First-Time Buyers Home Buying Advice

What Are Closing Costs in Maryland?

Mortgage calculators are an excellent tool to help you estimate what you’ll spend on a home. We offer several of these to prepare prospective buyers for homebuying expenses. However, there are some costs that aren’t factored in upfront. Called closing costs, these are expenses associated with finalizing your home purchase. It’s important to understand what each of these are, and how much they can cost. This helps avoid any last-minute surprises that can throw a wrench in finalizing your purchase. Below you can explore all of the potential closing costs in Maryland you might face.

Which closing costs apply to your mortgage depends on location, the size of the home, and the type of mortgage that you take on. Even though you will not have to pay every closing cost that is listed, it is best to become knowledgeable about all of the potential expenses in order to prepare yourself as much as possible.

What are Seller Concessions for Closing Costs in Maryland?

While the buyer is responsible for paying the majority of the closing costs, the seller also has the ability to take some on themselves. These are called seller concessions and they exist to incentivize the buyer. Sellers are only allowed to pay up to a certain amount in closing cost assistance. This amount is based on the type of loan, how many people are living in the home, and the percentage of the down payment. For conventional loans in primary residence homes, those who put a downpayment of 25% or more can receive up to 9% of their home’s purchase price or appraised value. Those who put down 10-24.99% can get up to 6% while down payments of 10% or less can only get 3%.

If it is your second home, the return percentages are the same except for those who put in a downpayment of less than 10%. In this scenario, they would not be eligible to receive any seller concessions. If it is an investment property, you may only receive up to 2% of the home’s sale price in seller concessions regardless of downpayment. In the case of FHA loans, you may only receive up to 6% of the home’s value in seller concessions. VA loans have a more unique approach. They allow up to 4% of the purchase price to be placed into an escrow account, however, the seller may provide an unlimited amount towards closing costs such as credit report fees, discount points, origination fees, and appraisal. 

How Much are Closing Costs in Maryland?

Closing costs are different for everyone. Depending on where the home you purchase is located, which government requirements apply to you and which lender you chose. Before you sit down with the seller to sign the closing documents you will receive a closing disclosure that goes over all of your closing costs. Before going into your closing meeting, it is highly recommended to develop a solid understanding of all of your potential closing costs so that you may be properly prepared.

Application Fee

The application fee is a charge from your lenders for them to process your loan request. This non-refundable fee can be up to $500.


The appraisal is when the lender sends out a professional to determine the value of the desired home. This is typically outsourced to a third party. The amount that they determine the home is worth will dictate the amount you are able to receive for a loan. They range in price but expect to pay around $450 for an appraisal.

Attorney Fee

You are required by Maryland law to have an attorney present during the home sale proceedings. They will assist in organizing your paperwork as well as managing your closing. The price for an attorney highly depends on the attorney you decide on as well as local rates.

Closing Fee

In Maryland, you are legally responsible for having an attorney conduct and sign off on your closing meeting. These fees again vary depending on the attorney and your local rates.

Courier Fee

Mortgage documents must be transported and with that comes a courier fee of around $30.

Credit Reporting Fee

To receive a loan for your home your lender must first run a credit score check. These typically cost about $25.

Discount Points

Discount points are one of the best ways to decrease your interest rate. By paying more upfront, you have to option to purchase discount points which will greatly reduce the amount of interest you pay over the life of the loan. If you can comfortably afford it, discount points will save you a significant amount of money over a longer period of time.  

Escrow Funds

A valuable asset, some lenders will require you to deposit money into an escrow account in order to cover your expenses for several months after signing the closing documents. The lender will make payments on necessary expenses for you. 

FHA Mortgage Insurance

FHA loans require you to pay for mortgage insurance. This will cost you around 1.75% of your total loan. It is not all paid at closing, but in monthly installments during your loan.  

Flood Certification and Flood Insurance

Purchasing a home that is prone to flooding? You may be required to pay around $20 for a flood certification. If your home is within a federally designated floodplain, you will also be legally required to obtain flood insurance.

HOA Transfer Fee

If the home you are buying is in a community that has a homeowners association, you or the seller may have to pay a fee to transfer the HOA’s fee collection and homeowner information. 

Homeowners Insurance

Required by most lenders, homeowners insurance is crucial to avoid having to pay for damages to your home. A majority of lenders will require that you pay for a year of homeowners insurance when you close. The cost of homeowners insurance can be expected to be $35 for every $100,000 in home value, every month. 

Loan Origination Fee

Expect to pay around 1% of your loan amount towards origination fees. These cover the expense required to process and underwrite your mortgage loan. 

Lender Title Insurance

If you lose your home to a claim on the title, the lender’s title insurance protects the lender from loss. This is a one-time payment due at closing that can cost up to $1000.

Lead-Based Paint Inspection

Any home built before 1979 is required to have a lead-based paint inspection performed. These inspections can cost around $300.

Pest Inspection Fee

A pest inspection fee is required by law as one of the closing costs in Maryland. These usually cost around $100.

Private Mortgage Insurance

If you decide to put less than a 20% down payment on your conventional loan, you will be required to pay for private mortgage insurance. Private mortgage insurance usually costs around $50 for every $100,000 in home value.

