22
Mar
By First Rate Financial Group
Mortgage

Navigating A Market With Higher Interest Rate

Navigating A Market With Higher Interest RateEven though interest rates have gone up significantly during the past few months, there are still opportunities for you to find a home at a great price. The high interest rate can be discouraging for some people, but as long as you know how to navigate the market, you can still put yourself in a position to be successful.

Put More Money Down

The easiest way to combat a high interest rate is to reduce the amount of money you borrow. That means that you might need to put more money down. Of course, this means that you might need longer to save up a down payment, but there are other benefits you might notice as well. For example, if you are willing to put 20 percent down or more, you no longer have to purchase private mortgage insurance, which can help you save some additional money.

Increase Your Credit Score

You may be able to secure a lower interest rate if your credit score is higher. Remember that the lender will give you a lower interest rate if you are of less risk to them. If you increase your credit score, you improve your financial health, which means that the lender may offer you a lower interest rate. You can increase your credit score by correcting mistakes on your credit report, paying down your existing debt, and reducing your credit utilization ratio.

Consider an Adjustable-Rate Mortgage

You may even want to consider going with an adjustable-rate mortgage, usually shortened to ARM. This means that the interest rate on your loan will change with the market. If you feel like the interest rates are going to go down, this may be a way to save money; however, keep in mind that you may end up owing more money if the interest rates go up.

Refinance Your Home Loan Down The Road

If you are not willing to take the risk with an ARM, keep in mind that you can refinance your home loan later if interest rates go down. You might need to pay closing expenses again, but it could save you tens of thousands of dollars over the life of the loan if you decide to refinance. 

 

17
Mar
By First Rate Financial Group
Mortgage

Is A VA Loan The Best Option For Your Needs?

Is a VA Loan the Best OptionIf you plan on buying a house in the near future, there are a few mortgage options available. One potential option is called a VA loan. This is a loan that has been backed by the Department of Veterans Affairs, and it could provide you with some added flexibility that you can use to purchase a house. Is a VA loan right for you? There are a few points to keep in mind.

Who Qualifies For a VA Loan?

First, not everyone is able to access a VA loan. This is a loan that is generally only available to active members of the US military, veterans of the US military, and surviving spouses of service members. There are different service requirements that you need to meet before you can qualify for a VA loan, so if you have questions about your service record, consider reaching out to an expert who can clarify whether you meet the requirements.

What Are the Top Benefits of a VA Loan?

There are a few reasons why you might want to take advantage of a VA loan. First, you don’t need to put any money down. You can take out a home loan for 0 percent down, making it easier to purchase the house of your dreams. Second, even though don’t put any money down, you don’t need to pay for mortgage insurance, helping you save money. While you can still put money down if you would like, there is no requirement for you to do so.

Overall, the closing costs tied to a VA loan are significantly lower, so you don’t have to worry about exorbitant fees at the closing table. Finally, if you decide to pay off the loan early, you should not have to worry about incurring a prepayment penalty. 

Consider Applying For a VA Loan

There are a lot of unique requirements that you need to meet if you want to qualify for a VA loan, but it could help you buy a home without having to put anything down at all. You should partner with an expert who has experience navigating this situation. That way, you can find the best loan option to meet your needs.

16
Mar
By First Rate Financial Group
Mortgage

Should You Pay Discount Points When You Get Your Mortgage?

Should You Pay Discount Points When You Get Your MortgageOne of the challenges you will face when deciding how much money to put down on your new home is whether to put down a larger down payment or to take a bit of money from your down payment and use it to buy “discount points” to lower your interest rate.

There are pros and cons to doing both and each borrowers situation will be different so it’s important to understand which option is best for your individual situation. Some factors you should consider include:

  • Cost of borrowing – generally speaking, to lower your interest rate will mean you pay a premium. Most lenders will charge as much as one percent (one point) on the face amount of your loan to decrease your rate. Before you agree to pay points, you need to calculate the amount of money you are going to save monthly and then determine how many months it will take to recover your investment. Remember, closing points are tax deductible so it may be important to talk to your tax planner for guidance.
  • Larger down payment means more equity – keep in mind, the larger your down payment, the less money you have to borrow and the more equity you have in your new home. This is important for borrowers in a number of ways including lower monthly payments, better loan terms and potentially not having to purchase mortgage insurance depending on how much equity you will have at the time of closing.
  • Qualifying for a loan – borrowers who are facing challenges qualifying for a loan should weigh which option (points or larger down payment) is likely to help them qualify. In some instances, using a combination of down payment and lower rates will make the difference. Your mortgage professional can help you determine which is most beneficial to you.

There is no answer that is right for every borrower. All of the factors that impact your mortgage loan and your overall financial situation must be considered when you are preparing for your mortgage loan.

Talking with your mortgage professional, and where appropriate your tax professional, to help you make the decision that is right for your specific situation.