regularly afford to take on a mortgage loan now can. There are also no pre-payment penalties for those who decide to pay off their mortgage earlier. You can finance closing costs into your loan as well as receive a lower fixed interest rate. With USDA loans, private mortgage insurance is not used. Instead, the USDA uses two fees, one being an upfront guarantee fee, equal to 1% of the total financed amount, that is due once the buyer has closed on the loan, and an annual fee, equal to 0.35% of the loans current balance, that is included in your monthly mortgage payment. 

The Three USDA Home Loan Programs

Guaranteed USDA Loans

A guaranteed USDA loan is when the USDA partners with local lenders to offer a loan that the USDA insures a portion of the total mortgage should the buyer default on their loan. To be eligible for this type of USDA loan, adjusted household income may not be higher than 115% of the median family income in the area where the house is located. This encourages lenders to be more willing to offer better loan terms to low-income buyers with lower credit scores. 

Direct USDA Loan

With a direct USDA loan, the funds are borrowed directly from the USDA. This is offered to low-income individuals who otherwise wouldn’t qualify for a typical loan from a bank lender. To receive a direct loan from the USDA, one must fall into the low-income category in the area where the home is located. 

USDA Home Improvement Loans

Also designed to benefit low-income households, the USDA Home Improvement loan option helps to fund repairs or improvements to a dwelling. In some cases, the USDA could potentially combine these with grants that you would not have to pay back. 

Who Qualifies for Eligibility?

To qualify for a Maryland USDA loan, you must first be a U.S citizen that has an income that falls below the set “low income” in the area you intend to purchase the home. The main qualification that is needed to qualify for a USDA loan is that the home is located in an area deemed “rural”. This means that metropolitan areas are exempt from USDA loans however, some suburban areas may qualify. The dwelling that the USDA loan is taken out for must be listed as the primary residence of the person signing the mortgage. With all of that taken into consideration, eligibility for a USDA loan is open to a large majority of Americans that live in rural areas and should be utilized accordingly. 

Accessible USDA Loans in Maryland

The benefits of a Maryland USDA loan are immense and the eligibility fits a wide spectrum of potential homeowners. Taking advantage of this loan can make the difference between being able to afford a mortgage or not. Many people who are renters cannot come up with the initial down payment needed to secure a good rate and therefore are stuck renting. Without this obstacle, many Americans in rural areas can attain a mortgage. When shopping around for Maryland lenders, be sure to find one that maintains your best interest throughout the mortgage process. At Federal Hill Mortgage, we guarantee that we will be by your side every step of the way ensuring that you get the best rates available on the home that you desire. Call us or apply now to begin your journey into your new home.

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Home Buying Advice Mortgage Advice Mortgage Rates

What You Should Know About an FHA Loan in Maryland

Home buying can be a costly process, requiring strong financial standing and the ability to foot a down payment that usually accounts for 20% of your total home price. However, there are options at your disposal that help make buying a house more affordable. One of the best options is an FHA Loan in Maryland.

What is an FHA Loan?

An FHA loan is a home loan that is insured by the Federal Housing Administration that allows qualifying individuals to make as low as a 3.5% down payment. While the FHA loan is insured by the federal government, the finances are still acquired from private lenders who have differentiating requirements and terms. The two most attractive aspects of an FHA loan are the aforementioned low down payment and the leniency of terms for those with low credit scores. An FHA loan is recommended, but not limited to first-time home buyers due to its low credit acceptance and minimal down payment however, FHA loans require the purchase of mortgage insurance, and the amount that can be loaned is capped. Finding out if an FHA loan in Maryland is right for you means properly understanding all of the aspects that make up an FHA loan and weighing them against your own personal situation.

Maryland FHA Loan Limits

Loan limits differ by county and state as well as how many units are in the dwelling. Be sure to make yourself aware of the loan limits in the county you plan to purchase the dwelling in because it can greatly differentiate between different counties. 

How to Qualify for an FHA loan in Maryland

Qualifying for an FHA loan is mainly based on your credit score and debt to income ratio and is not limited to just mortgages but also refinancing and renovations. To receive the 3.5% down payment you must have a credit score of 580 or higher. To receive a 10% down payment allowance, you must have a credit score of 500 to 579. The FHA loan must be used on a dwelling that is listed as your primary residence. Your debt to income ratio or DTI must be no more than 43% of your monthly gross income as well as at least two years of verifiable employment. Your private lender will determine the property value of the home you wish to purchase as well as verify your credit and income. Finally, the residence must meet HUD guidelines when appraised by an FHA-approved appraiser.

