Current Mortgage Rates: Richmond, VA
2.750% (2.807% APR) 30yrs
2.125% (2.130% APR) 15yrs
as of 09/23/21
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Copy of Understanding conventional mortgage terms

 

Federal Housing Administration (FHA) loans are an attractive offer for first time home buyers, as they allow for a low down payment, accept lower credit scores than conventional mortgage loans, and are government insured for both the buyer and the lender. However, there are important details that first time home buyers need to know about FHA loans that may not be apparent when shopping for a home and comparing rates.

FHA Loans were originally created to help first-time home buyers, or home buyers with either a history of bad credit or that could not provide a down payment that would purchase more than 20% of the home’s cost. The program was created after World War II to help finance homes for returning veterans and families of soldiers. Now, the FHA is one of the largest sources of mortgage funding, alongside Fannie Mae and Freddie Mac. FHA Loans account for roughly one-third of all mortgage loans issued in the US.


Down payment requirement

An FHA loan requires a downpayment of 3.5% of the home’s purchase price. Originally, this was one of the most attractive factors for FHA loans, as they were available to younger buyers with less savings. The FHA loan covers the remaining cost of the home.


Credit score requirement

FHA loans require a minimum credit score of 580, making them attractive to homebuyers with a lower credit score than what is required for conventional loans, 620. However, most lenders still require a score of 620 as an underwriting overlay.


Annual Percentage Rate

The APR for FHA loans fluctuates with the economy. In June of 2017, it is 3.375% for a 15-year fixed rate mortgage and 4.5% for a 30 year fixed rate mortgage. It fluctuates constantly, but only goes up and down drastically when the economy sees majors changes. The actual Note rate will be lower than the APR.

Shorter term FHA loans will have a lower APR, creating an incentive for homebuyers to sign a 15-year mortgage if the FHA loan requirements are attractive to them.


Approval amount for the loan

FHA maximum allowable loan amounts are also variable over time and even by location. However, in the past few years, many locales saw an increase in the maximum loan amount due to the rising cost of homes. Mortgage lenders will also be able to grant a higher loan limit based on the borrower’s information, such as their income, work history, and bank statements.

 

FHA mortgage insurance

After the 2008 recession, FHA loans began to require insurance for the full term of the loan. This provides insurance for both the mortgage lender, as well as the FHA insurance fund reserves.

The insurance is paid out in two separate ways: First, there is an up-front mortgage insurance premium of 1.75% of the loan amount, and while it is financed on top of the base loan amount, that is paid at closing. Second, there is a monthly mortgage insurance premium that is between 0.80% and 1.00% of the amount of the loan.


FHA loan approval

Borrowers must get their FHA loan through an FHA-approved lender allowing the lender to use some discretion when granting the loan. For this reason, home buyers may have to meet certain requirements for income, credit score, and work history in order to be approved by the individual lender. It is also possible that lenders charge different interest rates and closing costs, so it is important to ask about this when shopping for rates.

FHA loans create an opportunity for home buyers to purchase a home because of many beneficial differences from conventional mortgage loans. However, it is important to speak with your mortgage lender about their specifications for FHA loan approval, as well as any closing costs that may be presented.

 

 

Determining your down payment for first time homebuyers web

One of the most important factors for securing your mortgage loan is the down payment. This upfront payment on a home is separate from your monthly mortgage payments. Planning a realistic down payment is important to getting the type of mortgage loan that you want. Because of this, saving the desired sum is important and requires considered financial awareness. Basically, the higher your down payment, the lower your monthly payments, because it is the remaining amount owed divided over the term of your mortgage.

Before you determine how you will make a down payment, it’s important to understand the requirements that certain types of loans will have, as many will require you to pay 3%-5% of the total cost of the home. An FHA loan requires a minimum down payment of 3.5% and is what many first-time homebuyers will end up using. All FHA loans also require home buyers to purchase MI, or mortgage insurance. With a 20% down payment, home buyers can use Conventional financing will not be required to purchase mortgage insurance. A higher down payment will give the buyers more options when it comes to shopping for a mortgage and ultimately with the house they buy.

The down payment is one of approximately 4 factors that will determine if a buyer is pre-approved and ultimately approved for a loan: down payment, credit history, employment and income, and bank statement history. A down payment does not actually have to be available to the buyer at the time an offer is made, so long as the full sum is available at the time of the closing.

The more you put down the lower your monthly mortgage payment will be. USDA and VA mortgage loans are government-backed and do not require a down payment which may be attractive to some customers who have difficulty saving a large sum. Homebuyers with lower credit scores may benefit from providing a larger down payment.

Here are four steps to determining how much money to put down:

1. Plan ahead
Because mortgage loan approval will involve the home buyer’s credit score, income and employment history, and bank history, it is important to evaluate these factors before beginning home buying process. Because the down payment will be provided up front, a large down payment can increase the likelihood of getting the loan that you want if you have a low credit score. However, if you have excellent credit history and income, providing a larger down payment may not be necessary unless you would like to avoid the requirement of purchasing mortgage insurance.

2. Determine what you can pay from savings
After evaluating your credit score and income history, you should determine how much you can provide as a down payment. Savings are important, so be reasonable and realistic about what you can provide. Remember that FHA loans require at least 3.5% down, and when speaking to a mortgage lender, they may provide you with their own, additional requirements. Keeping these
factors in mind will help you determine your home buying budget—but remember, lending is a conversation, and you should feel comfortable working through different scenarios with your mortgage professional.

