Northern Virginia Real Estate Finance
Interest Rates are FALLING - What does that mean to ME?
December 9th, 2008 Categories: Alexandria Dirt, Arlington Dirt, Falls Church Dirt, McLean Dirt, Northern Virginia Real Estate Dirt, Northern Virginia Real Estate Finance, Real Estate 101, Reston Dirt
So it seems that everyone’s fixated on interest rates – even people who are not considering buying or selling real estate - it’s a popular water cooler subject, for sure! People ask me about rates all the time and the reality is 
that I rarely give a straight answer (good strategy, huh?) 
The reason I don’t answer those questions is the answer is: “it depends”
It depends on the applicant’s credit scores, the amount of down payment they have, the program they are choosing, the lender and/or investor that will purchase their loan, etc…
Having said all of that, I wanted to take you through a real scenario of what falling interest rates could mean TO YOU as a buyer.
SCENARIO:
Let’s say you want to buy a home and you spoke with a lender to get “pre-approved” a few months ago. They would have taken your salary history, debt information, run your credit scores, etc… and let’s say they qualified you to purchase a home for $400,000 and you have $80,000 to put towards a down payment making your loan for $320,000 - with me so far?
Let’s assume that a few months ago, the interest rate quoted was 6.5% – (for the sake of keeping things simple, let’s not add any sort of loan origination fee or points into the discussion, however, please remember it’s an important point to evaluate when selecting your lender). Let’s also assume that it’s a straight, fully amortized loan (not interest only).
So your payment (without adding in taxes and insurance) which includes principal and interest would come to $2,022.62.
So we chat and we go out looking for homes and perhaps you travel for a month and you get back last week and call me up to discuss resuming your search… guess what – (assumption here) now interest rates are 5.5% and your new estimated payment on that same loan is now $1,816.92.
WOW - this means a savings of just over $200/month. You’re SO EXCITED.
The other solution would be that if you were really within your comfort zone at $2,022, at TODAY’s rate, that amounts to a loan value of $356,227 - so your PURCHASE POWER has increased by over $36,000 and now you could write an offer on a property upwards of $435K and it would cost THE SAME as it would have a few short months ago… cool, huh?
What’s the downside? Well, if rates rise, it all happens in reverse - so when you were once approved for $400K, perhaps now it’s only $365K… that hurts.
Many lenders will offer what they call a “float down” option to allow you to take advantage of ONE rate drop during the time you’re waiting to go to settlement - that’s an excellent offering, if they have it.
Bottom line is ask a lot of questions and if you’re in the home buying process, pay attention. Be sure you are working with the BEST lender you can – it’s not all about the rate (although reading this article you’d think it was) but it’s also about costs and service. Do your homework and find someone who is truly interested in your positive outcome! It will be well worth your time invested up front!
Happy Tuesday!
Jennifer
Serving all of your real estate needs in Arlington, McLean and the entire Northern Virginia Region!
Contact me today for a free home valuation or buyer counseling session! And remember, spring is RIGHT around the corner!
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Don’t Panic!
September 16th, 2008 Categories: Alexandria Dirt, Arlington Dirt, Falls Church Dirt, McLean Dirt, Northern Virginia Real Estate Finance, Reston Dirt
It would be so easy to work up into a lather with all of the gloom and doom financial news. Everywhere we turn some major wall street financial institution is filing for bankruptcy or being taken over. Mortgage companies are in trouble and/or crumbling left and right. The Federal Government decided to bail out Fannie Mae and Freddie Mac in order to increase the availability of mortgage finance and to add liquidity to the mortgage bond market.
Oh and then there’s the AIG mess – the government is supposedly considering lending tens of billions of dollars to bail them out of their recent woes… YIKES… And today, if all that weren’t enough, the feds decided against lowering the fed funds rate stating that they believes the mortgage interest rates are already low enough to spur future economic growth.
