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5 Ways to Finance a $500,000 Crofton Home

MoneyWith prices of detached homes hovering around a half million dollars in Crofton MD, it’s not surprising to see young adults who grew up in Crofton and Anne Arundel County moving to other areas and even other parts of the country to live.  My own daughter relocated to the Dallas-Ft.Worth area in Texas last spring, where nice single family homes are available under $200,000.

Yet there are financing options available for buying a $500,000 Crofton home, even in this market, making this community accessible for many people in this high-income area to take advantage of today’s extraordinary “buyer’s market” and move into a Crofton home:

1)  Jumbo VA loan up to $650,000.  VA loans are still “no money down” up to $417,000, and buyers must put down 25% of the difference between $417,000 and $650,000.  The resulting $20,750 (on a $650,000 property) is only about 4% down, and the current rate (10/26/07) is 6.375. (Remember, active duty military personnel will have their settlement fees waived by Capitol Title in the Crofton office, so closing costs will be minimized.)  If you’re eligible for VA, this may be your best option for buying a Crofton home.

2)  5–1 Conventional ARM.  As of today, 10/26/07, 5–1 ARM Conventional loans are available at 6% interest with just 5% down payment.  (In my opinion, the rate differential is not enough to justify using an adjustable rate mortgage instead of a fixed loan, unless you expect to sell your home during the first five years of a 5–1 ARM.)

3)  Fixed Rate 30 Year Conventional.  6.5 % interest rate, with at least 5% down, effective today, 10/26/07.  If you have the funds for down payment and closing, I recommend this financing for buying a Crofton home, if you’re not eligible for a VA loan.

4)  No-doc.  With credit getting tighter, these days, no-doc loans are still available for you to buy a Crofton home with a $417,000 loan amount, but not over that.  If you have enough cash available to put down to keep your loan below this threshold, and you are self-employed with good credit, you may wish to consider a no-doc loan at 6.25% interest (10/26/07).  This is something to discuss with your own financial advisors. 

5)  Fixed Rate 15 Year Conventional.  The best available interest rate, at 5.875% as of today (10/26/07), with at least 5% down payment.  If you can afford and qualify for the monthly payment on a 15 year loan, this loan will cost you less over the life of the loan than any other financing method for buying a Crofton home or anywhere.

This loan information was provided by Chris Washburn, a Crofton area resident and Vice-President of FNMC Mortgage.  If you have any questions about this or any financing, you can email [email protected] or phone Chris at (301)220–1000. 

The editorial comments on each loan type are mine.  Please rely only on your own agent, lender and any other financial advisors to choose which financing to use for your Crofton home.

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