Property Tax

It is not uncommon for a lender to require a buyer to pay a full year’s worth of property taxes as a closing cost. The amount of property tax you will owe depends on the home’s location and value. 

Rate Lock Fee

If you wish to lock in your interest rate during the time between preapproval and closing, your lender may offer you the option to lock your rate by paying a one-time fee. These can either be free depending on the rate locks terms or .25% – .5% or your loan’s total value. 

Recording Fee

When you purchase a home, the local government has to update its public records. This usually costs around $125.

Title Search & Transfer Fees

A title search fee will look for and find any current claims on the property you are purchasing and the transfer fee will cover the cost of changing the title over to you. These can cost up to $400.

Underwriting Fee

Your lender has to verify that your loan paperwork is accurate. For this, expect to pay up to $800.

How to Budget for Closing Costs in Maryland

As you can probably tell by now, closing costs in Maryland are abundant. With the process of mortgaging a home being so complex, all of the moving parts and involved parties must be compensated for their assistance. To budget for closing costs, the best thing you can do is be prepared. Quantify all of your potential closing costs and make sure that you have more than enough ready to pay for them. Maryland has the ninth-highest average closing costs in the county, coming in at around 2-5% of the home’s final purchase price. With that number in mind, you can properly allocate funds to pay for the closing costs in Maryland. 

Professional and Comprehensive Mortgage Lenders and Brokers

If you are ready to purchase your dream home, do it with the confidence that comes with having Federal Hill Mortgages’ team of professional lenders and brokers working with you. At Federal Hill Mortgage, we work closely with all of our customers to ensure that they receive the best and most favorable mortgage terms available. Call or contact us today to begin the journey toward securing the home of your dreams!

First-Time Buyers Home Buying Advice

Tips for Home Appraisal in Maryland

A home appraisal is one of the most crucial aspects of the home sale process. It determines what the lenders are willing to loan for the home and sets the maximum for what you will receive for your home. Thankfully, there are simple steps that you can take to increase the appraised value of your home. These simple and easy methods won’t take much time and effort but the result can drastically improve your home’s value during a home appraisal in Maryland. 

Understanding What Appraisers Look For

To be able to know how to prepare for a home appraisal in Maryland, you must first understand what appraisers are looking for. Appraisers are supposed to not only look over the condition of the home but also at the local market and what comparable homes in your area have sold for in the past 6 months. Their unbiased opinion places your home in one of several “C” categories. Before we get into how to improve your chances of getting a higher appraised value of your home you must first understand which level your home fits in. 

C-1: A never occupied, brand-new home

C-2: Home that has undergone major renovations, major components replaced after the home was gutted

C-3: No signs of neglect, suitable condition. 95% of homes fall in this category.

C-4: Less than livable home with signs of disrepair

C-5: Unfit for occupation on day one, major disrepair, disconnected utilities and/or pests

The amount that your appraiser says your home is worth sets the limit for what your lender will be willing to loan you. To get the most out of your home appraisal in Maryland, be sure to follow the following 8 steps to improve the value of your home before the appraisal takes place. 

How to Improve Your Homes Value

  1. Do Not Get Your Own Appraisal, Let Your Agent Give You An Assessment

Getting your own appraisal will help you in identifying areas of potential improvement. However, this is not recommended. The only appraisal that really matters is the official one that was ordered by the buyer’s lender. You’re better off relying on your agent to give an assessment and save on the cost of an extra appraisal.

  1. Tidy Up the Exterior & Yard

Cut the grass, trim the bushes and remove debris from your yard. The exterior of the home is the first impression that the appraiser will have on your home. To have a positive effect, make sure that the exterior of your home is tidy and clean.

  1. Research Local Comparable Homes That Have Recently Sold

The best way to gain an initial idea of what your home is worth is by looking at the public records of recently sold, comparable homes in your area over the past 6 months. If you have hired a real estate agent, they may be able to provide a comparative market analysis that contains all of this information.

  1. Make Small Repairs and Clean the Home

If you have been putting off making small repairs on your home now is the time to do it. Something that may only take a few dollars to fix can make a significant difference in your home’s appraisal. You will also want to perform a deep clean on the interior of your home as it will have a positive impact on the appraisers’ opinion of your home. 

  1. Stage The Home How You Would For a Showing

When a real estate agent prepares a home for a showing, they make the effort to stage the home and make it look as valuable and desirable as possible. This should be mimicked when your preparing for a home appraisal as it will have the same effect. 

  1. Make it Easy for the Appraiser to do their Job

Allow the appraiser to do their job by staying out of their way. They know how to do their appraisal and they do not need you hanging over their shoulder during the entire process. Make their job easier by opening up any locked doors or entryways.

  1. Provide a List of Significant Upgrades

In addition to making their job easier by providing easy access and staying out of their way, you will also want to include a list of significant upgrades that have been done to your home. Include things like major home renovations, integral system upgrades, and any other significant work that will work to improve the appraised value of your home. 

