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Mortgage Rates

Maryland Mortgage Rates for Winter 2023

As we enter a new year, the mortgage industry still faces a chaotic environment. The pandemic has left lasting repercussions, and analysts predict a recession on the horizon. These factors work in tandem to create complications within the economy at large, and within the real estate market To gain a grounded understanding, we have to analyze the elements that affect Maryland mortgage rates. While even market experts lack a crystal ball, there is information we can extrapolate to determine where rates are headed in Maryland in 2023.

Current Maryland Mortgage Rates

Maryland Mortgage Rates as of January 23rd, 2023

Fixed Rate Mortgages

30-year fixed – 5.875% APR – 6.016%

20-year fixed – 5.375% APR – 5.597%

15-year fixed – 4.99% APR – 5.258%

10-year fixed – 4.99% APR – 5.347%

30-year fixed FHA – 5.875% APR – 7.076%

30-year fixed VA – 5.6255 APR – 5.975%

Adjustable Rate Mortgages

10-year ARM – 5.5% APR – 6.355%

7-year ARM – 5.375% APR – 6.575%

5-year ARM – 5.5% APR – 6.853%

Where is the Maryland Housing Market Trending?

Currently, the Maryland housing market is going through a major change. Maryland mortgage rates are at record highs over the past 20 years at over 7%. With homes beginning to stay on the market longer, sellers are starting to reduce their prices. This means that buyers are gradually regaining their market power. Amidst this shift in the housing market, buyers and sellers alike are wondering if and when the housing market in Maryland will experience an upheaval. 

What to Expect for 2023’s Real Estate Market

As it stands at the beginning of 2023, inflated home prices, low inventory levels, and high mortgage rates create a perfect scenario for the housing bubble we are currently experiencing. If that bubble breaks then the housing market is in jeopardy of crashing. However, with a limited supply of available housing, experts are indicating that the real estate market won’t crash but simply slow down. It is expected that interest rates will keep climbing due to continuing inflation, the war in Ukraine, and the expected recession. It is also expected for home prices to continue a gradual rise over the next year and potentially even out shortly after, especially as the housing inventory remains at a 3-month supply, less than half of what is required.

Professional Maryland Mortgage Brokerage Service

While the housing market is experiencing difficulties, there are still fantastic options out there for the insightful buyer. If you are interested in receiving professional guidance throughout your mortgage process, Federal Hill Mortgage is here to help. Our experts will provide transparent advice that benefits you and your mortgage. We strive to help every one of our clients through the current real estate market and secure the lowest Maryland mortgage rates possible. Ready to get the most out of your mortgage? Call or contact Federal Hill Mortgage today to get started.

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Mortgage Education Mortgage Rates

How to Get the Best Mortgage Rates in York PA

Every buyer faces can face challenges along the road to homeownership. A mortgage is a significant undertaking. You’ll want every opportunity to simplify the process and lessen the cost burden during your purchase. Interest rates are a key factor in the affordability of a property. A reduction of a few percentage points can save you tens of thousands of dollars over the course of your loan. There are a variety of steps you can take to reduce your rate. If you want to get the best mortgage rates in York PA, here are 8 steps you can take,.

Credit Score

The first thing that you should do before taking on a mortgage is to consolidate your credit score. You can start by checking your credit score for inaccuracies that are decreasing it and dispute those claims and make an appeal. If your credit score is below 760, consider paying off your balances and making sure that you make your payments on time before taking out a mortgage loan. Anything you can do to improve your credit score will significantly be reflected in your mortgage interest rate.

Decrease Your Debt, Increase Your Income

As with improving your credit score, decreasing your debt and increasing your income will improve your debt-to-income ratio, thus making you less of a risk to your lender. Pay off balances, limit your spending, and if possible, increase your income. While this may be easier said than done, lowering your mortgage rates in York PA will end up saving you dividends over the life of your loan.

Apply to Multiple Lenders

Mortgage lenders are in competition with each other and will offer you different mortgage terms and rates. For this reason, it is recommended that you shop around and apply to different lenders. Compare the estimates of a minimum of 3 lenders to see which rates and terms would benefit you the most. The main factor to consider is the length of the loan you’re looking to secure. For a long loan, you will want lower rates and if you plan on taking out a shorter loan, you will want lower closing costs.

