We came across a great read by Mortgage News Daily that we wanted to share with you!
The biggest story for the mortgage and housing market so far in 2021 has been the big spike in mortgage rates. It has been more abrupt and covered more ground than all but the worst historical examples. That said, it was always going to happen when the covid outlook improved.
For something that was “always going to happen,” the rate spike still managed to catch many people off guard. The biggest reason for that was the disconnect between mortgage rates and the bonds that typically dictate mortgage rate movement.
There are actually two types of bonds that affect mortgage rates: Treasuries in a general sense, and mortgage-backed bonds specifically. To make a long story short, the pandemic resulted in an unprecedented breakdown in the normal correlations between bonds and rates.
Although the easiest question, ‘what is the interest rate?’ is not the only thing you need to know. So what should you be asking? These mortgage questions – and the answers you want – will help you find the best home loan from the right lender.
What can I do to make sure I get the lowest payment on my home loan?When looking for a mortgage you should start at least 6 months prior to the time you want to put in an offer on a house. Starting early will help make sure that you are 100% ready to purchase and get the best deal available. Your credit score and down payment amounts will have determine your payment.
Which type of mortgage is best for me? This question will help you determine whether you’re talking to just a producer — a salesperson — or a quality adviser. When you ask, “What are my options?” for each type of loan discussed, the mortgage lender should tell you the pros and the cons in light of your situation.
How much down payment will I need? A 20% down payment is every lender’s ideal, but it’s not always required. Qualified buyers can find mortgages with as little as 3% down, or even no down payment. Again, there are considerations for every down payment option. The best lenders will take the time to walk you through the choices.
Do I qualify for any down payment assistance programs? If you really want to size up your mortgage lender’s value, this is the question that will do it. If you get a chuckle or a groan in response, move on.Lenders with knowledge of local, state and national down payment assistance programs — and the wherewithal to help you navigate the process — are well worth the hunt.
What is my interest rate? You probably already planned to ask this mortgage question. It’s the one benchmark we all understand. Or do we? Lenders can move the needle on your mortgage interest rate a number of ways, most of them involving additional fees.But after talking to at least a couple of lenders, you’ll get an idea of a ballpark interest rate you’ll qualify for. Let’s say it’s 5%. We’ll call that your payment interest rate because that’s what your monthly mortgage payment will be based on.By the way, if you’re considering an adjustable-rate mortgage rather than a fixed-rate loan, you’ll want to ask: How often is the payment interest rate adjusted? What is the maximum annual adjustment? What is the highest cap on the rate?
What is the annual percentage rate? Now that you have an idea of what your payment rate will be, it’s time to find out what your annual percentage rate is. The difference between the two? The APR incorporates all of the embedded fees of the loan.Ask your lender if any discount points are included in your APR. The answer you’re looking for is “No.” You can always decide later to buy discount points, which are extra fees you pay upfront to lower your interest rate.When you have zero-discount-point APRs from competing lenders, you can see who has the lowest fees for the same payment rate.
Are you doing a hard credit check on me today? It’s always good to know when the lender is going to perform a “hard” credit check, called a “hard inquiry.” That type of payment history inquiry shows up on your credit report. Lenders need to do this to give you a firm interest rate quote.When you’re shopping more than one lender, you’ll want these hard credit pulls to occur within a short period of time — say within just a week or so — to minimize the impact on your credit score.
What will my monthly payment be? You’ve probably asked this question already. But knowing what your monthly mortgage payment will be is kind of key to the whole deal, right? You’ll also want to ask if there is any prepayment penalty if you pay off the mortgage early — for instance, if you move or refinance. The answer should be “No.”
What other costs will I pay at closing? Fees charged by third parties, such as for an appraisal, a title search, property taxes and other closing costs, are paid at the loan signing. These costs will be detailed in your official Loan Estimate document and your almost-time-to-sign Closing Disclosure. But the sooner you know what they are, the better you can shop, compare — and prepare — for them.
How will I be updated on the loan’s progress? Will you have a single point of contact throughout the mortgage loan process? And how will you be updated on the progress: by email, phone or an online portal? Establishing your service expectations upfront, and seeing just how eager the lender is to meet them, will give a clear point of comparison among lenders.
How long until my loan closes? Of course, you want to know what your target closing and move-in dates are so you can make preparations. And just as important: Ask what you should avoid doing in the meantime — like buying new furniture on credit and other loan-busting behavior.