  1. Show the Appraiser If You Have Multiple Offers

If you have any offers on your home by the time your lender sends an appraiser, it’s important to make them aware. If you received an offer that was higher than what the appraiser values your home at, they may potentially reconsider your home’s worth.

Making an Appeal on Your Maryland Home Appraisal

If you disagree with your home’s appraised value, you may want to consider making an appeal. There are several routes to appealing an appraisal and which one you decide on depends on your situation. If you notice or are inclined to believe that there are errors in the appraisal, you should appeal for an appraisal revision. If there are not any mistakes, the appraisal will stand. If you know the amount that the buyer is putting as a down payment, you can negotiate a new price to cover the appraisal gap, given that there is one. Next, if you are trying to expedite the process and sell the home quicker, you can lower the price. Finally, if all else fails and you are not pleased with the appraisal, you can back out altogether and re-list the home. The next appraiser may give you a better or worst price, so it’s a bit of a gamble. 

Take Control of Your Home Sale with Mortgage Professionals

Buying or selling a home can be a daunting process, especially if you do not have any experience doing so. Instead of going in blind, Federal Hill Mortgage is here to help. Our team of experienced mortgage experts will guide you through every step of the way, offering transparent guidance in order to help you proficiently secure a new home or sell the one you already own. Give us a call or visit our website to get in touch with us and get started on benefiting your mortgage or home sale with Federal Hill Mortgage today!

First-Time Buyers Home Buying Advice

Tax Breaks for Homeowners and Buyers

Tax breaks are an essential part of homeownership. They incentivize more US residents to purchase by lessening the financial burden of homeownership. To take advantage of the available tax breaks, you first have to understand what is available to you and what qualifies as a tax break that can maximize your savings. With a wide variety of tax breaks for homeowners available, there’s no reason you shouldn’t be claiming them on your return.

Two Types of Deductions: Standard & Itemized

The two main types of tax deductions are standard and itemized deductions. Standard deductions are available to all filers and are based on set amounts depending on how you file. Single and married individuals filing separately receive a standard deduction of $12,550 while married couples filing together will receive a standard deduction of $25,100. Itemized reports are when you file your own itemized deductions and forgo the standard rate. To take full advantage of your itemized deductions, make sure that the total amount of your itemized deductions is larger than the standard deduction that is available to you. 

10 Tax Breaks for Homeowners and Buyers

There are a wide variety of available tax breaks that can be used on your itemized deductions. To ensure that you get the most out of your tax returns, itemize as many deductions as possible. 

1. Property Taxes

Property taxes are tax deductible and can be included in your itemized tax report. A married couple filing jointly can receive up to $10,000 off of their property taxes and a separate or single filer can receive up to $5,000 off of their property taxes.

2. Mortgage Interest

Being able to deduct mortgage interest is one of the most important tax breaks for homeowners to take advantage of. Mortgage interest can quickly add up and make the difference for a prospective homeowner in being able to afford the mortgage. Thankfully, a single filer or married couple filing jointly can claim up to $750,000 and a married couple filing separately can claim up to $350,000 for each party. 

3. Home Equity Loan Interest

Similar to mortgage interest, the interest paid towards your home equity loan or HELOC can be itemized as a tax deduction. The only difference is that you can only access this deduction if the money from the home equity loan was used for home improvement.

4. Discount Points

Discount points are an option for homeowners where they may purchase these discount points to decrease the interest rate on their mortgage. You may deduct the cost of the discount points but loan origination points are not included. 

5. Mortgage Insurance

Some loaners will require you to pay for private mortgage insurance or PMI to protect the lender from liability if you are not able to pay for your mortgage. This too may be included on your itemized tax return. 

6. Necessary Home Improvements

Necessary is the keyword in this tax break for homeowners. These “necessary” home improvements are typically for home improvements that benefit a disabled person or are some sort of medically related improvement. While it is not completely limited to medical improvements, it is difficult to make the case for other types of home improvements. 

7. Capital Gains

When you sell the home that you own, hopefully, you will have made a profit. These capital gains can be included on your itemized tax return but only if the home was your primary residence for two out of the five previous years. A married couple filing jointly can receive up to $500,000 while an individual filer can receive up to $250,000. This is one of the largest tax breaks for homeowners and should be considered when selling your home. 

8. Home Office Expenses

If your primary place of work is at your residence, you may qualify for a home office expense deduction. This deduction does not apply to those who sometimes work from home or have a home office but rather to those who operate a business primarily from your residential business space. 

9. Deduction of Rental Expenses

If you choose to rent out a portion of your home then you can qualify for a deduction from the cost of rental expenses. Instead of directly deducing these expenses from your itemized report, the cost will be subtracted from your taxable rental income. A rental expense can be considered an expense that is related to operating and maintaining the rented portion of your home. 

10. Credits for Energy-Saving Improvements

Both the federal and state governments are adamant about providing incentives to get homeowners to have energy-saving improvements installed on their property. Tax breaks for homeowners are no exception as the federal government offers a 30% tax credit for the cost of energy-efficient equipment. Currently, in 2022, an additional $500 tax credit is offered for the cost of installing energy-efficient appliances and upgrades to things like doors, roofs, and windows.