Downpayment

In short, the more amount of money you put down as a downpayment, the less your mortgage rates in York PA will be. If you decide to put less than the recommended 20% on a conventional loan, your lender will compensate the extra risk by making you pay for private mortgage insurance. This will increase your monthly mortgage payment just as a higher interest rate would. If you can, save up for a larger down payment. Even if it isn’t 20%, it will improve your interest rate and lower your cost of private mortgage insurance.

Loan Term & Type

Interest rates will compile over time, meaning that the longer you have to pay it, the more you will end up paying over time. If you opt for a 15-year fixed-rate mortgage over a 30-year fixed-rate mortgage, your interest rate will be significantly lower, however, your monthly mortgage payment will be more. Even with higher monthly costs, you will end up spending much less if your interest rate is lower over the course of the loan.

Discount Points

Discount points allow you to decrease your interest rates by paying an upfront fee when closing on your mortgage. Each point is equal to 1% of the loan amount. This tradeoff will lower the risk taken on by the lender and in turn, save you money over the length of your mortgage. You will generally end up saving more on interest than the initial cost of the discount points. If you can afford it when closing, discount points are a great way to secure better mortgage rates in York PA. 

Adjustable Rate Mortgage

Instead of taking out a fixed-rate mortgage loan, you can potentially secure a lower interest rate with an adjustable-rate mortgage. This type of mortgage loan is unique due to its variable interest rate, which changes over a fixed period of time. The initial interest rate is typically below the current market rate. Once this predetermined period ends, the interest rate adjusts at a pre-arranged frequency. The shorter duration that the adjustment period is, will typically cause the loan to have lower interest rates. Once the first term is over, the loan resets to the current market values. This type of mortgage is only recommended for those with specific circumstances and due to its complexity, it is highly recommended that you have a mortgage broker to help you successfully navigate it. 

Hiring A Mortgage Broker

While there is a variety of steps that you can take on your own to lower your mortgage rates in York PA, one of the best things that you can do to benefit your mortgage terms is to hire a professional mortgage broker. They will effectively guide you through the process, offering transparent advice and negotiating with your lender to secure better rates and terms. Their expertise will help you find routes toward a more beneficial mortgage and expose options that you might have otherwise overlooked. 

Professional Mortgage Brokers in York PA

If you want to secure the best possible mortgage rates in York PA, Federal Hill Mortgage is here to help. Our team of experienced mortgage brokers will guide you every step of the way and apply our extensive knowledge to your mortgage to get the best terms and lowest interest rates possible. Give your mortgage the benefit of having Federal Hill Mortgage in your corner. Call or visit our website today to get started.

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Mortgage Education Mortgage Rates

What Are Interest Rate Buydowns?

Your interest rate is an essential piece of your loan puzzle. As a buyer, you have a wide range of options to choose from. Finding avenues to lower your overall interest rate is key to a successful home-buying process. One thing that has been drastically affecting the purchasing ability of prospective buyers is the high-interest rates we are currently experiencing due to the federal response to combat inflation. If you fall into this category, it may be time to explore an interest rate buydown. It gives you the opportunity to lower your interest rates and save a significant amount of money throughout the life of your mortgage. By understanding how interest rate buydowns work, you can take advantage of them to lower your mortgage interest rate.

What is an Interest Rate Buydown?

At its core, interest rate buydowns are when you pay a larger amount upfront to receive a lower interest rate on your mortgage. As the buyer, you purchase discount points that are prepaid upfront. These allow the lender to provide more favorable interest rates. There are several different forms of interest rate buydowns. Some are active throughout the entire duration of the mortgage, while others allow a reduced interest rate for a specified duration of time. The cost of these discount points depends on the amount of the loan. Typically, each discount point is equal to 1% of the entire loan amount. The interest rate deduction per discount point varies between lenders.

Who is Able to Buy Down a Mortgage?

In most cases, the buyer is the one who chooses to pay for discount points upfront to get a better interest rate but there are also situations where a seller or builder might offer to pay for discount points. Sellers will offer interest-rate buydowns in order to incentivize the purchase of the home. These often are in the form of a one-time payment into an escrow account that will pay for discount points throughout the mortgage. While having the seller pay for the buyers’ interest rate buydown is a major advantage, they will often include this cost in the final purchase price of the home. To incentivize home purchases in new developments, builders will sometimes offer to provide points towards an interest rate buydown. These are usually only found in neighborhoods that have recently been constructed in order to fill up their occupancy quicker. 

