Nick Pakulla - Mortgage Lender Loan Officer in MD, DC, VA

Hope the spring market is treating you well!

With the active real estate market kicking into full gear our Community Bank can give your buyers the edge!  We offer the ability to close a loan in as little as 2 weeks and also offer second mortgage products that buyers can use to go non-contingent on their next home purchase.  These features were featured in the Washington Post real estate section this past weekend. 

Below are a few excerpts from the article:

The Washington Post, “Handling our hot market” Saturday, May 12, 2012, page(s) E1, E3

Regarding purchasing while retaining an existing home vs. selling first and then purchasing a new home: “We run the numbers both ways up front for pretty much anyone,” said Nick Pakulla, loan officer with First Place Bank in Rockville. In the current hot real estate market, “there’s no magic bullet anymore,” he added. “The most important thing any good lender would do is make sure you can qualify for the new mortgage non-contingent.”

One financing option that First Place Bank has found increasingly popular for buyers who qualify is to temporarily secure a second mortgage on the new home that they can then pay off when they sell the first home. “We’ve had a number of borrowers who don’t even make a first payment and most keep it for only a couple of months,” said Pakulla. However, even this solution has what amounts to a major hurdle for many: “You have to have at least 10 percent down on the new home and there are more strict qualification requirements with regards to income and reserves,” said Pakulla.

Negotiate shorter contingencies, including the home inspection, home appraisal and financing. Have a clear conversation with your lender about exactly how long it will take to secure financing and talk to your realty agent to determine potential closing dates. The lender’s cooperation is crucial.

“Legally we can close in eight days,” said Pakulla. In this competitive market, offering to close in a hurry can make buyers more attractive. “That’s definitely a good strategy people can use,” he said. The shortest closing Pakulla has done recently was just 10 days. If you can close in under a month or less than two weeks, make sure your agent includes a cover letter with your offer letting the seller know this.

You can read it directly:

http://www.washingtonpost.com/realestate/how-to-buy-a-house-in-dcs-sellers-market/2012/05/10/gIQAYvNCIU_story.html

Mortgage rates continue near all-time lows!  Please keep us in mind for any buyers that can use some of our bank’s unique abilities.

FHA has announced several changes in the past few weeks leading to increases in the required mortgage insurance premiums making FHA much more expensive.  This will significantly impact areas such as Bethesda and Rockville MD.

There are some very good alternatives that our Rockville Community Bank offers.  For loans below 417k we offer a 5% down conventional option, and for loans above the high-balance loan limits ($625,500 – DC metro area, $494,500 Baltimore metro area) we offer our 80/10/10 second mortgage option. 

With the recent increase in mortgage rates and impending FHA increases it will be important to ensure that all options are considered to find out what makes the most sense.  Below are two examples of way we can help save Rockville Maryland borrowers a significant amount of money with a small increase in down payment.

FHA vs. 5% down Conventional, $400,000 financed:

FHA

• 1.75% (effective after April 6) upfront mortgage insurance = $7,000 rolled into the mortgage
• $407,000 @ 3.875% = $1,914, Plus new FHA MIP (effective after April 6) = $400
• Total monthly = $2,314

5% Conventional with monthly MI

• $400,000 @ 3.99% = $1,907, Plus Monthly MI = $197
• Total monthly = $2,104

5% down conventional represents a savings of $210 per month, plus $7,000 savings from upfront MI or $17,600 over 5 years!

FHA vs. 10% down 80/10/10, $650,000 financed:

FHA

• 1.75% (effective after April 6) upfront mortgage insurance = $11,375 rolled into the mortgage
• $661,375 @ 4.00% = $3,157, Plus new FHA MIP (effective after June 8) = $785
• Total monthly = $3,942

10% Conventional with First Place Bank Second Mortgage

• $577,000 @ 4.375% = $2,881, Plus $73,000 Second Mortgage = $498
• Total monthly = $3,379

10% down 80/10/10 represents a savings of $563 per month, plus $11,375 savings from upfront MI or $45,155 over 5 years!

You can view the full mortgagee letter with all the details here - FHA MIP Changes 2012.  As always we are available via phone or email to answer any questions you might have.  Have a great day!