11. First-Time Homebuyer Tax Credit

The first-time homebuyer tax credit is a government-funded program that assists first-time buyers to pay for their new homes by reducing the amount of taxes owed. It does not have to be your first time purchasing a home to qualify. You are considered a first-time buyer as long as you haven’t owned a home or have been a cosigner, in the past three years. Those who are eligible can potentially receive a tax credit worth up to 10% of the home’s purchase price with a maximum threshold of $15,000.

Maximize your Tax Savings with Federal Hill Mortgage

By taking full advantage of the available tax breaks for homeowners, you could potentially save thousands of dollars on your tax returns. Using all of the tax breaks listed above can be tricky as the complexities of filing for deductions can often be daunting to someone who is not familiar with itemizing their deductions. Thankfully, Federal Hill Mortgage is here to help. Our team of mortgage professionals will walk you through every step of the mortgage process offering expert guidance throughout. If you would like to ensure that you maximize your tax savings, call or contact the team at Federal Hill Mortgage today to get started. 

First-Time Buyers Home Buying Advice

Assistance and Incentives for First-Time Home Buyers In Maryland

Buying your first home can be a daunting process, especially when common knowledge dictates you need a 20% down payment. However, this is far from the truth. With all of the available grants and incentives offered at the state, federal and private levels, affording your first home becomes much more feasible. By understanding all of the available incentives and grant options, you will be able to find out what you qualify for and make an educated plan to purchase your first home. With a wide variety of options, it is important to find out which one benefits you the most. To do so, we will go over all of the grants and incentives offered to first-time home buyers in Maryland. 

Maryland First-Time Home Buyer Programs

Maryland Mortgage Program

Offered by the Maryland Department of Housing and Community Development, or DHCD, the Maryland Mortgage Program offers first-time home buyers in Maryland competitive loan terms, which can make the difference between being able to purchase and continuing to rent. To qualify, you don’t have to be a first-time buyer but you must not own any real estate when you apply. You also must purchase a home in the state of Maryland, have a household income at or below the local income limit, choose from one of the DHCDs lenders and live in the house once you have bought it. 

1st Time Advantage

Specifically for first-time home buyers in Maryland, the 1st Time Advantage program offers competitive interest rates. Within the 1st Time Advantage Program, there are options for down payment assistance, either $5000 or 3% of the purchase price.

SmartBuy 3.0

The SmartBuy 3.0 program assists first-time home buyers in Maryland with student debt in purchasing a home. SmartBuy financing will give 15% of the home’s purchase price so that the borrower can pay off their outstanding student debts. This program is limited to $30,000, comes with zero interest, and is forgivable over 5 years. To qualify, you must have at least $1000 in student debt, your entire student loan must be paid off by the time you purchase, earn a homeownership counseling certificate, live in the home as your primary residence and contribute at least 5% of the sales price from your funds.


If you or a member of your household is currently living with a disability, you qualify for Maryland’s HomeAbility Program. This program offers two separate loans. The first is one for 80% of the home’s purchase price and another zero-interest loan for up to 25% of the price. HomeAbility comes with no mortgage insurance requirement and lower limits than other loan programs. 

Maryland First-Time Home Buyer Loans & Grants

Partner Match

Partner Match allows participating partners to provide financial assistance to borrowers who are eligible and meet the criteria set by the partner. The DHCD matches the funds up to $2,500 as a 0% deferred loan which must be repaid when the home is sold or when the first mortgage ends.

Flex 5000

Offered by the Maryland Mortgage Program, the Flex 5000 is a $5000 grant that can be used for a down payment or closing costs. To qualify you will need a credit score of at least 620. All of the flex loans and grants provided by the Maryland Mortgage Program come with zero percent interest and can be repaid once the first mortgage ends.

Flex 4% Grant

The Flex 4% grant is offered through the Maryland Mortgage Program and includes an outright grant of 4% of the total loan amount. This grant is used for down payment or closing costs and does not need to be repaid. 

Flex 3% Grant

Similar to the Flex 4% grant but easier to qualify for, the Flex 3% grant is 3% of the total value of the mortgage loan and does not have to be repaid. 

Flex 3% Loan

Another form of down payment or closing cost assistance is in the form of a loan, worth 3% of the first mortgage and is structured as a 0% interest deferred on the second lien. 

Eligibility for Maryland Mortgage Program Flex Loans and Grants

To be considered eligible for the Maryland Mortgage Programs Flex Loans and Grants you must have completed a homeownership counseling program, not own any other properties at the time of closing, live in the home as your primary residence, have a household income below the Maryland Mortgage Program limit and your mortgage cannot exceed Maryland Mortgage Program limits. The Maryland Mortgage Program is not limited to first-time home buyers in Maryland, however, it is a valuable tool for making your first home purchase a reality. 

Federal First-Time Buyer Programs


FHA Loan

An FHA Loan is a mortgage backed by the Federal Housing Administration. Their main attraction is their low down payments, starting at only 3.5%, and a requirement for credit scores as low as 580. If you can afford to pay 10% or more down, the credit score range decreases to the 500-579 range. FHA Loans have total home price limits set by the federal government, as well as income limitations. FHA Loans may require private mortgage insurance depending on the amount you are able to pay down.