Forms of Buydowns

While most interest rate buydowns are throughout the duration of the mortgage, they can be negotiated with terms that are more favorable to your specific situation. For example, a 1-0 buydown lowers the interest rate by 1% for the first year. While this type won’t achieve the amount of savings with a permanent buydown, it is a valuable asset if you expect your income to increase in the near future. A 2-1 buydown is similar to a 1-0 buydown but instead sees the interest rate begin 2% lower than the contract rate the first year, 1% lower the second year, and then return to the full interest rate for the rest of the mortgage. Less common is the 3-2-1 interest rate buydown. This type sees the rate go from 3% less the first year, 2% the second, 1% the third, and the full interest rate for the rest of the loan term. 

There is also an option to purchase discount points that will evenly distribute and reduce the interest rate throughout the duration of the mortgage. The initial cost of an evenly distributed interest rate reduction is much higher than the other forms of buydowns, however, the savings that can be had over the life of the loan are considerably larger when compared to the other forms of buydowns. This type of interest rate buydown is recommended for those who intend on staying in the home for over 5 years. 

When Should You Buydown Your Mortgage?

Even with the advantages of an interest rate buy-down, it is crucial to consider your situation and contemplate if a buy-down will benefit you. If the seller or builder offers to provide you with discount points, it is beneficial so long as the home’s purchase price isn’t significantly increased. While interest rate buydowns can save you money in the long run, the initial expenditure can often be quite hefty. This is why interest rate buydowns are recommended to those with savings left over after paying the downpayment and closing costs. Because buydowns require money upfront to access savings in the long run, interest-rate buydowns are only feasible if the buyer owns the home for an extended duration. 

The Breakeven Point

When exploring if an interest rate buydown is right for you, you must consider the return on investment and find out if your buydown financially makes sense. To determine how much you will save, you must first determine how long it will take for your monthly savings to reach the cost of the discount points. To do this, simply divide the amount you spent on your discount points by your monthly savings. The result will show you the amount of time it will take for you to start earning your savings. If your breakeven point is longer than you plan on owning the house, you will not save any money using an interest-rate buydown. 

Restrictions on Buydowns

Unfortunately, there are some restrictions in place that limit the use of interest rate buydowns. Investment properties and cash-out refinance cannot utilize a buydown. To avoid overpriced homes, some states have limits on the number of discount points that can be purchased. Certain types of mortgages also have restrictions such as an adjustable-rate mortgage, which is only able to be used with plans that have an initial interest rate period of at least three years. Lastly, government-backed loans like an FHA loan are only able to use temporary buydowns if they are on a fixed mortgage. If you have an FHA loan, you cannot temporarily buy down your mortgage if you are getting an adjustable-rate mortgage or are refinancing, although, permanent buydowns are permitted.  

Take Control of Your Home Loan With Federal Hill Mortgage

If you are looking to purchase a home and take on a mortgage, do it with the confidence that comes with having a team of mortgage professionals in your corner. At Federal Hill Mortgage, we work closely with each of our clients to ensure that they get the best mortgage terms available. Considering taking advantage of an interest rate buydown? We can help you to get favorable terms and increase your monthly savings. Call or contact Federal Hill Mortgage to begin your home-buying journey today!

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Mortgage Education Mortgage Rates

Maryland Mortgage Rates Update Winter 2022

With the pandemic still affecting the real estate market, the rates and trends have yet to level back to normal. Pair this with the Fed raising interest rates to counteract growing inflation rates and you get a housing market that is still unfavorable to the buyers. By looking at the currently available Maryland mortgage rates and their recent fluctuations, we can begin to gain an understanding of where the market is heading. 

Current Mortgage Rates in Maryland

calculations

Maryland Mortgage Rates as of November 28th, 2022

Fixed Rate Mortgages

30-year fixed – 5.99%  APR – 6.15%

20-year fixed – 5.5%  APR – 5.726%

15-year fixed – 5.5% APR – 5.788%

10-year fixed – 5.5%  APR 5.903%

30-year fixed FHA – 6.75%  APR 8.097%

30-year fixed VA – 6.75% APR 7.218%

Adjustable Rate Mortgages

10-year ARM – 5.75%  APR – 6.446%

7-year ARM – 5.625%  APR – 6.614%

5-year ARM – 5.625%  APR – 6.822%

Where is the Maryland housing Market Trending?

