Monthly Archives: September 2015

Interest Rates Impact Your in Home Buying Options

If you’re in the market for a new home, chances are you pay close attention to home mortgage interest rates, and for good reason.  When it comes to maximizing your affordability while keeping your monthly payments low, a low-interest rate offers increased flexibility in the way you approach home buying.

With interest rates poised to go up soon – even modestly – the most obvious impact will be on your monthly payment. Of course, higher interest rates result in higher monthly payments which generally means that the value of the home you purchase is generally less if you have a strict budget you need to follow. Small increases in interest rates, however, seldom become a deal breaker for new home buyers and they shouldn’t.

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There are other important factors to consider when thinking about home loan interest rates:

  1. Today’s interest rates have remained at extraordinarily low levels for several years now. However, even a 5% or 6% interest rate is still very low by historical standards. Whatever the rate is when you buy, if you have an experienced loan officer, they will work with you to lock in a rate at the lowest rate possible. But don’t be surprised to see interest rates fluctuate day to day; there is no precise way in knowing when they will be the lowest in a particular month or week.
  2. Because interest rates are low and are expected to remain relatively low for some time, there will probably be plenty of homes on the market for a while. That’s because when interest rates are low, current homeowners are more willing to upgrade or downgrade so they have more incentive to sell in order to benefit from low interest themselves. That means you’re likely to have a nice sized inventory from which to select your next dream home.
  3. Higher interest rates mean you can recover a larger portion of your monthly payments in the form of a mortgage interest tax deduction. Document improvements along the way of homeownership as many improvements will be relevant to your taxes when you sell by lowering the amount of capital gains or taxable income you realize if you decide not to reinvest the earnings.
  4. Generally speaking, you come out ahead buying a home over renting, especially if you are going to stay in a location for two or more years. One rule of thumb is that it takes at four to seven years to gain enough appreciation for homeowners to come out ahead. By then, chances are your interest rate will play a role in how long you decide to stay in your home, along with other factors such as changes in income, job changes, and changing family needs.

Now is a great time to buy a home but if you have a longer timeline for home purchasing readiness, you can breath and get your financial picture in order. The interest rates aren’t going to skyrocket overnight and chances are you’ll be able to get a great rate when you’re ready to buy in the next year or two. But don’t wait too long. As interest rates rise, fewer owners will be motivated to sell so the inventory of available home will likely decrease.  Happy home hunting!



How to Hire a Rock Star Home Loan Officer

When it comes to buying a new home, many folks rely on the old adage: Location, location, location. But when it comes to selecting a loan officer to process your home mortgage, the mantra is all about experience, experience, experience. Along with experience, find a loan officer with superior customer service, an array of loan options to best meet your unique situation, and of course, compare rates and fees.

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Experience, Experience, Experience

When it comes to making what is probably the biggest single investment of your life, you want a home mortgage professional that has significant experience in the real estate industry, particularly in processing residential home loans. A loan officer who has closed hundreds to thousands of loans is more likely to understand the ever-changing legal and regulatory requirements and the best ways to save you money than someone new to the field.

An even bigger advantage is having a loan officer on your team with significant experience in your local market. With knowledge of your local real estate market, your loan officer will be able to maximize all available resources to support you in becoming prequalified so you can begin your home search. Once you’ve made an offer and have had it accepted, she’ll be right there ready to process the loan and have you ready for closing

Customer Service Counts

Despite the excitement that comes with buying a new home, there is also no shortage of stress. An experienced loan officer that is available and accessible to answer your questions is a must.

Deadlines are part of the home purchasing process as is collecting all types of personal financial information. A skilled loan officer will guide you through the process to make it as clear and stress-free as possible. Some qualities to look for when selecting your loan officer is whether she is dependable, friendly, approachable, patient, thorough and supportive. You’ll know you’ve found a good match when your loan officer says, “don’t worry – we’ve got this,” and you believe her. Because they understand the stress associated with home buying, an excellent loan officer will do everything in her power to bring you solutions rather than problems and will be an asset to other members of your team such as your Realtor®.

Read about your loan officer by reviewing their website, Facebook and other social media channels. When you see a plethora of happy customers, you can be pretty sure they are happy for a reason. Same thing with negative reviews.

Array of Loan Options

To make sure you get the best loan for your unique needs, seek a loan officer able to process a variety of different loan types including conventional, FHA and VA loans. They should also be able to offer privately funded loans which increases their flexibility to make non-traditional loans such as Second Chance Loans for buyers who recently experienced a short-sale or foreclosure or whose home does not qualify for conventional financing.

Compare Rates and Fees

One thing about having a loan officer you can trust is that you don’t have to fear hidden fees or charges. If you are looking for a loan officer, one of the first things to ask is about their fees including the home origination fee. This fee can range from zero to up to one or two points, where one point is equal to 1 percent of the loan (one point on $100,000 is $1,000, etc.).  Origination fees are generally the largest fee to be concerned with but other unnecessary fees may also crop up on the day of closing and catch you off guard. That won’t happen if your loan team is doing their job.

Similarly, an experienced loan officer will have the most current information on the best time to lock in your interest rate. Locking an interest rate, in all fairness, is always about 90 percent guesswork but where trends or forecasts exist, a skilled mortgage loan officer will generally know and will do their best to get you the lowest rate possible.

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