Are you planning to stay home for the upcoming holiday weekend?  If you are considering diving into some Memorial Day weekend projects then take a look at the two articles below.  You might finally have some time to finish cleaning up your landscape.  Or perhaps you would like to spruce up your home and property but need to keep your costs to a minimum.  Whatever your plans are, don’t forget to take some time to relax and reflect on the purpose of the holiday.

Visit our Resources page for local contractors and other vendors to help with all your home project needs.

Coming to market soon!
Beautiful house on 1+ acres – The Marches in Aldie.  Stay tuned for more information and pictures to come.

Are you a home-buyer looking for 100% mortgage loan financing options?  Currently there are only two loan types available that offer no down payment options for buyers seeking a home mortgage loan.  Veterans Administration (VA) loans and United States Department of Agriculture (USDA) loans are available to eligible applicants.

The VA Loan program was set up to help active duty and retired military personnel purchase homes and offer the eligible buyer(s) 100% financing and very competitive interest rates without having to pay mortgage insurance.  VA Loans are guaranteed by the Veterans Administration and most of the time they are easier to qualify for.   USDA Loans are not restricted to military personnel and offer the same benefits of competitive interest rates and 100% financing.  Buyers must meet eligibility requirements, so let’s take a closer look at USDA Loans.

What is a USDA Loan and Who is Eligible?

USDA loans are kind of a hybrid between a conventional and government loan. They are a conventional loan with a conventional appraisal; however, the appraiser must confirm that the home meets the FHA handbook codes for its health and safety requirements.  A USDA Loan, also known as a Rural Development Loan or Rural Housing Loan, is guaranteed by the US Department of Agriculture and serviced by direct lenders who meet federal guidelines.  Closing costs may be paid by the seller or financed into the loan and there is always a fixed rate with no specific loan size limitation.  The borrower can only finance closing costs up to the appraised value if the home appraises for more than the sales price.

USDA Loans are structured like conventional loans but differ in the down payment required.  USDA Loan benefits include:

• No down payment required
• No monthly mortgage insurance
• Flexible credit guidelines
• Low interest rates
• Ability to add cost of eligible home repairs and improvement to closing

Eligibility is based on the buyer’s financial history and the property for sale.  Buyers must meet a qualifying monthly debt to income ratio of 29% for all household costs and 41% when the monthly mortgage is added.  USDA assesses a 2% guarantee fee to all loans which can be financed into the loan.  The buyers may not own another home within commuting distance of the property purchased with a USDA loan.  To learn more about the eligibility requirements and to see if the property you’re interested in is considered rural development, visit the USDA website.

USDA Loan Types Offered in Virginia

Currently there are two types of USDA Loans offered in Virginia for single family households.  Those available are the Guaranteed Rural Development Loans and the Direct Rural Development Loans.

The Guaranteed Rural Development Loan is the most common type in Virginia.  It allows the buyer to have higher income limits and offers 100% financing for home purchases.  Applicants’ income may not exceed 115% of median household income for the area and all loans carry 30 year financing terms with fixed interest rates.

The Direct Rural Development Loan is less common and only available for low and very low income households.  Very low income is defined as below 50% of the area median income (AMI).  Low income is considered 50-80% of the AMI and moderate income is defined as 80-100% of the AMI.

Who is Eligible in Virginia?

Eligibility may vary from state to state so it is important to consider all the requirements to ensure that you qualify.  In Virginia there is no set maximum loan allowed; however your debt-to-income ratios will determine how much you are eligible for.  According to stated guidelines, applicants must meet 29/41 percent; however, all loans are run through USDA’s automated underwriting system called the Guaranteed Underwriting System (GUS) and a borrower can be approved with higher debt ratios based on higher credit scores, job stability, some financial reserves, as well as other factors.  The household monthly income must be within the USDA allowed maximum income limits for your area.  For the guaranteed housing program, the income limits are grouped largely based on family sizes of 1-4 and 5-8. So borrower(s) with 1-4 members need to have an income that does not exceed a certain number and that income threshold increases significantly for families with 5-8 members. There are other ways to expand that income like documenting child care costs and having a disabled family member. In the Washington DC MSA, the base income limit before add-ons is $101,000 for 1-4 members and $133,300 for 5-8 members.  The maximum loan amount is 102% of the appraised value of the home.  This includes the 2% USDA Loan guarantee fee.  A credit score of 620 is required and families must be without adequate housing but able to afford the mortgage, tax and insurance.  Properties purchased with a USDA Loan must be owner occupied (OO) and located within “rural areas”.  The “rural area” definition is not always what one would expect and can change based on each census tract update.  Most of Loudoun County will qualify as except for the Sterling area and homes within the town limits of Leesburg.  Other parts of Leesburg not in the town limits are eligible.  Changes will be coming October 1st to the Loudoun County areas that will qualify.

