|  When you're ready to purchase your Alexandria, Arlington, or Washington DC home, you'll have plenty of choices when it comes to financing. No
two buyers are exactly alike, so the mortgage industry has been
proactive and responsive when it comes to creating loan products
to help buyers find a home.
From the first-time buyer, to the experienced investor, mortgage
companies have made it very easy to find a loan that will best suit
your needs.
Mortgage programs have become much more flexible over the years,
allowing more people to afford, qualify, and purchase a home.
Although the newer loan products are certainly not your traditional
30-year fixed loans, these financing options will work to your advantage
when fully understood.
| Do you need a lower interest
to qualify and purchase, but are also scared of rising interest
rates? |
Consider a 10-year interest only
loan that then automatically transfers into a 20-year fixed
loan at the same time. Why this is a good fit? You can weather
the interest rate storm with a low rate, and build equity during
the 10-year period. Once the 20-year period kicks in, you can
either continue, or refinance if the rates are lower. |
| Are you purchasing a new construction home
from a builder? |
Consider a loan with a longer interest-rate
guarantee. Why this is a good fit? This is perfect for the buyer
who is fearful about the uncertainty of interest rates over
the long term. Usually with new construction, the lender will
lock-in your rate within 60 days of home delivery. With a loan
rate guarantee, the stress of an unforeseen increase in interest
rates with a higher estimated monthly payment, is eliminated. |
| Do you need a year or two of breathing room
before making full payments? |
Consider a fixed-rate loan with an initial
interest rate buydown. Why this is a good fit? In a cool buyers
market, this type of loan is ideal for buyers who held the short
end of the stick during a hot sellers market. With a buydown,
a home that was not within reach becomes within arm’s
length because a lower interest rate means lower payments, which
means greater affordability. |
| Are you in a high appreciation market and
expect to move in 10 years or less? |
Try the interest-only ARM loan with a longer
amortization period. Interest-only ARM loans usually come in
5/1, 7/1, or 10/1 types. With these loans, your required monthly
payment is only the interest portion. In a hot sellers market
where appreciation is on the upswing, buyers take advantage
of home ownership, with the tax advantages, while the value
of the home continuously increases. |
| Do you want cash flow and to build up equity? |
Look into the flexible option ARM. This type
of loan will allow you to make the interest-only payment in
months where you need some extra cash. The rates for these loans
may be a little higher over the long run, but in the short run,
the option of having to pay only the interest portion of the
monthly payment can be very helpful. |
| Are you purchasing a four-plex? |
Try the Alt-A mortgage, which offers loans
at rates between prime and subprime for borrowers whose loan
needs don’t conform to Fannie Mae or Freddie Mac guidelines.
This loan is perfect for investors. |
| Are you a firefighter, teacher, or police-officer,
or have an income at or below the area’s medium? |
Many lenders have special first-time buyer
programs, and community partnership programs. Popular programs
like the ACORN Housing program, Virginia Housing Development
Authority (VHDA) loans, and county government housing grants
make it possible for lower-income families to qualify for homes
in the areas where they work. |
Do you want a traditional fixed rate but
need a lower payment? |
The much anticipated 40-year loan may be
a fit for you. Your equity builds slower, but your interest
rate is firm and secure, and will never change. |
Before you shy away from an adjustable rate mortgage, know that
you can select a loan where your rate adjusts monthly, yearly, or
every other year. And there is always the option of refinancing
later into a fixed loan, where you interest rate will not change.
Before you give interest-only loans the cold shoulder, know that these
loans do allow you to make extra payments that can go toward paying
down your principle balance. While this type of loan usually takes
a little more financial discipline, it is one of the best tools
to enable purchase a home a step above what you would qualify for
with a traditional 30-year fixed rate loan. Also, an interest-only
loan can often mean the difference between a condo vs a townhouse,
and a townhouse vs a single-family home. Part of our job as Alexandria, Arlington, and Washington DC real estate specialists is to be familiar with different types of financing, so that we can answer your questions as well as offer reasonable alternatives and options for financing your new home.
More Tips For Buying
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