Yesterday FHA announced an increase in Mortgage Insurance premiums (the 4^th time in 3 years) beginning on April 1, 2012.  This will have a big impact for locations like Rockville MD, or Bethesda MD.  Also, FHA posted a notice in the Federal Register last week regarding the implementation of a decrease in the maximum closing cost assistance from sellers (right now maximums are at 6%). 

The Mortgage Insurance Premium Changes, planned for April 1:

• FHA upfront mortgage insurance will increase from 1.00% (now), up to 1.75% April 1.
• FHA annual mortgage insurance will increase from 1.15% (now), up to 1.25% April 1.
• FHA mortgages above $625,500 will be subject to an additional 0.25% annual mortgage insurance fee, or 1.5% April 1.  

Proposed Closing Cost Credit Changes, implemented in the near future after comment period:

• FHA is proposing that the closing costs be limited to the greater of $6,000 or 3% of the sales price.
• FHA is also proposing to narrow the definition of acceptable concessions.  FHA proposes to eliminate payment supplements offered by sellers, such as a year’s worth of homeowner association fees, as they are viewed by HUD as inducements to purchase.
• Comments on this proposal can be made at http://www.regulations.gov

Anyone planning on obtaining a FHA mortgage in Rockville or Bethesda MD and who is on the fence about buying may find this important information to know so they can get in before the changes.  Remember our bank’s 80/10/10 financing or 5% down conventional products offer alternatives to FHA. 

Please note: This information is subject to change by the FHA. It is based on an initial FHA announcement made February 27, 2012. It's unofficial until FHA releases a mortgagee letter.

There are some very positive signs in the economy are emerging and Fed policies are keeping Rockville MD mortgage rates near historic lows.

We strongly encourage spring buyers to get fully-approved now to avoid missing out on “the one.”  Without having an approval letter buyers could risk missing out on their dream home, or at the minimum be under high-stress to gather and send the required approval documentation last minute.  Our bank approvals are good for up to 1 year, there is no cost or obligation, and approvals can be turned around in 1 hour. 

Mortgage News Headlines of Interest:

• US Jobless Claims fall to 4-year low, consumer confidence up, Bloomberg: http://buswk.co/wQBtva
• Mortgage delinquencies hit 3-year low, Wall Street Journal: http://on.wsj.com/x4QdRs
• Standardization proposed for monthly Mortgage Statements by CFPB, New York Times: http://nyti.ms/yuaEuN
• $25 Billion Mortgage settlement deal FAQ (not to be confused with the HARP refinance program), Bankrate: http://bit.ly/xCfRF4
• Murmurs that FHA Mortgage Insurance Premiums will be increasing again this year, Reuters: http://reut.rs/AcpNUH

Our Community Bank is here to support you and your buyers, with our ability to close loans in 2 weeks, 10% down second trust products above the loan limits, and 5% no monthly mortgage insurance products we are ready to get you and your buyers to settlement on time with ease.

As always, we are accessible anytime to go over payments, closing costs, and issue approval letters at any time.  301-585-RATE (7283).  I hope you had a great holiday weekend! 

Happy New Year!  Hope you had a great Holiday and were able to enjoy time with your family. 

As the 2012 spring market is getting started off with pre-approvals and buyer inquiries, there were several changes (and re-changes) near the end of 2011 that may have led to some confusion and will likely impact your buyers.  Below is a current recap of loan limits, minimum down payments, and maximum seller contributions for all loan options available.

Mortgage rates continue to stay at all time lows!  Let’s make 2012 the best year yet!

Location           Loan Limit       Min. Down Payment     Max. Closing Concessions

Below 417,000 Conventional:

Baltimore          $417,000           5%                               3%

DC                   $417,000           5%                               3%

Investment        $417,000           20%                              2%

Above 417,000 High-Balance Conventional:

Baltimore          $494,500           10%                              6%

DC                   $625,500           10%                             6%

Investment        -                       35%                              2%

10% Down Jumbo ** Using First Place Bank Specific Second Mortgage Product:

Baltimore          $900,000           10%                              6%

DC                   $1,100,000        10%                              6%

FHA Loans:

Baltimore          $560,000           3.5%                            6%

DC                   $729,750           3.5%                             6%

VA:

Howard             $478,400           0%                               ~4%

Baltimore          $494,500           0%                               ~4%

DC                   $625,500           0%                               ~4%

*VA is now very specific per county, please consult the VA County loan limit site: http://www.benefits.va.gov/homeloans/loan_limits.asp

** borrowers can purchase above the VA loan limits by putting down 25% of the difference of the maximum loan limit and the sales price.