Currently, the Maryland housing market is following the same trends seen in the national market. Home prices continue to rise even as inventory begins to pick up again. The average mortgage payment is 76% higher than it was in June 2019 and with the Feds continuing to combat inflation by rising interest rates, this is showing little sign of reversing. While this market does favorite sellers, buyers are still in a poor buying position. Pair these high Maryland mortgage rates with increased home prices and fears of an impending recession and the toll on the housing market becomes apparent. 

What to Expect for the Rest of 2022 and The Beginning of 2023

The big question for the rest of 2022 and the start of 2023 is what will happen with inflation. If it continues to rise, the Fed will continue to raise interest rates but if there is any indication that inflation begins to slow down, then rates will begin to stabilize and return to normal levels. The country is at a crossroads with the inflation dilemma with some analysts saying there is a 50% chance of a recession within the next 12 months. While a market crash is rumored, data collected does not show this to be confirmed at this time. There is hope that Maryland mortgage rates will begin to cool but it is largely dependent on the results of inflation and the nation’s economy as a whole. There are several global factors like the War in Ukraine and the fallout from the pandemic that is still affecting the United States. While there are several factors that are still up in the air that will determine the results of Maryland mortgage rates going into 2023, change is coming one way or another. 

Take on Your Mortgage With Professional Guidance From Federal Hill Mortgage

The Maryland mortgage rates have been greatly affected by several global and stateside factors over the past year and their recovery has not been too favorable to buyers quite yet. Hopefully, a rising inventory and slowing inflation will bring about a stabilization of the housing market. Regardless of the market, having a professional mortgage broker and lender, who will assist you in securing the best available Maryland mortgage rates when you are ready to purchase your new home, is one of the most surefire ways of securing a better deal. Call or contact the team at Federal Hill Mortgage to get the process of your new home purchase started today. 

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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.

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Home Buying Advice Mortgage Education Mortgage Rates Real Estate Advice

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!

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Learn With Mortgage Brokers in Rockville MD: Is the Sellers Market Cooling Off?

It’s no secret that the economic crisis resulting from the COVID-19 pandemic has wreaked havoc on the global economy. One of the consequences of this economic turmoil has been the massive effect it has had on the domestic housing market. Since the lockdown began at the beginning of 2020, housing prices have consistently increased and those selling have enjoyed a seller’s market. While many people have sold their homes for a large profit, many people looking to buy are left asking when it will end? Learn with mortgage brokers in Rockville MD to find out where the housing market is now and where it is predicted to head in the coming months.

Sellers Market vs. Buyers Market

A seller’s market is when the housing market has ideal conditions for someone to sell their house and a buyer’s market is when the market sits at a place where buyers benefit. Typically, a seller’s market comes with high-interest rates, and when houses sell for more than they were previously worth. In our current seller’s market, homeowners selling their homes almost always receive more than the asking price. Not only are they selling for more but they are selling quicker. On average, homes last only 20 days on the market. A buyers market, on the other hand, is when the supply is greater than the demand, interest rates are low and homes can be negotiated for below the asking price. The market swings back and forth meaning that due to the conditions of the seller’s market, a buyer’s market will begin to emerge.     

Current Stats

By looking at the current statistics of the housing market, we can develop a much better understanding of where it stands now and where it can be predicted to go. Rockville MD mortgage brokers are always breaking down the statistics to gain an idea of where the market is heading.

  • Total New Net Listings: 4.2% Decrease versus 52 weeks prior
    • A net listing is when the owner sets a minimum amount that they wish to receive for their unit and allows the broker to collect a commission if the unit were to sell for a higher price.
  • Monthly New Net Listings: 11.6% Decrease compared to May 2021
    • How many new net listings there are by the month. Tracking this by the month allows for Rockville MD mortgage brokers to get a better understanding of where trends are heading.
  • Monthly Contract Volume (Single Family Detached Homes): 10.9% Decrease year-over-year
    • The monthly contract volume is how many homes are sold in that specific month. In this case, there was a 10.9% decrease in the number of homes sold that month compared to the years prior.
  • Median Listing Price: 12.7% Increase year-over-year
    • The median listing price is in the middle of the range of house prices currently available. When this number rises it means that homes have gotten more expensive.
  • Median Closing Price: 14.4% Increase year-over-year
    • A 14.4% increase in median closing price is evidence that homes are closing at a higher price than they did in previous years.