3. Set a goal for your mortgage terms
It is important to set goals when shopping for a mortgage and one of the most important is your interest rate. If you are seeking a lower interest rate, you may want to provide a higher down payment. Not only will this offset the costs that you will be paying each month because the remaining balance on the loan will be reduced, but it will be a positive factor in evaluating your readiness to repay the loan to the lender. Remember that after a down payment, the remaining balance on the loan will be divided by the loan term, and this will be your monthly payment with interest. Figuring out these numbers with a mortgage lender will allow you to realistically evaluate what you can pay each month, and having that goal in mind will help you take the steps to get there.

4. Meet with a mortgage lender
After setting goals and determining what type of mortgage loan you would like, it is time to visit a loan professional and get a rate quote. Many local mortgage agents are happy to go back to the drawing board and help you to determine your best options for obtaining your ideal interest rate and loan terms. Remember to be open and honest with your mortgage lender, and that a local lender will be able to give you the most time and attention, opposed to large, national lenders or over-the-phone mortgage apps.

Determining your down payment is an important step in shopping for a mortgage. Remember to evaluate all of the factors that will determine your mortgage loan, set goals, and find a local mortgage lender that will work hard to realize your goals.

Click here to get a rate quote from RatePro Mortgage today!

Goochland Real Estate and Home Sales Statistics for 2016

2016 was another strong year for home sales in Goochland, Virginia with 317 homes sold. The average home sold in 2016 was 2,933 square feet and sold for $478k (an average of $163 per square foot). The average sale price was up 9% over 2015 home sale prices marking another strong year of growth in home values. The average listing price in 2016 was $483k with homes averaging 72 days on the market. The highest priced home sold in Goochland in 2016 was $2.7 million where the lowest sale price was $23,700.

Goochland is very diverse area offering everything from horse and livestock farm properties to luxury neighborhoods such as Holland Hills, Kinloch, and The Meadows at Joe Brooke Farm. Goochland homeowners are spoiled with the serenity of country life with convenient access to many amenities in neighboring Short Pump (West End of Henrico). Find your peaceful country getaway in Goochland Virginia.

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Quick mortgages are advertised everywhere these days. Large quick approval mortgage lenders portray home buyers signing “instant” mortgages over their smartphone. Corporate structured mortgage lenders advertise that they care about individual success and financial security. Whatever the claim of these large companies, it’s nowhere near the reliability of a local mortgage lender. Here are four reasons why you should work with a local mortgage lender:

1. Have the opportunity to shop rates more closely
Having the availability of a mortgage lender in person will give you the opportunity to view and discuss mortgage rates and loan types more closely. Insider knowledge will allow you to see the variables that are affecting your rates and will help you to understand which mortgage type may be best for you. You won’t be able to get that sort of conversational feedback from an app or large financial institution.

2. Face to face contact unavailable from a website or app
Local mortgage lenders are usually small, personal businesses that value relationship building. Many rely on setting appointments, standing by for phone calls, and giving quick replies to questions. Don’t deal with the contact structures of corporate or online lenders who will reroute you through their customer service department. To them, you’re a number. Local lenders will give you their time and presence in order to ensure that you have a friendly experience.

3. Work with one person who understands your needs.
National banks are giving you scripted information. Their loan types are a part of a system that was built at a corporate office. Mobile apps and websites are even further detached and will allow no options for conversation, feedback, and re-evaluation. Meeting with a local lender will allow you to build a relationship that isn’t possible with online or large corporate lenders. Shop local to meet a real person who will evaluate and value your needs.

4. Local lenders will understand your local market.
Shopping for a mortgage locally will not only make it easier to find a reliable partner in the expenditure of buying a home but will also provide insights into your local real estate market. Real estate agents will commonly have relationships with local lenders and can point you in the direction of someone trustworthy. A local lender will understand your wants and needs better than a large lender or app because they will have worked in your area previously.

Local has meant better for a long time now. Local mortgage lenders are going to give you more time and appreciation, and in turn, you will return more value on your new home. Mortgages don’t need to be a hassle, and lenders don’t need to rush you in and out of their doors. Remember to shop locally when considering a mortgage.

Powhatan Real Estate and Homes Sales Statistics for 2016

2016 was another great year for real estate activity in Powhatan County, Virginia. In total, there were 464 homes sold in Powhatan which was a slight increase over 2015. The average home sold in 2016 was 2,245 square feet and sold for $299k which comes to $133 per square foot (average for 2016). This average sale price was up 3% over 2015 Powhatan home sale prices, marking the third straight year home sale prices have increased. The average listing price in 2016 was $302k and averaged 55.7 days on the market. The highest sale price for a Powhatan home sold in 2016 was $1.2 million while the lowest priced home sold for $31,650.

Powhatan is a very diverse area offering many luxury neighborhoods such Aston, French Hill, and Founders Bridge. It is also a community known for expansive acreage available for horse, livestock and agriculture farms. While the area is considered rural, Powhatan homeowners still appreciated convenient access to local medical facilities, great restaurants, and multiple entertainment options. Find your next home in beautiful Powhatan Virginia.

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