It would seem that in fact we’re headed for mass destruction and dismay. In fact, that’s the farthest thing from the truth – at least from the housing perspective. Consider this –
Interest rates have tumbled beginning with the Fannie/Freddie news and are now once again below 6% – hmmm
Inventory of homes is still fairly high and there is generally a plethora of choices
For a consumer that has good credit and assets, this is the BEST TIME EVER (yes, I did say the best time ever) to make that home purchase. Can I guarantee that home prices will not continue to go down? NO Can I guarantee that home prices will appreciate at some ridiculous rate over the next 2 years bringing “flipping” back into vogue? Of course not. But I can say that conditions are actually favorable right now for the housing market to correct itself. NOW is the time rather than when buyers have to enter into bidding wars against each other. NOW is the time rather than when buyers will have to give up some of their rights in order to beat out someone else.
Every action has a counter-action. When builders realized that they would 
have home surpluses, building slowed and in some cases even ceased. When we come through the cycle, they won’t be able to gear up quickly enough to meet future demand and there begins that cycle again with higher prices and more demand. So… just stop for a moment to consider that perhaps, just maybe, now is the time to begin thinking about a change.
I look forward to your call to discuss your home needs - both selling and buying.
Happy Tuesday
Jennifer
Serving all of your real estate needs in Arlington, McLean and the entire Northern Virginia Region!
Contact me today for a free home valuation or buyer counseling session! Fall is here!
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The Ins and Outs of Loan Approval, Pre-Approval, Loan Commitments and so forth…
September 2nd, 2008 Categories: Alexandria Dirt, Arlington Dirt, Falls Church Dirt, McLean Dirt, Northern Virginia Real Estate Dirt, Northern Virginia Real Estate Finance, Reston Dirt
As a general rule, one of the very first things I do when working with a new buyer (whether they are a first time buyer or even an experienced buyer) is to recommend they speak with a lender and obtain loan approval.
The reason for this is simple: Let’s say they’ve used an internet loan calculator to guess at their loan amount – did someone explain to them the tax relief they will benefit from? Or perhaps they actually talked with a lender and did some sort of preliminary approval where they provided their salary information and debt information, but perhaps they didn’t discuss more detailed financial matters like alimony (either being given OR received), investment properties owned, etc… These factors can have a HUGE impact on a buyer’s ability to actually obtain a mortgage.
I usually like to have someone talk with a contact of mine – for no reason except that keeping the communication lines open during this process is HUGE. It doesn’t matter to me who originates a loan for my clients in the end, as long as they get as good of a program as they can – good rates, good terms, and the RIGHT program fit for them. But during the process, questions can arise - here’s one that happened lately:
I have a client who wants to purchase a condo – he has his preliminary loan approval in place for a particular amount - and the lender is out of state. So we set out looking at properties in a particular range that we are estimating will work with his loan amount and the amount of cash he has set aside for this purchase. However, pretty soon, some questions came up:
What condo fees were used for the approval? (Usually a lender will put in some sort of estimate)
What about property taxes?
Oh, and since the lender is out of state, how were they able to complete a good faith estimate perhaps not knowing what our usual and customary charges are here in Virginia to the buyer?
At this point, since we were unclear on the answers, my client agreed to talk with one of my local lenders, and we’re in the process now of understanding exactly how much home he can afford. At least we’ll know what the range is and negotiate the best deal on a property with confidence that he can afford it.
So perhaps I digressed a little from the title of this article - here are some brief descriptions of different terms you’ll hear from the lending world:
Pre-Approval – this means some basic information has been provided to the lender, probably without verification in order to establish a baseline of affordability. Sometimes lenders will even issue pre-approval letters, but they all state that they are subject to income/asset verification, so really, they’re not particularly strong.
Loan Approval – this usually means that all income/asset verification has been done as well as a credit check. This is a much stronger term and generally is used when submitting a contract. Sometimes, depending on the lender, the application has even made it through the underwriting process already. Barring any issues with the property, it’s smooth sailing from here.
Loan Commitment - this is when the loan has not only been approved, but the bank has already earmarked the funds to consummate the transaction. This is the strongest level of approval that exists.