A USDA Loan is reserved for those wishing to purchase a home in a region that is designated as a rural area. These loans are for low to moderate-income households that require zero down payment, at least a 640 credit score and offer low mortgage insurance rates. 

Conventional 97

With a Conventional 97 Loan, you can borrow 97% of the home’s cost, resulting in a 3% down payment. Conventional 97’s are a good alternative to FHA loans if you have good credit and want a lower down payment. To qualify for a Conventional 97, you must have a credit score of at least 620, meet income limits, and plan to live in the purchased property as your primary residence.

VA Loan

Reserved for veterans and active service members, a VA loan requires no down payment and a credit score of at least 620. VA loans have some of the best mortgage attributes, with competitively low-interest rates, limited closing costs, and no requirement for private mortgage insurance.  

Local and County Based Incentives

happy family


Buying Into Baltimore

Buying into Baltimore works like a lottery, providing $5000 for downpayment and closing costs that are forgiven over five years to 20 lucky winners every year. This program has no household income limits.

Baltimore City Employee Homeownership Program

A $5000 loan is offered to full-time, permanent Baltimore City staff to purchase a home. The loan is forgiven over five years.

BayBrook Boost

Reserved for those purchasing a home in the Brooklyn and Curtis Bay neighborhoods in Baltimore. Depending on your household income, you can receive a $10,000 or $20,500 interest-free loan with no monthly payments. You must pay this loan back when your first mortgage ends. 

Columbia Down Payment Assistance Program

Provided by Howard County, the Columbia Down Payment Assistance Program offers interest-free loans with no limit where the borrower pays a low rate of 2 points below the primary mortgage interest rate. The loans are due at the end of the first mortgage.

Germantown First-Time Home Buyers

Provided by Montgomery County, Germantown first-time home buyers can borrow 5% of their purchase price up to $10,000 using the Revolving Closing Cost Assistance Program. This comes as a loan with a 5% interest rate that the borrower must pay back in equal installments over ten years with their main mortgage. 

Buy Your First Home With Help From Maryland’s Best Mortgage Brokers and Lenders

As you can see there are various incentives and assistance options available to assist in purchasing your first home as a first-time homebuyer in Maryland. With so many choices, it may be difficult to boil down which is best for you. Thankfully, at Federal Hill Mortgage, our team of mortgage professionals is ready to provide you with transparent guidance so that you can get the most out of the incentives and assistance programs. We will be by your side every step of the way so that every aspect of your mortgage is clearly explained and expert advice is given. Get the most out of your first home-buying experience with Federal Hill Mortgage. Call or contact us today to get started.

First-Time Buyers Home Buying Advice

How to Find the Right Realtor as a Montgomery County First Time Home Buyer

Finding the right realtor to facilitate your first-time home purchase can have an immense impact on the outcome. Who you choose dictates if you get the house, how much you end up paying, what homes are found for you to choose from, and many other crucial factors that it would be best to have handled by an experienced realtor who retains your best interest throughout the buying experience. As a Montgomery County first time home buyer, finding the right realtor can be difficult but by following the information provided here, your chances of finding a well-intended realtor are significantly increased.

What is a Realtor?

A realtor is someone who facilitates the home-buying process. These individuals have experience in real estate, are licensed agents, and are members of the National Association of Realtors, meaning they have more training and accreditation than real estate agents, who just have a real estate license in the states that they operate. A proper realtor will assist you in finding homes that fit your buying criteria, as well as guiding you through the sometimes complicated process of purchasing that home. From there they will help you to construct an offer and facilitate the purchase of your home. The main reason people use realtors is for their capability of finding homes, their experience in the home buying process, and their ability to secure more favorable terms.

How to Find a Realtor


There are several different avenues to take when looking for the right realtor for a Montgomery County first time home buyer. The most commonly used method is to ask friends and family for recommendations, preferably for someone who they have recently used. These referrals are based on the experience that the friend or family member has recently had, making it a good gauge for how your experience with that particular realtor will go. It is very important to secure a realtor who is familiar with the area that you are trying to purchase in. You can also attend local open houses to network with the realtor that’s present. Keeping an eye out for realtor signs in your area can also broaden your selection. Finally, if you are unable to source a realtor using these methods, you can call your neighborhood realtors. Be sure to shop around and compare realtors by asking several key questions.

Questions to Ask Your Realtor

There are different types of realtors that specialize in buying and selling. Along with making sure that your realtor represents you, the buyer, there are other important questions that you are going to want to ask to make sure that a certain realtor will guide the purchase in your favor. Besides finding out what services and type of representation the realtor provides, inquire about how much experience they have in your area. This is a good indicator that the realtor has a good understanding of how long homes typically stay on the market and other economic trends relative to your location. As a first time home buyer in Montgomery County, you are also going to want to ask questions specific to buying such as, what challenges you will face in today’s market. This will give you an idea of what the realtor knows about the local market and what difficulties you stand to face. Also, it is important to understand what the realtor will do to assist in making competitive offers and how they will negotiate with sellers. 

