You are currently browsing the tag archive for the 'mortgages' tag.
Because I do mortgages, a lot of people ask me about interest rates. Often times you will hear in the news that the Fed lowered or raised interest rates. When you hear that, that doesn’t mean you should go out and refinance your home loan or thank your lucky stars for your low interest rate. The Federal Funds Rate (which is usually what you hear about in the news) directly effects short-term interest rates like bank loans, credit card interest rates, adjustable rate mortgages and not long term fixed mortgages. So the next time you hear that the Fed dropped the rates (which will most likely happen again by the end of the month) know that it will have more of an influence on your credit card interest rates or your home equity line of credit and not on fixed mortgages.
If you have been following the news on the mortgage industry you know there has been a lot of drama lately. Basically, the honeymoon’s over (at least for now) for creative financing. Right now there are very few 100% loan programs but they’re still out there! The FHA and VA governement loans are really great products for first time home buyers with less than perfect credit because they allow you to put little to no money down and still get great rates. Make sure you also ask your lender about other 100% financing options since FHA/VA loans have loan amount limits and more costs attached to them.
Don’t be discouraged by all the hype in the media. Rates are still really good…actually they’re great right now- today 6.125% on a 30 year fixed (with 1 point-see my previous post on points). Right now is a great time to buy and a horrible time to sell. It’s truly a buyer’s market. Winter is traditionally slow because everyone is too busy with the holidays so you’re more likely to find sellers who are willing to negotiate!
Here are some tips:
1. If you don’t have money for closing costs, tell your realtor that you want to have the sellers pay your closing costs. That can be negotiated into your contract. With most loans, you can have the sellers pay up to 6% (of your loan amount) in closing costs. Check with your lender to make sure there aren’t any restrictions.
2. Make sure you ask your lender about any prepayment penalties. It’s important to know about those ahead of time. My take is, unless you don’t have any other option, don’t take a pre-payment penalty.
3. Whether you’re thinking about buying a house this month, in six months, in a year, in two years, go to a lender and get pre-approved now! I love it when clients come to me and they’re not planning to buy for a year or so. That way, I can get them pre-approved and if there are any issues we have a lot of time to resolve them and also I can give them tips on what they can do to maximize their purchasing power. It’s like trying to run a marathon without training…if you just would have trained months in advance you would have been able to run the best race possible! Bad analogy, but go with it.
4. Don’t get comfortable renting! You are throwing thousands of dollars away each year!
5. Just a tip- obtaining auto financing can lower your credit score by about 40-80 points and it can take several months to go back up. Make sure you don’t buy a car right before you buy a house.
6. Remember, all your liability payments reduce your purchasing power. For example, if you have a $300 car payment you will be approved for about $50,000 less than if you didn’t have that payment. Think again before opening another credit card, financing jewlery or buying a car.
