Virginia First-Time Buyer Programs | Does Your Buyer Agent Know About Them?
Turning A ‘No’ Into A ‘YES’

It happened once again!  I was able to help a first-time homebuyer become more knowledgeable about the opportunities that are avaialable with the Virginia First-Time Buyer Programs that are offered.

I received an inquiry from a buyer who was interested in my Arlington VA condo for sale at 4600 Four Mile Run Drive – Unit 505 in The Carlton.  Just a day too late, as my listing had already gone under contract, proceeded to qualify the buyer by asking the most important question when buying a home, “Have you been pre-approved by a local mortgage company?”

There was a short pause, then she responded that she had spoken to one of the big banks, and was told that she couldn’t qualify for a home.  Being a first-time home buyer, she was interested in taking advantage of the $8000 tax credit.  I informed her about the Virginia First-Time Buyer Programs that are offered through the VHDA, and introduced her to my lender partner, Patrick Cunningham of Home Savings and Trust Mortgage (GO DUKES!), who specializes in VHDA loans.  Patrick was able to offer her a mortgage pre-approval with one of the VHDA mortgage loans and now she’s actively looking for a new place to call home!

If you’re a Virginia First-Time Homebuyer and would like to know about the different programs that are available, consider working with an Alexandria VA buyer agent who is familiar with the loans that may be avaialable to you.

See Also: Video – Biggest Buyer Blunder, The Importance of Mortgage Approval

* – VHDA Homebuyer Tax Credit Plus Program (Extended) – use your $8000 tax credit at closing!

* – Other VHDA loans for Virginia First-Time Homebuyers (including zero down loans)

Don’t househunt without a pre-approval letter!  It’s so much fun to shop for homes.  To walk into a move-in ready home with everything neatly in place and organized, the kitchen has lots of countertop space and the table is set for a gathering, the family room is warm and ready to accommodate your guests, the bedroom is fit for a king or queen and the closet goes on for miles!  It’s easy to start to daydream, and envision yourself living in a particular home. 

But before you venture off into La-La Land, remember that looking at homes isn’t really the first step in the home buying process, securing your mortgage pre-approval is.  There’s nothing scary about obtaining your mortgage approval, it’s painless, and best of all it’s free and it doesn’t commit you to buying a home today (or any day for that matter).

You’d actually be at a disadvantage if you didn’t obtain your mortgage approval before you start looking at homes.  Here are the three reasons why:

• The lending guidelines are no longer relaxed and programs that were available years ago, have been scrapped today.  You can’t assume that just because you have a pulse, that you’ll be approved for a loan.  The lender will want to know how long you’ve been employed and what your credit score is.  Mortgage programs and interest rates are credit score driven; the higher your score, the better your interest rate, and the lower your monthly payment.  If your credit score is not where you’d like it to be, your lender can make recommendations on how to improve your credit score.  You’ll also need to know how much money you’ll need for a down payment and closing costs.
• Special programs are available, and you need to know what they are.  Getting pre-approved helps you determine the best program for your needs.  Do you qualify for special first-time buyer programs?  Are you active military and do you qualify for a VA loan with no down payment?  Are you buying a home in a specific county or city that has special programs? Consulting with a knowledgeable, local lender gives you the benefit of working with someone who is aware of what your options are when it comes to financing.
• Are you limiting yourself?  Are you strapping yourself?  Some buyers think they can’t afford a certain price range, and on the flip side, some buyers assume that they can afford a more expensive home when they can’t.  Getting your pre-approval means that you know exactly what price range you can afford. 

If you’re ready to buy a home, then make sure that you have all of right tools for the journey.  And your first stop along the way, is your mortgage lender’s office.

While many people looking to buy a home for sale in Old Town Alexandria VA or Del Ray start out looking at homes, smart buyers know that once they know their tastes and budget, the next step is to meet with their Realtor for an initial consultation.