This is just a brief overview of USDA Loans.  For more information or to assess your eligibility status for a USDA Rural Home Loan, contact a qualified lender to discuss your options or visit the USDA website.  Content for this blog was reviewed by:

Andy Sikora
Branch Manager
Vice President of Mortgage Lending
Direct: 703-505-2999
Fax: 703-822-7171
Andy@AndySikora.com
GuaranteedRate.com/AndySikora
1800 Alexander Bell Drive, Suite 400
Reston, VA 20191

Many clients ask “why is a pre-approval letter necessary?”, since a pre-qualification was already done.  To answer this question, I thought we’d explore what each phase of the process entails to get one to the actual mortgage loan.  A pre-approval letter and pre-qualification letter are not the same.  Neither one is a guarantee that a lender will give you a loan but the pre-approval letter holds far more weight than the pre-qualification letter.  The ultimate goal for a borrower is to obtain a commitment letter from the lender.  Let’s look at each one and see what the difference is. 

Pre-Qualification Process

This process is quick and simple and only gives you an idea of how much you might qualify to borrow.  There is no application process and the number is based on your word of mouth as to how much income, assets and liabilities you have.  The pre-qualification process does not include an analysis of your credit report or an in-depth look at your ability to qualify for a home mortgage loan.  Many people use this as an initial step because it is simple, fast and there is typically no cost involved.  Often the pre-qualification can be done over the phone or online.  It’s important to remember that because it’s quick and based only on the information you provide to the lender, it is not a sure thing!

Pre-Approval Process

The pre-approval process is more involved, requires that you fill out an application and there may be a fee that you need to pay.  Pre-approval means that you have given additional information about your income, assets and liabilities and it has been checked and verified by your lender.  In this phase the lender has likely already pulled your credit report to learn more about your credit history and your credit-worthiness.  Be ready to supply your lender with the following documentation:

• W2 Statements (or 1099’s) for the last two years
• Federal Tax Returns for the last two years
• Bank Statements for the last few months
• Recent Pay Stubs and proof of other income
• Proof of Investment Income

From this information your lender will be able to give you a specific idea of the amount you will be able to borrow.  Basically you receive a conditional commitment in writing for an exact loan amount.  Once you have this pre-approval letter you have an advantage when dealing with potential sellers and are one step closer to obtaining an actual mortgage loan.  This allows you to know how much you can afford before you start looking for a home, as well as the ability to move more quickly once you find the perfect one.  Your real estate agent will want you to obtain the pre-approval letter prior to showing you homes.  The letter proves that you‘re likely to be able to make a purchase and, therefore, you can be taken seriously.  And when the time is right to make an offer on a home, you and your agent will be in a better position to negotiate the contract.  In a competitive housing market, sellers prefer a pre-approved buyer to those who might be unable to close the deal.

The Commitment Letter

Obtaining the commitment letter (“loan commitment”) is the goal for a borrower seeking a mortgage loan.  This is the final step and is issued by a bank when the borrower and the property intended for purchase have been approved.  In this phase your income and credit profile will be checked again to ensure that nothing has changed since the initial approval.  The commitment letter is only issued when the bank is certain it will lend to the borrower.

Obtaining a home mortgage has changed significantly over the last few years.  During the height of the real estate boom, getting approved for a mortgage was a simple process.  That’s not the case anymore, making it even more important to have a qualified professional real estate agent and lender assisting you through the process.  We’re here to answer questions for you so let us know how we can help.  Visit our Resources page for our list of preferred lenders and other contractors. 