Mortgage Rates 

When the pandemic occurred, lenders dropped interest rates to attract more buyers. Since then, this trend has done a complete 180. In a move to combat rising inflation, the Federal Government has raised interest rates by 0.75%, the largest rise since 1994. This has caused the average interest rate to rise to just under 6% for a 30-year fixed-rate mortgage. The last time that interest rates were above 6% was during the 2008 housing crisis. The mortgage rates are expected to remain high in the coming months and may even continue to rise.

Inventory 

Typically, an increase in mortgage rates would deter buyers and thus increase the available inventory. However, the available inventory is yet to show any signs of increasing, indicating that the inventory levels will remain low for some time. New listings are down 7% since last year marking their 21st consecutive annual decline.

Home Prices 

The median home sale price has increased 17% year-over-year and homes are consistently selling for more than the asking price. This year homes only stayed on the market for a median of 18 days as opposed to the 26-day average it took last year. Hopefully, as interest rates rise, home prices will decrease. Already, mortgage brokers in Rockville MD have seen 13% of homes dropping their listing price in the past four weeks, an indicator that the seller’s market is cooling off. 

Where is the Market Headed? 

Before the pandemic, these observations would leave a well-versed Rockville MD mortgage broker optimistic about the housing market’s future and lead him or her to believe that the seller’s market is cooling off. Now, in the post-pandemic economy, it is a lot harder to make these assumptions and estimates due to the unprecedented nature and irregular fluctuation of the market. The biggest indication that the seller’s market is ending is that home prices are beginning to show signs of decline in the spring months which would normally see an uptick in price. While irregular, it does not make up for the severe lack of inventory. Without an abundance of homes, the competitiveness of pricing is lost. The disparity between supply and demand continues to exasperate the seller’s market and with the anticipation of rising mortgage rates, the time for a buyer’s market is still well off. 

Mortgage Brokers in Rockville MD Here for You In a Challenging Market

While the market is ripe for sellers to make a healthy profit on their homes, it has yet to sway in favor of buyers. The market constantly fluctuates and with new governmental implementations on the way, a lot is bound to change over time. The best thing that a homebuyer can do in a seller’s market is to find a Rockville MD mortgage broker that will use their expertise to assist in finding the best deal and rates available. At Federal Hill Mortgage, we use over a decade worth of experience to grant our clients the absolute best mortgage possible. Contact the #1 mortgage broker on the east coast, Federal Hill Mortgage and see the difference.

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Home Buying Advice Mortgage Education Mortgage Rates

Learn With Mortgage Brokers in Towson: How to Secure a Great Rate

Learn With Mortgage Brokers in Towson: How to Secure a Great Rate

Taking on a mortgage is a long-term financial decision that requires careful planning and research to ensure its success. When working with mortgage brokers in Towson, mapping out your financial status is vastly important as well as developing a comprehensive understanding of the mortgage process. It is much easier to take notice of the down payment and listing price of a home rather than the small percentage that is the interest rate. A few percentage points inevitably add up over the years and can quickly end up becoming a deciding factor on affordability. Thankfully, there are several steps that you can take to lower your interest rates and in turn, make your mortgage experience less of a financial burden. 

1. Check Credit Score

Your credit score is the first thing that mortgage brokers in Towson will look at to judge your ability to pay back the loan. A higher credit score shows the lender that you make timely payments on your debts and have a track record to prove it. If you have a low credit score the lender will raise the interest rates to compensate for the lack of credibility. In short, the better your credit score is, the lower the offered interest rates will be. By checking your credit score you can begin to evaluate where you stand and what you can do to increase your score. Having a higher credit score will cause you to save exponentially on your interest rate and is decisive in determining your overall financial expenditure. Once you have an idea of where your credit score sits, you can begin to take the steps to improve it.  

2. Improve Credit Score

Having a credit score that is 760 or above means that it fits in the excellent range. To get the best interest rates, you should take the steps to get your credit score closer to the excellent range. Make timely payments and pay off existing balances to improve your credit score. Having a low credit score doesn’t mean you won’t be accepted for a loan, it will only cause your interest rate to increase. Another important tip when applying for a loan is to apply to several lenders in a short period of time so that it only affects your credit score as if you only applied for one.

3. Larger Down Payment

As a general rule, decreasing the expected risk to the lender will cause our interest rate to go down. With that being said, a larger initial down payment will make it so the lender is less liable and in turn, they will offer better interest rates. Typically if you pay less than 20% down on a conventional loan, you will have to pay for private mortgage insurance or PMI. Even if you don’t put 20% down, a larger down payment will decrease the cost of the PMI.