The initial consultation serves many purposes both for the Realtor, and the consumer.  For the Realtor:

• It provides me an opportunity to listen to your long term and short term goals
• It gives me a chance to review the homebuying process to you from start to finish
• It allows me to explain the different types of agency representation
• It helps me to determine what types of homes can best accommodate your needs
• It gives me the opportunity to provide you with different monthly payment estimates of homes that you select from the MLS, based on your approved mortgage

For the consumer:

• It gives you the opportunity to ask questions about the homebuying process
• It allows you to interview your agent to see if you will work well together
• It helps you to see what homes are available in your price range by browsing the MLS and seeing how your Realtor searches the MLS for you
• It gives you a chance to take a tour of homes to see what neighborhoods may be of interest

Buying a home is a big step.  And remember, getting pre-approved for your mortgage does not obligate you to buy, and meeting with a Realtor for an initial consulation does not obligate you to buy.  But these are two very important steps in your information gathering process.  Once you have determined how much you can afford, and have an idea of where you’d like to live, it’s then time to meet with your Realtor to see what Old Town Alexandria VA and Del Ray homes for sale are available.

Free Report: What You Should Know, Your Buyer Bill of Rights

Free Report: HUD’s Homebuying Guide

Free MLS Search: Browse the MLS and Sign Up for New Listings

Here’s a quick tip on how Alexandria VA homebuyers can get a leg up on the competition once they enter the market to buy a home.

Imagine you’ve narrowed your zip code search for homes to homes for sale in 22314 in Old Town Alexandria VA, or decided to focus on Del Ray.  These popular areas are still seeing multiple contracts or bidding wars on the right home.  From the entry level condo market, to the mid-level prices of $600,000, buyers in all price ranges need to be prepared, and the mortgage approval is that very necessary first step.

Meeting with a lender is more than simply visiting a financial website and using the calculators to see what you can afford.  Mortgage loans and interest rates are credit score driven, and the higher your credit score, the better your interest rate.  For example, did you know that for every 20 points that your credit score is off, you could pay an extra 1/4 percentage in interest?

When you meet with a local, reputable lender, and complete a mortgage application, the lender can check your credit report.  If you’re serious about buying a home in Old Town Alexandria or Del Ray, then having your credit pulled is required (unless you’re paying all cash).  For a lot of first-timers, this can be a money saver because the lender may help you identify errors on your credit report, that once corrected can raise your score (in other words, meeting with a lender can actually save you money!).

A good lender will also explain several different loan types and after listening to your long and short-term goals, will be able to suggest the best loan.  For some buyers, an interest-only loan is best, for others, the traditional 30-year fixed is the better solution.  Different people have different situations.  Those on a fixed, predictable salary may require a different loan than someone self-employed and paid on a commission basis.

You should also receive a Good Faith Estimate of Closing Costs which outlines what the lender will charge to secure your loan.  Be sure to review different scenarios and varying sales prices.  Homes for sale in Old Town Alexandria VA and Del Ray can range anywhere from the  high $100’s to the millions. You’ll need to know what the price range is that will allow you to stay within your monthly comfort zone for your total housing payment.

And finally, your approval letter is your official GREEN LIGHT to shop for a home. An approval letter or a mortgage application does not bind you to any lender, nor does it obligate you to purchase.  But as part of the information gathering process the approval letter tells your Realtor that you’re serious enough about the process and gives you the comfort of knowing you have the financial ability to move forward when you find an Old Town Alexandria VA or Del Ray home for sale that you like.

Bonus Free Report: 10 Questions To Ask Your Lender 

Well, it seems that all of the funds for Down Payment Assistance (DPA) programs have dried up.  Even though the deadline is near for the government aid to officially come to an end, it appears that local banks are applying the 30-day rule.  Meaning that buyers who are approved for a mortgage utilitizing a DPA, like Nehemiah or AmeriDream, are encouraged to find a home quickly and reach a written agreement (contract ratification or acceptance) with the seller and close within the next 30 days.

Alexandria VA homebuyers can still purchase a home with the help of the Virginia Housing Development Authority (VHDA).  One program that stills offers home buyers to purchase with a minimal down payment is the VHDA FHA Plus loan. Borrowers need only a 1% down payment, and the seller can still pay up to 6% of the sales price toward the closing costs.  There is no adjustable mortage, the FHA Plus loan is a 30-year fixed loan.

Applicants must meet eligibility requirements and attend a free course offered by the VHDA.

