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.
Many eyes turn to the markets when disaster strikes, and the coronavirus has been nothing short of a disaster. Even though there was a major initial market shut down, things are beginning to look normal again, it’s no surprise though that some are continuing to hold their breath, waiting for the other shoe to drop. So are experts predicting the bubble to pop as a result of the pandemic? The short answer is, NO, the US housing market is not forecast to crash. Here’s why we don’t have to worry about the housing market bubble popping anytime soon:
Not Our Problem
The current dilemma in the US is in no way related to the housing market, in fact the stay-at-home orders have actually increased the number of buyers on the market in search of bigger and better homes to quarantine in! Currently, there is a massive shortage of homes for sale on the market, there are thousands of buyers demanding and very few sellers supplying. In fact, inventory is down over 33% when compared to this time last year. This was the exact opposite during the 2008 housing market crash, too much supply and not enough demand.
Property Prices On the Up-and-Up
In the infamous crash of 2008, properties for sale were so common that their prices fell through the floor. As aforementioned, the coronavirus pandemic and increase of buyers has shot prices of properties for sale through the roof! This seller’s market is another good sign that we are not headed for a burst in any bubble. With the housing market continuing to be more active than usual, home prices are not expected to drop much in the foreseeable future. Additionally, mortgage rates have been reduced to a record low rate. Rates are expected to remain near 3% for the next 18-months, allowing buyers to purchase homes they may have only dreamed of a few years ago. Real estate trends have continued to show a stable resilience, suring up that the predictions for the 2021 housing market remain optimistic.
Good Guy Freddie Mac
When Covid-19 first began to make real waves in the US in March, the Federal Housing Administration (FHA) placed a major restriction on foreclosures to prevent home prices from completely nose diving as they did in 2008. This was a true blessing to homeowners whose household income was affected due to state-wide layoffs. The reopening of the economy, coupled with the various mortgage and other assistance programs, allowed October to track a nearly 90% reduction in foreclosures with active foreclosure inventory setting another record low! The low interest rates have allowed many homeowners to increase their prepayment rate to record high levels as well.
So, with stable market trends, a need for inventory and slashed mortgage and loan rates, it looks like the housing market will continue to favor the seller with no bubble popping in sight.
Covid-19 has drastically changed the world we live in, from the way we interact with each other to the way we buy and sell homes. After a plummet in mortgage rates the pandemic created an influx of home sales and a buying frenzy, decreasing the overall inventory for sale. However, as time has passed and another spike in coronavirus cases appears to be on the horizon, the buying bubble may have popped. Market experts predict a “W” shaped rebound for the months to come, and it seems that we are not yet out of the woods.
After the coronavirus initially hit the US, the unemployment rate shot up from 6.2 million in February 2020 to 20.5 million in May 2020. At the apex of about 14% of American’s were unemployed. However, as most US citizens have continued adjusting to new social distancing measures and more businesses continue to adapt and find ways to reopen, the Bureau of Labor Statistics has reported that “the unemployment rate has declined to 7.9 percent,” as of October 2nd, 2020.
Despite a worldwide pandemic and historically high unemployment rates, things for early fall housing markets looked to be on the up-and-up. Buyers continued to buy despite astronomically high prices on the homes that remained for sale in a very limited market, likely due to the inconceivably low-interest rates on mortgages. More businesses gave leniency to employees working from home, causing people to consider investing more into where they lived and had many fleeing their highrise rentals. Having children home from school 24/7 was also a key factor in pushing families to expand into bigger homes with bigger yards. If quarantining and social distancing would keep people in their homes, buyers were looking for a good place to hunker down and wait out the storm.
Though we’ve seen a significant drop in coronavirus cases since the initial arrival of Covid-19, as temperatures continue to drop, health experts anticipate another large resurgence in infections when the masses head indoors into confined spaces. Many cities have begun to pump the brakes on a full-blow reopening in fear of another drastic state-wide shutdown. So what’s to come for those still trying to buy and sell homes with a second strain of coronavirus infections predicted for winter? The possibility of another round of infections will have potential buyers examining their budgets and income with scrutiny out of fear of another series of mass layoffs. While sellers have enjoyed a very biased market and buyers have been taking advantage of low-interest rates, the late summer and early fall buying frenzy looks to be tapering off and flattening out. Realtor.com has predicted that the seller’s home price growth will flatten, with a forecasted increase of only 0.8 percent, while buyers’ mortgage rates are likely to rise to 3.88 percent by the end of 2020. Inventory will more than likely remain constrained, “especially at the entry-level price segment,” and a tight housing inventory paired with rising mortgage rates and fear of potential mass layoffs for buyers will lead to a significant drop off in sales. So if you’re considering making a move or selling your home, there is no time like the present!