4. Shorter Loan Time

Typically, mortgage loan terms are 15 and 30-year fixed-rate mortgages. Usually, shorter loan terms result in lower interest rates. While this does save a borrower in the long run, they will end up having to pay more monthly. Another option to consider is an Adjustable-Rate Mortgage or ARM. An Adjustable-Rate Mortgage is a good option if you want to start with a low introductory rate and then have your interest rate adjusted after a certain period of time. Typically, the rate is matched with a national index. These carry a little more risk as predicting the change in interest rates is a guessing game. 

5. Increase Income, Decrease Debt

Getting a good interest rate means having the best credit score possible. Simply put, one should increase income and decrease debt. While gaining income is easier said than done, a better debt-to-income ratio or DTI will look better to lenders and grant you a better rate. Generally, any DTI over 43% will prohibit qualification for a mortgage loan. Reducing your debt before you apply for a loan is one of the best ways to secure better interest rates.

6. Apply with Several Lenders

Shopping around to compare prices is always a good idea and helps a borrower gain an understanding of the range of offers. Base your desires on your financial situation and find a lender who offers you rates that best suit you. There are a ton of different Towson mortgage brokers competing for your business, do not settle for one that does not have a fair offer. 

7. Watch Mortgage Rates Trends

Mortgage rates are constantly changing. This can be used to the borrower’s advantage to get a better interest rate. Lock in your fixed-rate mortgage when rates are trending down. Waiting for this decrease can make a major difference in the long run. 

8. First Time Home Buyer Program

Depending on the borrower’s location, different governmental programs offer incentives for first-time home buyers. These include loan forgiveness, down payment, and closing cost assistance, and tax breaks. Using these benefits can help to lower interest rates. Using everything that is at your disposal will help lower interest rates and result in long-term savings.

9. Discount Points

If you plan on keeping your mortgage for a long period of time you might want to consider paying for discount points. A fee paid at closing, and a discount point can help decrease your interest rate. Discuss with mortgage brokers in Towson how discount points can help save you money and what you would be able to afford.

Securing a great interest rate goes hand in hand with choosing a Towson mortgage broker that will work closely with you to get the best deal possible. Thankfully, Federal Hill Mortgage has been helping our clients achieve their home-buying goals since 2006 and is recognized as the number one mortgage broker in Maryland. Contact us today if you want to get expert assistance in your home-buying experience! 

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Home Buying Advice Home Selling Advice Mortgage Rates

How Inflation Affects Mortgage Rates and Home Prices

Inflation presents its own set of difficulties that can be difficult to deal with. The thought of our hard-earned dollars rapidly losing their value is one that strikes feelings of worry into our core. Currently, we are experiencing a 40-year high of 8.5% inflation and people are panicking. Despite this, not all of the effects of inflation are negative and silver linings can be found. Owning a home is a valuable asset that can be used as leverage in a financial situation and can be especially valuable during times of unprecedented inflation. We have compiled an overview of exactly how inflation affects mortgage rates and home prices and how you can safely navigate your finances and assets through it.  

Inflation and Fixed-Rate Mortgages

Having a mortgage during inflation is a double edge sword. If your mortgage does not have a fixed rate and instead you have an Adjustable-Rate Mortgage, the interest is subject to rise with inflation. On the other hand, taking out a 30-year fixed mortgage during relatively low average mortgage rates can help protect from inflation for three reasons. First, when you take on a low fixed mortgage rate it will not be subject to the inevitable rise in interest rates, which the Federal Reserve has already implemented as a countermeasure to the nation’s inflation. Next is having the large tangible asset that is a home. Owning a home is a great investment that will likely only grow in value over time, usually at a rate that counters inflation. Lastly is protection from rent hikes. Not only do renters have to deal with a significant rise in the cost of living, but their rents are also subject to a rise in rates while those on a fixed mortgage don’t have to worry about their rates increasing. Those with fixed-rate mortgages with a low rate are the best protected from how inflation affects mortgage rates.