Tips for Buyers

Before deciding on a realtor, be sure to shop around and compare their experience, their buying approaches, and their ability to maintain communications. These are all crucial factors that go into the relationship you will have with your realtor and in turn, will affect your buying experience. They are your representation and will influence the seller and their agents. Make sure that you feel comfortable with your realtor and reassure yourself that this is someone that you want facilitating a major purchase. The rate that the realtor charges should be around 5-6% of the final sales price, anyone who charges significantly more than that should be avoided. Finally, you will want to look into the realtors’ previous clients and see if they were satisfied with their work. With the realtor being the one who creates an offer, see how other offers and purchases were conducted with previous clients and see how they differentiate from the listing price.  

Get the Best Rate as a Montgomery County First Time Home Buyer

By finding the right realtor as a Montgomery County first time home buyer, you set yourself up for a successful and advantageous home purchase. The right realtor will locate homes that fit your needs and wants in the area of your preference, formulate and facilitate competitive offers and ensure that you get a better deal than you would have without them. Once you have found a realtor who retains your best interest, you will need a mortgage broker that does the same. At Federal Hill Mortgage, you will be paired with team members who will guide you through every step of the home-buying process and secure great rates and terms on your mortgage plan. To find out the difference that Federal Hill Mortgage can have on your home-buying experience, call or contact us today!

First-Time Buyers Home Buying Advice

5 Tips for Choosing a Home That Will Appreciate in Value

When choosing a home to purchase, one of the most important things to consider is its potential to increase in value over time. Real estate can be a significantly profitable investment, but only if the property appreciates over the time of ownership. To assist in predicting this appreciation, there are several key factors that should be evaluated in order to determine if, and how much, the property could be worth down the road. While there are limitless factors that come into play that cannot be foreseen, there are a few that can aid immensely in determining the appreciation value that your property could potentially have. By considering these before purchase, you will be able to gain a better understanding of what your home will be worth down the road.

1. Location

By far the most important factor to consider when purchasing a home is the location where it is situated. While you can make endless renovations on a home’s physical structure, the value of the land it is built on is mostly out of your control. When looking for a home that will increase in value, look at the local neighborhoods, schools and developments. If the neighborhood is growing and the market value for nearby homes has steadily increased over the past few years, that is a solid indicator that the area as a whole will continue appreciating. Look for recent developments and construction projects. If a home is located in a place where investors are funding major infrastructure projects, then the demand for homes in that area will increase as more people will want to move there. Some red flags for a specific location include rising crime rates, underfunded educational institutions, and abandoned structures. All of these factors will deter higher-paying buyers and thus decrease the value of your home as these problems continue to grow.  

2. Fixer Upper

While there isn’t much you can do about an area besides being vigilant in your observations and predictions, there is a lot you can do to a home’s physical structure to increase its value. When purchasing a home that could use improvements, it’s important to be conscious of what upgrades will make your day-to-day life more comfortable and what will impact home value. If you have the resources or the knowledge necessary to make these improvements, you can get a home for a good deal and raise its value through renovations. The location should still be considered when buying a “fixer-upper”. Buying a home that needs repairs in an advantageous location means that you will get the home at a relatively good deal and, through renovations, increase the value of the property while the land it is built on also appreciates. A well-built home in a depreciating location will lose value while a home undergoing renovations in an appreciating location will see a significant increase in value. 

3. Potential Upgrades

When looking at homes to purchase, try to imagine what upgrades you could potentially add to the property to increase its value. Does the kitchen need remodeling or new appliances? Could the yard use a serious cleanup and some new landscaping? A wide variety of affordable upgrades can be done to a home that can greatly improve its value. Be considerate when making these upgrades as some will cost more than the value they will add.

4. Market & Current Rates

home in Aberdeen MD

While future market fluctuations are nearly impossible to predict, the current market and available rates should affect your decision on when to buy a home. Purchasing a home with a long-term loan at a high-interest rate does not leave as much room for appreciation as one purchased at a lower interest rate would due to the additional cost of interest. Buying a home while the market is low will greatly increase its chances of rising in value. When you buy your home is almost as important as where you buy your home. See if homes in your desired area are selling for, or more, than the asking price. If so, those homes are typically overpriced to match the high demand for real estate. Buying a home for more than it is actually worth is a surefire way to ensure that your home does not appreciate as much as buying a home that is undervalued.

5. Population Influx & Growing Job Market

home tour

When it comes to the impact of supply and demand, real estate is no exception. If an area shows a recent influx in population, or if an influx can be accurately predicted then it can be assumed that demand will rise. When demand rapidly rises, the supply of homes takes a while for it to catch up and in that time, the homes already there will increase in value. A major indicator of a population influx is a growing job market. A great recent example of this is the Washington D.C metro area. Demand for homes has significantly increased over the past decade due to a population influx. Due to this disparity in supply and demand, homes in the D.C metro have skyrocketed in value. 

Make the Most of Your Investment With a Great Mortgage Rate

Purchasing a home at a low rate that will increase in value over the duration of your ownership is one of the best things that one can do to ensure a financially successful future. To help ensure that you obtain a beneficial deal on your new home, have the professionals at Federal Hill Mortgage in your corner, assisting you every step of the way. Our team will use our decades of combined experience to make sure that you have every asset that you need to guide you into your new home. For the best mortgage brokers and lenders in Baltimore and the surrounding areas, look no further than Federal Hill Mortgage. Call or apply now to receive expert guidance throughout your home-buying experience. 