So there you have it – a lesson on loan approval types, terminology and the like - and also some reasoning as to why I’ll ask you to speak with a lender and why it’s important! It’s a much smoother process when this is done in advance and we can start out with the best foot forward not wasting any time at all in finding that dream home.
If you’d like to talk about the process or get started, call me today! I have some great local lenders I can refer you to – with a great team around you’ll be in great shape for a successful outcome!
Happy Tuesday
Jennifer
Serving all of your real estate needs in Arlington, McLean and the entire Northern Virginia Region!
Contact me today for a free home valuation or buyer counseling session! Fall is right around the corner!
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What Were They Thinking??
August 18th, 2008 Categories: Alexandria Dirt, Arlington Dirt, Falls Church Dirt, McLean Dirt, Northern Virginia Real Estate Dirt, Northern Virginia Real Estate Finance, Reston Dirt
Lately, I’ve been showing a lot of property that was foreclosed upon and is now bank owned. I’ve seen bank owned properties in all sorts of locations, neighborhoods, buildings, etc… even in the “luxury” market. In considering making an offer on one, I called the listing agent to ask my usual barrage of questions:
“When can we expect a reply from this bank?”
“Are there any other offers on this property?”
“How quickly can we settle?”
“Is the bank willing to pay closing costs”
“Is the bank willing to allow for home inspection repairs?”
“Can we settle with our own real estate attorney?”
“Can we hold the earnest money deposit?”
…. the list goes on ….
Certain banks (and agents, unfortunately) have earned unfortunate reputations of being difficult to work with. It makes me wonder how we’ll ever get out of this situation unless the banks (and the agents) realize that they have to be at least somewhat agreeable, approachable, responsive, etc…
So here I sit - wondering “How did we get here?” Don’t misunderstand, I know HOW we got here, but I wish I could know who was responsible, don’t you? Which lenders? Which ORIGINATORS? It dawns on me that just 
because Bank of America (JUST AN EXAMPLE) holds a loan now, they may not have originated that loan. They may have just made a bad business investment decision. So I wish there was some report that indicated WHO took these risks? WHO was writing B paper loans? WHO was ignoring (or turning a blind eye) to underwriting guidelines with respect to debt ratios? WHO was outright lying? I wish I knew.
I’m glad our credit restrictions have tightened up. I hope that my buyers who are buying now are well qualified and prepared to be homeowners for the foreseeable future!
If you need a good lender, give me a call – I know several who are excellent and in whose hands you’d be well taken care of!
Happy Monday!
Jennifer
Serving all of your real estate needs in Arlington, McLean and the entire Northern Virginia Region!
Contact me today for a free home valuation or buyer counseling session! Fall is right around the corner!
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Is it Time to Buy? How ’bout NOW? Is NOW Finally Here?
May 16th, 2008 Categories: Alexandria Dirt, Arlington Dirt, Falls Church Dirt, McLean Dirt, Northern Virginia Home Buying, Northern Virginia Home Selling, Northern Virginia Real Estate Dirt, Northern Virginia Real Estate Finance, Reston Dirt
For the past few years, this has probably been the most asked question of 
every real estate professional across the US. With the media leading the charge, the news has been all gloom and doom with a few regional exceptions and, just like a run on the bank in days gone by, the public has largely bought into the concept that the sky is falling in.
Well, we’re still standing. Yes, we have a credit crisis of enormous proportion that will likely take years to recover from. But guess what… houses are selling! Prices are somewhat steady! There are plenty of happy buyers and sellers at least here in our region, that are actually experiencing pleasant transactions!
But here’s the greatest news of all. Finally, we’re getting some great reports from national media sources that perhaps the crisis is over! Yes, you heard me correctly, the headline of an article in The Wall Street Journal on May 6, 2008 reads, “The Housing Crisis Is Over.”