Homeowners

Inflation can actually be beneficial for homeowners who have already borrowed money towards their house. Due to the decline of the dollar’s value, the money that they originally borrowed will be worth less in the future, thus lowering the overall cost of the debt owed. Having the asset of a home is a much better defense than cash savings, which will depreciate as inflation increases. As inflation increases, mortgage lenders will increase their rates but as of now, that has yet to happen. The current trend of low mortgage rates paired with the rapid rise of inflation makes taking out a fixed mortgage one of the best hedges to protect your finances against inflation. Low mortgage rates are not around to stay and are already beginning to rise

Home Prices

While inflation has just recently begun affecting mortgage rates, the cost of houses has been skyrocketing for some time. The cost of materials was drastically impacted by the supply chain crisis caused by the pandemic and now with the increase of inflation, that cost is only going to continue to rise. This means that homes being built are using materials that are more expensive and in turn, will raise the final price. If you already own your home, it will in turn increase its value. Residential properties have risen in value at an average of 12.7% and estimated home price is expected to go up 16% year-over-year in 2022 meaning that waiting to buy will end up costing much more. This jump in cost lowers the buying power of many individuals looking to enter a new residence but in turn, raises the value for those looking to sell. 

Making a large financial decision in a time of inflation can promote hesitancy and uncertainty. Understanding how inflation affects mortgage rates and home prices is only one piece of the puzzle. Fortunately, hiring a professional mortgage broker can ease the stress of buying or selling a home. They will provide you with a clear understanding of how to best approach the dilemma of inflation as well as explore mortgage options that can help protect against financial losses.

Here at Federal Hill Mortgage, it is our mission to ensure that our clients receive the best possible mortgage plan available to them. Contact us today and find out why Federal Hill Mortgage is ranked as Maryland’s number one mortgage broker and lender.

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Mortgage Advice Mortgage Rates Real Estate Advice

A Look At The Maryland Housing Market 2022

Since the start of the pandemic, the housing market has been a chaotic buying environment, especially for first-time buyers. Early on, low rates led to an extremely competitive market where bidding wars and homes going far above the asking price were not uncommon. With the new year well underway, we wanted to take some time to analyze the state of the Maryland housing market and help you make your buying goals for 2022.

How Did We Get Here?

When the pandemic was first felt, there were concerns that a market crash may follow as buyers employ caution during uncertain times. However, that was quickly proven wrong as low-interest rates contributed to a run on the limited housing market in Maryland. If you’ve been hoping to buy over the last year, you may have encountered the challenges that come with a limited market, especially in hot buying areas such as Frederick or Columbia. Low rates can feed into bidding wars, cash transaction incentives, buyers taking on additional fees, and other challenges. If you were seeking to buy over the past year, you may have encountered these scenarios. The good news is that we may have a more accessible market on the horizon.

Where The Maryland Housing Market is Today

The housing market across the state remains hot according to both our experience and the available data. In 2021, homes only spent 7 days on average on market, as opposed to the 11 days spent in 2020. As that article by Norada highlights, buyers may still be stepping into competitive markets due to lower inventory across the state. As such, the median home price in the state rose 9.4% in 2o21, from $330,000 in 2020 to $361,000 in 2021. The situation gets more difficult when we look at active inventory, with only “6,447 units whereas in 2020 it was 10,385 units for sale.” These challenges have discouraged some homebuyers, however, there may be help on the horizon in the form of stabilizing mortgage rates that make for a more fair market for buyers.

Current Rates in the Maryland Housing Market

The average 30-year fixed-rate mortgage has risen to over 4.0% for the first time since the pandemic began in March 2020. On the surface, this may seem counterintuitive for buyers who would like the get the most affordable rate when purchasing a home. But low rates can help contribute to the situation we’ve seen over the last two years with high competition making it more difficult for average buyers to get in on the housing market. When rates stabilize, they can help cool off buying booms. What this means for you is that you may be able to find houses with fewer bidding wars or special conditions such as more down. This overall makes for a fairer houses process for buyers of all means.

What’s the Outlook for 2022?

As of now, it’s still difficult to determine exactly. The hope is that as rates continue to stabilize, the market will follow suit. However, in an era where pandemic fluctuations still persist and have the potential to create substantial slowdowns for the building material industry, it’s hard to know for certain. Another hope is that the price hike for home prices that was experienced in markets across the country will slowly begin to taper out as demand evens. Recently, the chief economist of Realtor.com predicted a price rise of 2.9%. While this is still an increase in price, it pales in comparison to the raise of over 9% Maryland saw in 2021.

As of now, it’s important to keep home buying expectations in check and be a prepared buyer. A great way to do that is by working with the right mortgage brokers to help you break into a competitive market. Being pre-approved, for instance, is a great way to help you appeal as a buyer. The team at Federal Hill Mortgage wants to help you get there. Apply today to get started.

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