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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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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.


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.

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Learn With Mortgage Brokers in Bethesda: Should You Lock in a Mortgage Rate Right Now?

In 2022, we are currently experiencing unusually high mortgage rates. As a result of a multitude of factors, high-interest rates greatly affect buyers in the long term. Several avenues exist to mitigate risk with this jump in high-interest rates such as an interest rate lock. Being nearly impossible to predict, interest rates could rise in favor of the lender or decrease benefiting the borrower, meaning that the risk of an interest rate lock is present for both parties. When working with mortgage brokers in Bethesda, be sure to understand all of the factors that go into a mortgage rate lock and conduct thorough research into whether a rate lock is right for you.

What is a Mortgage Rate Lock?

A mortgage rate lock is when your rate is locked in between the time you make your offer and closing. If you close within the rate lock period, you should incur no charges. A rate lock can secure you a good rate if one to your standards is available at that time, but a rate lock will also prevent you from securing a better one should the rate decrease. Interest rates rapidly fluctuate, therefore, locking in an interest rate can help you better plan for future mortgage costs. A rate lock can be a useful tool or a financial risk, depending on how they change during the course of your mortgage.

Common Questions About Mortgage Rate Locks

What is the Rate Lock Period?

Typically, mortgage lenders in Bethesda will offer a rate lock period between 15 and 60 days. If you require a longer rate lock period, it will end up costing more and only some lenders offer this option. Closing before the rate lock period ends prevents this additional charge. 

What is a Float-Down Option?

A float-down option allows borrowers to access lower rates if they decrease during the rate lock period. Float-down options are only offered by some mortgage brokers in Bethesda and may only be applicable if rates drop considerably. There is no way of telling which way rates will change so this option can be an extremely beneficial option or a wasteful expenditure. Deciding on a float-down option should reflect your individual financial situation.

Are Their Fees Associated with a Mortgage Rate Lock?

Depending on the lender, short-term rate locks should be available with no fee if you close within the allotted time. What does come with an additional cost is extending the time that your rate is locked in. Typically, this fee is based on a percent of the loan.

Benefits of a Mortgage Rate Lock

Lower Cost

If you are satisfied with your current mortgage rate, locking in your rate usually comes at no extra cost, depending on the lender. 

Risk Reduction

Interest rates are far too common, especially in recent years. Locking in your rate reduces the chances that you will be subject to a jump in interest rates. While a rate lock avoids rate hikes, they also avoid better interest rates if you don’t have float rate provisions in place.

Risks of a Mortgage Rate Lock

Stuck with a Relatively High Rate

The biggest risk of interest rate locks is missing out on lower interest rates, should they decrease. While some options are available for mitigating this risk, not all lenders offer them. Discuss your options with your Bethesda mortgage broker before you finalize any plans to lock a rate.

Fees for Locking Rates

Fees differ between lenders but typically you can expect to pay a rate lock fee for terms longer than 30 days. Rate lock extensions are also usually available, also with a fee attached. These fees can be considerably lower than the overall cost of ending a rate lock term within 30 days.

Rates Dropped After You Locked in Your Rate, Now What?

Mortgage brokers in Betheda using pen to for client to sign document.

Go Over Your Options With Your Lender

If rates decrease well below what you locked in at, don’t panic. The first thing you need to do is to discuss your options with your Bethesda mortgage broker. There are routes you can take to decrease your interest rate such as changing to a shorter loan term but the rates will still be calculated off of the rate that you locked in at. Before you lock into a rate, discuss these potential options with your mortgage broker in order to have a plan in place should this occur.

Allow Your Rate Lock Term to Run Out

This option greatly depends on the seller of the home you are trying to purchase. If they are inclined to delay closing until the rate lock runs out then your broker would take your new rate based on the current one and not the one you locked in at. Allowing your rate lock to run out is tricky to navigate as it greatly depends on the willingness of the seller and the lender to accommodate your requests. 

Find a New Lender

If all else fails and the new rate is low enough to justify the costs, switching to a new lender might be your best and only remaining option to avoid your locked-in interest rate. This will inevitably cause a delay in closing and potentially mean you lose out on that particular home. Additionally, all appraisal fees paid to the original lender are lost. While this can be a difficult route to pursue, it can be a saving grace if conducted properly.

Experience the Difference of Working with Expert Mortgage Brokers in Bethesda MD

Locking in your mortgage rate should be a decision based on a variety of factors unique to your individual situation. Because it is nearly impossible to predict the trends of interest rates, deciding to lock in a rate comes with as much risk as it does security. Deciding if you should lock in or not depends on your available options should interest rates decrease. If you are satisfied with your current interest rate, a rate lock would work in your favor. If you are anticipating and hoping that interest rates fall within the time of your mortgage, an adjustable rate might be better for you. It is highly recommended that one becomes familiar with all of their potential options before taking on a locked rate mortgage.