FHA Updates Loan Limits as of November 18, 2011

On November 18, 2011, the President signed into law H.R. 2112, Consolidated and Further Continuing Appropriations Act 2012 (HR2112). Section 238 of HR 2112 re-establishes the FHA loan limit at the higher of the dollar limit in Section 203(b)(2) or the dollar limit prescribed in Section 202 of the Economic Stimulus Act of 2008 for Forward mortgages.

Therefore, effective for all Forward mortgages with a case number assigned on, or after, November 18, 2011 through December 31, 2011, the loan limits referenced in Mortgagee letter 10-40 shall be in effect.

The Department will be issuing a Mortgagee Letter by mid-next week that will include more detailed guidance and applicable updated loan limit tables for 2012. We expect supporting system changes to be completed within that same time frame.

VA Funding Fees Revert Back to pre-change levels

FUNDING FEE UPDATE AS OF NOVEMBER 22, 2011:  On November 21, 2011, the President signed H.R. 674. Section 265 of the law raises funding fees to the pre-November 18, 2011 levels.  The fees specified in Section 265 are valid through September 30, 2016.

First Time Use

• < 5% down = 2.15%
• 5-10% down = 1.5%
• 10% or more = 1.25%

Second and Subsequent Use

• < 5% down = 3.3%
• 5-10% down = 1.5%
• 10% or more = 1.25%

Nick Pakulla

First Place Bank

Loan Officer

15400 Calhoun Drive Suite 170

Rockville, MD 20855

Direct: 301.585.RATE (7283) | Cell: 443.956.8774 | Fax: 301.560.6303

NMLS# 728211

Email:  NPakulla@fpfc.net

Apply now: http://www.firstplacebank.com/NickPakulla

It was just announced today that a bill has been approved that will raise the FHA (FHA only) mortgage loan limit back to $729,750 for the DC area and $560,000 for the Baltimore metro area.  Unfortunately, they did not raise the Fannie / Freddie conventional mortgage loan limit and they still remain at $625,500 and $494,500 respectively.  Although the conventional limits are not raised, this will still help buyers who don’t have 10% down and are looking to buy above the conventional limits.  

Below is the link to an article if you would like to read more about the change.  Remember, for borrowers with 10% down our bank’s 2^nd Mortgage can bridge the gap between conforming and true jumbo, and will be much more cost effective than going FHA (see example below).  Please call us with any questions.  Thanks and Happy Friday! 

http://www.bloomberg.com/news/2011-11-18/u-s-congress-votes-to-raise-top-limit-for-government-insured-mortgages.html 

Example – FHA with 10% down vs. First Place Bank second mortgage:

$800,000 purchase with FHA 10% down:
$720,000 financed @ 4.25% = $3,542 per month
FHA MIP = $660 per month ($0 going towards principal / not tax deductible)
Total = $4,202  

$800,000 purchase with First Place Bank Second Mortgage 10% down:
$625,500 first mortgage @ 4.25% = $3,077 per month
$94,500 second mortgage @ 7.25% = $645 per month (tax deductible and part of payment is going towards principal)
Total = $3,723 – much better option!

Thanks,
Nick 

Nick Pakulla
First Place Bank
Loan Officer 
15400 Calhoun Drive Suite 170
Rockville, MD 20855
Direct: 301.585.RATE (7283) | Cell: 443.956.8774 | Fax: 301.560.6303
NMLS# 728211
Email:  NPakulla@fpfc.net
Apply now: http://www.firstplacebank.com/NickPakulla

With Rockville MD mortgage rates still near all-time lows many buyers will have significantly higher payments and may qualify for less if they head back up (like they did last spring).  Please pass the example below to your buyers to show how beneficial low interest rates are!