The housing market right now is hot. Demands for homes making it an opportune time to sell, but you don’t have to worry. Lending services like Gulfside Mortgage can help you figure out what you can afford when it comes to housing, based on income, expenses and credit history. Here is the real scoop on home affordability from Gulfside Mortgage Services:
Mortgage: The simplest definition is a mortgage is loan used to purchase a home. Few people can outright pay for real estate, so mortgages are the easiest way to afford a home. Once you enter into a mortgage loan agreement, you will have to pay back the loan over a set number of years. Typically, there a will have a 30-year loan agreement, however, depending on how much you are able to pay back on your loan, you can adjust the initial fixed rate mortgage. You can also apply for an adjustable-rate mortgage which can change periodically depending on interest rates.
Down payment : When looking to buy a home, the rule of thumb for years has been 20% of the home’s cost should be the down payment. Depending on where your dream home is and the types of loans available, you may be able to pay more or less as your down payment. The 20% guideline as always been thought of to improve your changes of loan approval and lock in a lower rate, but grants, first-time home buyer programs and additional federal loans can make getting your home more affordable. You can put more money down at first to lower your monthly payments and lock in a lower interest rate. Or you may find that you can gain assistance with your down payment, which may give you more money to direct to monthly payment and pay down your loan quicker.
Interest Rate: Any home purchase through a lender or mortgage service company will be subject to interest rates. Interest will be factored into your loan repayment. If the timing is right, you could purchase your home and lock down a good interest rate. According to BankRate.com, the current mortgage interest rate is around 3.060%. This percentage can vary day to day depending on the market, but currently, this is a low interest rate, indicating a good time for buyers.
Loans: Where you want to buy a home and your homebuyer status may help you afford your dream home. Whether you are a first-time buyer, a veteran, interested in rural housing or looking to refinance, there are many loan options that can help your home buying budget and bolster your borrowing power.
Purchasing you first home, finding a new home, or refinancing the home you love are all things Gulfside Mortgage Services can help you achieve. We are available to help you navigate the process of home loans and affordability. Call our offices at 888-960-6850
Are you short on cash, and in a situation where your home equity is your biggest asset? Some homeowners end up in a situation where they don’t have any other viable way to raise money for their daily living expenses. In this case, they may want to take out a reverse mortgage.
However, this action is not a decision to make lightly because it’s probably taken years of hard work to accumulate your home equity; taking out a reverse mortgage means spending a significant part of that equity on loan fees and interest.
If you are thinking about a reverse mortgage, here are some things to consider:
DO YOU WISH TO STAY IN YOUR HOME?
This is the most important question to ask yourself if you are thinking about getting a reverse mortgage versus putting your house on the market.If you don’t plan to stay in your home—or if you don’t plan to be there for the long term—a reverse mortgage may not be the right option.
HOW MUCH IS YOUR HOME WORTH?
In order to qualify for a reverse mortgage, you must be at least 62 years of age, you must have a substantial amount of home equity, and all existing loans on the home must be paid off. Selling may be an option for you, but the recent housing crash has left many homeowners with a lot less in home value than they had five years ago. Getting a reverse mortgage with the potential to increase cash flow could be a viable alternative to selling at a loss.
HOW EQUIPPED IS YOUR HOME FOR YOUR NEEDS?
A borrower is allowed to use reverse mortgage proceeds however he or she so chooses. One way some borrowers choose to use their proceeds is to make home improvements or modifications so that the home is better suited for aging in place.
How do I know if the reverse mortgage will work for me?
The answer to whether a reverse mortgage will work for you will vary from person to person depending on their individual circumstances. The reverse mortgage is a great loan but that doesn’t mean that it works for everyone depending on their situation. Ultimately a homeowner needs to assess where they are at in life with regard to finances and expenses, where they want to live during their retirement years or for the foreseeable future, what is the best case scenario and worst case scenario of the options they have, and then find out if the reverse mortgage can help them accomplish those goals.
The Bottom Line
Reverse mortgages are widely criticized, and for a good reason; they aren’t an ideal financial choice for everyone. But that doesn’t mean they’re a bad deal for every homeowner, in every situation. Even if a reverse mortgage is an expensive option and not an ideal one, it may still be the best for your circumstances. Here are the ifs: if you will get enough proceeds from the loan to solve your financial problems (in the long run), if you plan to stay in your home long term, if you can afford the ongoing costs of homeownership, if you have a spouse who is 62 or older—and if you don’t plan to leave your home to anyone.