More and more, people are calling me asking for help on how to keep their current home.  In listening to their stories and understanding how their financial difficulties came about, it’s easy to see how consumers can fall into the trap of obtaining a mortgage where the terms are not fully understood (and in some cases not fully disclosed).

In high-priced housing markets, like Northern Virginia, it can be difficult to afford a home. That’s why a growing number of home buyers are forgoing traditional fixed-rate mortgages and standard adjustable-rate mortgages and instead opting for a specialty mortgage that lets them “stretch” their income so they can qualify for a larger loan.

Specialty Mortgages Can:

• Pose a greater risk that you won’t be able to afford the mortgage payment in the future, compared to fixed rate mortgages and traditional adjustable rate mortgages.
• Have monthly payments that increase by as much as 50 percent or more when the introductory period ends.
• Cause your loan balance (the amount you still owe) to get larger each month instead of smaller.

  Common Types of Specialty Mortgages:
  

• Interest-Only Mortgages: Your monthly mortgage payment only covers the interest you owe on the loan for the first 5 to 10 years of the loan, and you pay nothing to reduce the total amount you borrowed (this is called the “principal”). After the interest-only period, you start paying higher monthly payments that cover both the interest and principal that must be repaid over the remaining term of the loan.
  
• Negative Amortization Mortgages: Your monthly payment is less than the amount of interest you owe on the loan. The unpaid interest gets added to the loan’s principal amount, causing the total amount you owe to increase each month instead of getting smaller.
  
• Option Payment ARM Mortgages: You have the option to make different types of monthly payments with this mortgage. For example, you may make a minimum payment that is less than the amount needed to cover the interest and increases the total amount of your loan; an interest-only payment, or payments calculated to pay off the loan over either 30 years or 15 years.
  
• 40-Year Mortgages: You pay off your loan over 40 years, instead of the usual 30 years. While this reduces your monthly payment and helps you qualify to buy a home, you pay off the balance of your loan much more slowly and end up paying much more interest.

  Questions to Consider Before Choosing a Specialty Mortgage:
  

• How much can my monthly payments increase and how soon can these increases happen?
• Do I expect my income to increase or do I expect to move before my payments go up?
• Will I be able to afford the mortgage when the payments increase?
• Am I paying down my loan balance each month, or is it staying the same or even increasing?
• Will I have to pay a penalty if I refinance my mortgage or sell my house?
• What is my goal in buying this property? Am I considering a riskier mortgage to buy a more expensive house than I can realistically afford?

When looking to buy a home in Alexandria, Virginia, homebuyers should choose to work with a reputable lender who takes the time to prepare different scenarios and explains the differences of the many loan programs available.

The Commonwealth of Virginia has just given consumers hoping to buy their first home in Alexandria VA over 15 millions reasons to get off the fence and purchase a home.  This aid which encourages buyers to use the Virginia Housing Develpment Authority (VHDA) program is ideal for those who are currently renting and are indecisive about getting into the real estate market.

For more information, view the full article as reported by the Alexandria Times newspaper.

As a buyer’s agent, I can tell you first hand that there are so many opportunities right now.  There’s no sense of urgency like there was in the past sellers market, and buyers can protect themselves with necessary inspections in addition to seller or bank paid closing costs.  All of the foreclosure homes that I have sold resulted in the buyer receiving closing cost assistance.

This is very important because as the cost of living continues to increase, many buyers find it harder to save extra money for down payment plus closing costs.  Buyers now have the advantage of these down payment assistance programs to help defray the costs of securing a home.  Typically, closing costs run between 2-3% of the sale price, depending on the financing and can be negotiated between the buyer and seller.

If you are concerned about closing costs, or if you’re curious about the steps in the home buying process please contact me for a consultation.

If you’re selling your Alexandria VA home and your listing agent is not welcoming FHA and VA buyers, then your home may be on the market a lot longer, and it could eventually sell for less money.