$417,000 borrowed
@4.125% = $2,020 per month
@5.125% = $2,270 per month – this is $90,000 in wasted interest paid over the life of the same $417,000 loan!
@5.125% a $2,020 principal and interest payment would equate to a mortgage of only $371,000!  This means that in this example buyers today can finance $46,000 more for the same exact principal and interest payment due to low mortgage rates.

If you look at the chart above, for the past 2 years mortgage rates have been in the low 5%’s during spring…. Will history repeat itself again?  Even scarier, look how quickly mortgage rates shot up from November 2010 to January 2011.

HAPPY HALLOWEEN!

***About First Place Bank

First Place Bank is an established community bank new to the MD/DC/VA market.  With all the struggles of the “large banks” the community banking model has proven to be much more efficient.  We still offer 80/10/10’s, in-office underwriting, and have a group of local bank approved appraisers (no 3^rd party appraisal system).  My entire group made the move to First Place Bank after thirteen years at a large bank mainly because we believe in a higher level of service.  We work with some of the best Realtors in the area and our goal is to create a new, higher standard in the mortgage business.  All top Realtors should have a community bank option to rely on.  Please consider us for your next buyer.  Thank you.

Some encouraging mortgage headlines that all point for positive signs for the housing market in the coming months for buyers in Silver Spring and Bethesda Maryland, DC, and Virginia: 

• For buyers across the country and locally here in Bethesda MD, monthly payments based on median home prices and mortgage rates are now lower than they’ve been in 40 years!  Marketwatch.com http://bit.ly/o21FAN
• There is beginning to be a reversal in the trend towards renting in the Washington area – landlords have raised rents an average of 3.7% per year since 2006, low mortgage rates and home prices are driving purchases for young professionals: Washington Post http://wapo.st/o7AyFa
• Up to 2 million people are waiting to jump into the housing market in the next 2 years, and the typical American still places a high value on home ownership: http://bit.ly/peqpOz  

In other news the Senate voted late last night to restore the high-balance loan limits ($729,750) through 2013 and the vote passed 60-38.  This still needs to go to the House of Representatives, but will be positive for the DC Metro area, especially places like Bethesda and Silver Spring.  Wall Street Journal http://on.wsj.com/pVnppa    

Mortgage Rates continue to bounce near all time lows! 

Have a great weekend!  Keep us in mind for your next buyer, with our in-office operations and appraisal system our loan packages arrive to the title company days before settlement.  301-585-7283

September 30^th and October 1^st are important in our industry as several government loan limits are set to change:

• Conventional Fannie Mae loan limits will be changing,
• FHA mortgage loan limits will be changing, and
• VA loan limits will not be changing yet, however, VA funding fees will be changing

Fannie Mae loan limits: https://www.efanniemae.com/sf/refmaterials/loanlimits/xls/loanlimref.xls

Use the above referenced table to check the Fannie Mae loan limits.  Additionally, if your home purchase is affected by the loan limits going down utilize our bank’s second trust mortgage to allow you to purchase your home above the loan limits with as little as 10% down.  See my 80/10/10 second mortgage blog post and an article in the Wall Street Journal referencing our bank

FHA:

FHA loan limits https://entp.hud.gov/idapp/html/hicostlook.cfm

The FHA loan limits will also generally follow the change in the Fannie loan limits, but you can search by state via the link above.

VA:

VA Loan limits http://www.benefits.va.gov/homeloans/loan_limits.asp

The maximum guaranty for VA guaranteed loans closed October 1, 2011 through December 31, 2011 will remain unchanged. The Veterans’ Benefits Improvement Act of 2008 provided a temporary increase in VA loan limits for loans closed January 1, 2009 through December 31, 2011. Because of this legislation, VA loan limits will remain the same for the remainder of the calendar year. Please note that VA does not have a maximum loan amount. Loan limit refers to the maximum loan a lender could make and still receive a 25% guaranty from VA, assuming the veteran has full entitlement.

VA Funding Fee Changes

VA Funding fees going down: http://activerain.com/blogsview/2514838/va-funding-fee-changes-going-down-effective-october-1st