*Blog content reviewed by Mike Eastman.*

Mike Eastman, VP, Loan Officer
1st Portfolio Lending
8300 Boone Blvd., Suite 200
Vienna, VA  22182
o: 703-564-9100 ext.145
d:  571-327-2145
c:  703-906-4716
f:  703-564-9121
efax:  703-822-4250
meastman@firstphc.com

One of the highlights of the year for residents of Loudoun County, especially those living in Leesburg has arrived!  This weekend is the 23rd Annual Flower and Garden Festival with over 150 vendors.  With two full days of festivities centered around the intersection of Market and King Streets in Leesburg’s Historic District, there’s something for everyone.  The streets are blocked allowing pedestrian traffic only and are lined with vendors selling plants, flowers, home & garden decor, gifts, food and drink, and many other fun items.  Award winning local landscape companies attend the festival, creating unique and beautiful landscaping projects right in the heart of the Festival that showcase the their artistic and technical skills.  Live music from the stage on the Courthouse lawn entertains the crowds. Cornwall Street, with its historic homes, gardens and mature landscapes will also be included in the Festival this year.  Also included in the Festival is the Wine Garden on the Town Green showcasing Loudoun’s wineries and breweries.  This is a family event with lots of fun stuff for the kids, visit the hands-on art and education area featuring puppet shows, story telling and fun art projects.   

This event runs April 20th and 21st from 10am-6pm.

Admission Fee: $3/person, free/child under 6

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Mother nature is finally bringing us some warmer weather.  Now it’s time to think of all those outside home projects that need to be taken care of so that you can enjoy the summer with family and friends.   Do your spring and summer family activities take place outside on your deck?  Everyone loves to have barbecues and cookouts, so you may want to make sure you deck is ready for the fun.  Here are a couple of great articles with tips on fun ways to spring clean your deck and patio, along with some information for general care and maintenance. 

If you’re thinking of putting your house on the market, you’ll want to make sure you deck looks great for all those potential home buyers.  Maintaining your deck and patio properly are important when thinking of the overall value of your home.  Don’t forget we have a list of preferred contractors on our site that can help you.  Visit our Resources page for the complete list.  If you’re not finding the information you need, contact us, we’re always happy to help. 

Spring in Loudoun County sure is taking its time show up this year.  We had some warmer weather in February, confusing the early blooming daffodils and crocus.  Perhaps Easter weekend will bring the spring weather we’ve all been waiting for.  I’m sure many of you have already made plans for their weekend but if not, I thought we could provide you with a great list of events for the whole family to get spring in Loudoun off to a great start. 

The annual Cherry Blossom Festival is in full swing.  So if you want to venture into downtown Washington DC, there    are lots of fun family oriented events.  Saturday, March 30^th is the Blossom Kite Festival marking the start of kite flying season.  You can join in several competitions and some great prizes are available for the winners.  Click here for a full schedule of events. 
 

Of course, DC is home of Washington Nationals.  So if you’re a baseball fan, perhaps you’re traveling in for the game today.  The weather should be great so enjoy your day and good luck to the Nats!  Click here for the full schedule of games. 

What’s happening in Loudoun County this weekend?  Here’s a short list of events and links for others.

Friday, March 29  

Musical Theater – Return of the Wizard
Location: Tally Ho Theatre in Leesburg at 2:30pm.  $15/Adults, $12/Students and seniors

Saturday, March 30^th

Easter Eggstravaganza
Location: Ebenezer United Methodist Church, Purcellville, VA, 10am-4pm 
Egg hunt, games, crafts, food and some special live performances

Leesburg Winter Farm Market is open from 9am-12pm / Purcellville Winter Farm Market is open from 10am-1pm
Grab some locally grown produce and products to get your weekend off to a great start.

Sunday, March 31^st

Egg Hunt at The Marshall House
Location: The Marshall House, 217 Edwards Ferry Rd, Leesburg, VA – 2pm-4pm
Meet the Easter Bunny, egg & bag decorating, face painting, scavenger hunts and egg rolls with prizes.  3pm egg hunt organized by age $5 donation at gate.

Interested in some events for just the adults?  Check out the Loudoun County Wine Trail.  Here you’ll find a full list of all the Loudoun County Wineries and Vineyards.  Check out their websites for special events happening this weekend.  The Visit Loudoun website has a great calendar that you can search by date and the type of event you’re looking for.  And if you’re staying home this weekend, it should be a great time to start working on your flower beds and garden.  Whatever you choose to do this weekend, we hope you have a great time with family and friends!

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