How to Find an FHA-Approved Lender

Finding an FHA-Approved Lender is not difficult, as they can range from large bank corporations to local community banks and independent mortgage lenders. The challenge is comparing the different terms between lenders and deciding which will cost you the least in the long run. Weighing the different mortgage terms offered by the different private lenders is extremely important in order to secure the best mortgage terms possible. Before applying for an FHA loan you should know your budget and have all of your related supporting documents on hand and ready to go. Once you have that figured out you can shop around for lenders and get preapproved to be able to compare different rates and lending terms.

How to Apply for an FHA Loan

The first and most important step is finding a private lender and assembling your documents as previously mentioned as well as checking your debt and credit score. Once you have taken these simple but crucial preliminary steps, filling out the application for an FHA loan is relatively simple. You should apply for your home loan and receive mortgage pre-approval before you begin shopping for property. After you receive confirmation that your FHA application has been accepted you may have an FHA licensed inspector inspect the property.

Other Types of FHA Loans

1. 203k Loan

With an FHA 203k loan, you can fund the purchase of a home as well as renovations all under the same mortgage. There are a few key differences between a regular FHA loan and a 203k loan, the main one being the minimum down payment requirement of 3.5% if your credit score is 580 or higher. Things like appliances and repairs are covered in a 203k loan but luxury items like a pool or a sports court are not. Discuss with your lender to see if your mortgage plans would work well with a 203k loan option.

2. Home Equity Conversion Mortgage (HECM)

A Home Equity Conversion Mortgage or HECM is a reverse mortgage offered by the FHA that allows you to withdraw a portion of your home’s equity, typically without having to pay monthly payments. These loans are usually beneficial to seniors as upon the borrower’s death, their heirs will have to repay either the full loan balance or 95% of the home’s appraised value. From there, they will have 30 days after the notice to buy, sell or turn the home over to the lender. To qualify, you must be 62 years of age or older, own the property outright or have paid a large amount off, and occupy the property as your primary residence. 

3. Energy Efficient Mortgage

The FHA does offer an Energy Efficient Mortgage program to allow borrowers to finance energy-efficient improvements with their FHA-insured mortgage. A borrower only needs to qualify for the loan amount used to purchase the home and does not need to qualify for the portion used to make the energy-efficient improvements. 

4. 245(a) Loan

An FHA 245(a) allows families with a low to moderate income, who are expecting their income to rise, to purchase a home and make monthly payments that start small and gradually rise. This type of loan is perfect for someone who is expecting their income to rise as it allows the initial payments to be affordable and then, as time goes on, the borrower gets to choose how the payments increase. This allows equity to grow rapidly and brings the repayment date closer. Usually, if conducted properly, a 245(a) loan will allow borrowers to pay off their mortgages much quicker and avoid paying more interest. 

FHA Loans Alternatives

Conventional Loan

Conventional loans are the main type of mortgage loans that are not involved with any government entity. There are conforming and non-conforming conventional loans. A conforming conventional loan follows guidelines set by Fannie May and Freddie Mac. A non-conforming conventional loan does not follow these guidelines and can vary as to what they offer and its terms.

USDA Loan

A USDA loan is a government program that incentivizes people with moderate to low incomes to purchase homes in rural areas. One of the main reasons people are drawn to a USDA loan is that they require no down payment however, it is required to pay a mortgage insurance premium and an upfront fee.

VA Loan

A VA loan is a mortgage loan that is offered to eligible veterans and active service members and is insured by the Department of Veterans Affairs. VA loans can be extremely beneficial but are limited to those who have served in the military. Some of these benefits include a no down payment option, no private mortgage insurance requirement, competitive rates, and more permissible credit requirements.

Your Go-To Brokers for an FHA Loan in Maryland

As we can see, there is an abundance of options when it comes to taking out an FHA loan in Maryland, and deciding which one is best for you requires extensive knowledge about the available mortgage options and how they will apply to you. With Federal Hill Mortgage, we will be by your side every step of the way, clearly explaining all of your options in order to find which mortgage plan will benefit you the most. Call or contact the expert team at Federal Hill Mortgage to speak with a mortgage specialist and begin your home-buying journey today.