The VA Loan is made available to veterans and active duty service members for the purchase or refinance of a primary residence or the refinance of another property on which a VA loan already exists.  Some additional basics include:

• Standard Maximum Loan is $417,000
• Standard Maximum Loan-To-Value is 100%, meaning that you can finance 100% of the purchase price, there is no down payment required
• Debt-to-Income Maximum is 41%
• Jumbo Maximum Loan is $1,000,000
• Jumbo Maximum Loan-To-Value is 85.425%

The FHA loan is made available to the general public and is available to any qualified individual for the purchase or refinance of another property on which an FHA loan already exists.  The primary benefit of the FHA loan is a lower down payment requirement and less stringent underwriting standards as compared to most conventional loan programs.  Some additional basics include:

• Standard Maximum Base Loan up to $362,790
• Temporary Jumbo Maximum Loan is $729,750
• Maximum Loan-To-Value is 97.75%
• Up front Mortgage Insurance Premium is 1.5% of base loan amount, which can be financed into the loan
• Annual Mortgage Insurance Premium is 50 basis points of base loan amount
• Debt-to-Income Maximum is 43%

But what does all of this mean to you if you’re selling?  It means that when the market was hot, it was common for buyers with conventional loans to beat out other buyers with VA and FHA loans due to the more strict financing rules.  Listing agents should make it known and openly advertise: "FHA and VA buyers welcome!"  That way you’ve made it clear as a seller that you’re open to entertaining all offers, not just offers where the buyer is receiving conventional financing.  Don’t let buyers guess and assume.  By opening yourself up to flexible financing, you open your doors to more buyers and increase the chances of getting your home sold quicker and for more money.

Buyers: Find out if you’re eligible for the VA loan.

Sellers: FREE Book on ‘How To Sell Your Home For Top Dollar Fast’

Cash conscious buyers in Alexandria VA can take advantage of the Federal Housing Authority (FHA) loan.  Increased buying power allows Northern Virginia area buyers to take advantage of a loan that requires only 3% down, and allows the seller or builder to pay up to 6% toward closing costs, making homes more affordable.  Click here to find the new loan limits for your area.

Before you start your search for a new condo, townhouse, or single-family home in Alexandria VA, the real estate professional you’re working with will likely ‘prequalify’ you to help you determine how much you can afford.  But taking it one step further will prove to be even more beneficial to you as a home buyer.  Get in front of a local mortgage reperesentative or loan officer, and obtain a mortgage approval or pre-approval.   According to Tamara Inzunza, Accredited Buyer Representative of McEnearney Associates in Alexandria VA, mortgage pre-approval is a necessary part of the home buying process.

"I’ve seen buyers visit open houses and get excited about the possibility of owning a particular home, only to find out in the mortgage approval process that they don’t qualify," explains Inzunza.

"In today’s society, consumers are used to doing their own research and using the internet to gather information.  I’ve visited several websites, from company websites to general information sites, and they all say that the approval process is the first step or it’s second to selecting an agent," adds Inzunza.

By candidly discussing your financial situation, you’ll give your Buyer’s Agent the information necessary to show you homes you can afford. "If you don’t open up, you are placing the real estate professional in the role of a tour guide, not someone who can help you find a home within your budget.  You’ll wind up wasting your time, and that of the agent and the seller," Inzunza cautions.

With the recent changes in the mortgage industry, experienced buyer agents and listing agents will request a mortgage approval letter upon receipt of a purchase offer.  Sellers will want the assurance that if they take their home off the market making it unavailable to other potential buyers, that your loan is in order.

When selecting your buyer’s agent, ask for recommendations of local lenders.  If you already have an existing relationship with a bank, mortgage company, or credit union, start there and obtain your pre-approval.

If you’re already out visiting open houses or looking at homes online, then you’re obviously in the market to buy a new home. Why not take the extra step and get the approval?  That way if you see something you like, you’ll know it’s within your financial reach.

Buyers who have already obtained their mortgage approval have the ‘green light’ to start their home search:

Bonus Free Report #1: 10 Questions To Ask Your Lender 

Bonus Free Report #2: 10 Things A Lender Needs From You

Bonus Free Report #3: 8 Steps To Getting Your Finances In Order 

Tamara Inzunza, Associate Broker is one of 40,000 members of the Real Estate BUYER’S AGENT Council (REBAC) of the National Association of Realtors, who have obtained the ABR, Accredited Buyer Representative designation.  As the world’s largest association of real estate professionals focusing specifically on representing the real estate buyer, REBAC is "The Voice for Buyer Representation," with more than 44,000 active real estate professional members of the organization throughout the world.