The article begins by reminding us that we’ve been on a downward trend for 3 years already – hard to believe, but I guess it was 2005 when we started to see buyers push back from rapidly rising prices. It goes on to look at certain economic indicators that have been present in past housing corrections and comparing that with our current outlook.
Bottom line is that perhaps the worst is behind us. Here in the Northern Virginia area we have been seeing more activity, relatively stable prices and buyers finally coming around to believing that they can now make a good investment. However, like everything, it’s a giant pendulum. Perhaps now is an EXCELLENT time to be either a buyer or seller while that pendulum is essentially hanging in an almost weightless state before swinging the other direction. Remember the days of multiple contract? Waiving home inspection? Waiving appraisal? Let’s do some business!
Happy Friday!
Jennifer
Serving all of your real estate needs in Arlington, McLean and the entire Northern Virginia Region!
Contact me today for a free home valuation or buyer counseling session! Spring is HERE!
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Taking your (financial) Health Into your own Hands…
January 16th, 2008 Categories: Alexandria Dirt, Arlington Dirt, Falls Church Dirt, First Time Buyers Club, McLean Dirt, Northern Virginia Real Estate Dirt, Northern Virginia Real Estate Finance, Real Estate 101, Reston Dirt
Yes, today we’re talking about health. Had a checkup lately? Have you 
visited your family doctor? Well, all that might be interesting, but I’m talking about your financial health. YES, have you had a checkup lately? Seen your practitioner?
There are a few basic things one should do especially if preparing to enter into a real estate transaction anytime soon:
Run Your Credit
You are given the opportunity once each year to run your credit “free” so to speak. Here is a great article on the process, how it works, where and whom to contact, etc…
Address any Credit Issues with a Plan
Sometimes your credit report will reveal things you’re completely unaware of. You might find that a credit card or account you thought you “closed” years ago is actually still active with the company even though there have been no charges in a very long time and the cards have been long cut up. It will help your credit scores to methodically go through and, in writing, cancel any unused accounts.
Sit down with your Accountant
If you’re considering selling, be sure you understand how a gain could affect your tax situation. Be sure you understand how much you stand to gain from the sale of your home and how much you’ll be able to put towards your next purchase. (a qualified real estate agent like myself can run through scenarios to create a net sheet for you to use).
IF you’re considering buying, especially for the first time, you need to understand how the mortgage interest (and property tax) deductions work and how they increase your take home pay. Many first time buyers come to me understanding how much they currently pay in rent and trying to make a comparison – it doesn’t work the same way. It’s at this point that I would point you to a qualified lender to help walk you through the approval process.
Most of these are common sense – but all great things to do on a regular basis. There are also some great books out there to help take you through a financial check-up and lead you to financial freedom. So, take care of your health, financially, and the rewards will be great!
OF COURSE, if you want to talk real estate, I’ll look forward to your call or email.
Happy Wednesday!
Jennifer Klaussen
Serving all of your real estate needs in Arlington, McLean and the entire Northern Virginia Region!
Contact me today for a free home valuation! Spring is right around the corner!
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WOW - VA Loans - Welcome to the 21st Century!
October 29th, 2007 Categories: Alexandria Dirt, Arlington Dirt, Falls Church Dirt, McLean Dirt, Northern Virginia Real Estate Finance, Reston Dirt
The VA announced today that they will begin providing financing for eligible 
military personnel for loan amounts up to $1,000,000 — that’s right, ONE MILLION DOLLARS! This is a bold and impressive step for VA and of course, for a prospective borrower, will require a deeper understanding of the options this opens up for them.
VA Loans are still limited to $417,000 for 100% financing, but with a calculated down payment, they will now fund loans up to $1,000,000. Additionally, they will now allow the VA funding fee to be added on top of the max loan amount calculation – this is a new option for VA loans.
IF you have VA eligibility, this is a great time to look into what your options are. It’s also a great time to be a buyer, while inventories are high and prices are negotiable.
Call today to discuss it – I have some excellent lending partners who can get you through the VA loan process with ease!
Happy Monday!
Jennifer
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