When taking on a mortgage, having a professional broker on your side can prove to be invaluable. The team at Federal Hill mortgage will be by your side through every step of the process and ensure that you are aware of every possible option at your disposal. Apply now to get started!

First-Time Buyers Home Buying Advice

Competitive Market Tips for First-Time Home Buyers In MD

Jumping into the real estate market for the first time can be a daunting task. Simply looking at the wide variety of available homes for sale shadows the process that goes into mortgaging a home. By making yourself aware of this process and carefully formulating a mortgage plan tailored to your unique situation, you stand to be advantaged among first-time home buyers in MD and will be able to better navigate the current competitive market. 

Review Your Financial Situation

Before hopping on the real estate websites and seeing what is available, you need to review your financial situation. Assess your debt such as credit cards and loans. Paying off your debt will grant you a better interest rate and reduce the potential risk for the lender. Checking your credit also allows you to gain an idea of where you stand financially and what types of loans you may qualify for. Once you have gathered all of your necessary financial information, you can properly access all of it to determine your budget for your mortgage and down payment. When considering your budget be sure to include property taxes, homeowners insurance, regular maintenance, and a fund for emergency repairs. 

Pre-Approval and Pre-Qualification

Gaining insight into what your home buying costs are going to be is extremely valuable to first-time home buyers in MD. Pre-Qualification allows you to find out how much you may qualify to borrow, what your spending budget is and what your monthly payment could end up being. The pre-qualification process will go over your debt-to-income ratio and your overall financial situation to understand your ability to pay back your mortgage loan. A majority of sellers will not consider an offer without pre-qualification. A pre-approval letter is from a lender which says how much of a mortgage you will qualify for. This will show the seller how much you will be able to offer on a home. A pre-approval works wonders in having a seller take you seriously as it shows your ability to make the purchase and adds a great deal to your appeal as a buyer. Both of these preliminary measures will greatly increase your chances of securing the home of your choice. 

Down Payment

The down payment is a major factor in determining your mortgage costs. Generally, the higher downpayment you can afford, the better. Lenders prefer higher down payments as it reduces the risk that they take when lending you money. As a rule of thumb, a 20% down payment will result in lower interest rates and a shorter loan term. If you cannot afford 20%, fear not. Down payment assistance programs and first-time home buyer programs exist to assist buyers with down payments. Be sure to explore all of your options with your mortgage lender to find a program that applies to your situation. 

Finding Your New Home

Once you have completed the preliminary steps previously mentioned, it is time to start searching for your new home. By understanding what you can afford and how much you qualified to get loaned, you can refine your choices and find homes that you can afford. First, you need to list your needs and wants. It is much more important for you to find a home that meets your needs rather than your wants. Next, find out what type of home you want. Single-family homes, duplexes, condominiums, and townhomes are available with varying specifications that should be selected based on your personal preference and budget. After the type of home is selected, pick a neighborhood that works for you and meets your criteria. Look for neighborhoods with good schools, low crime rates, low property taxes, and potential for growth and development. This is an important step as it will determine the future value of your home. When looking, be patient and don’t panic buy. Jumping the gun on a home purchase is a common mistake made by first-time home buyers in MD. The market is constantly fluctuating, meaning that the homes currently listed will be sold and replaced with newly listed homes every week.  

Making an Offer

Before making an offer, shop around with different mortgage lenders to secure the best rates available. Consider closing costs, points, and lenders’ fees and weigh them against each other to find a mortgage plan that works best for you. Once you have selected a lender and are sure about a home that you have found, you are ready to formulate an offer. The stronger the offer you make, the better chance you have of securing the home. Making a strong offer includes making a larger down payment and limiting contingencies. Making a larger down payment shows the seller that you are ready and able to make the purchase. Limiting contingencies such as insurance, financing approval, and home inspection clears the path for a sale and makes it easier and more attractive for the seller. By making the best offer possible you separate yourself as a serious buyer which is highly important in a competitive market.

Buying Strategies

While we have gone through how to properly prepare to make a first-time home purchase, there still exist several strategies that should be implemented in order to gain an edge in the current competitive market. First comes bidding. In 2021, over half of the homes listed sold for higher than the asking price. If you intend on purchasing the home that you are bidding on, remember that you are bidding against other buyers and not trying to secure a bargain. Next comes cash offers. If you can afford it, nothing beats the attractiveness of a cash offer. This appeals to the seller due to its relative simplicity and quick transaction speed. Letters of intent are away to ensure the seller that you are determined and committed to making the purchase as well as establishing a personal connection with the seller. Gaining a competitive edge over other buyers through these strategies is the best way for first-time home buyers in MD to secure the home that they aspire on living in.

Expert Brokers for First-Time Home Buyers in MD

The current competitive market has put a strain on first-time home buyers in MD, however, by following the aforementioned steps, you greatly increase your chances of securing the home you want for a price you can afford. Even with all of this beneficial information, having a professional mortgage team in your corner is the best thing you can do to increase your likelihood of success. Federal Hill Mortgage’s team of experts is ready to work with you from start to finish to find the perfect mortgage plan that fits your specific needs. Contact us today to get started!

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