12
May
By First Rate Financial Group
Mortgage

ARM Loans: What To Know

ARM Loans: What To KnowMany people are wondering what type of home loan is right for them, and one of the options is an ARM loan. This is an adjustable-rate mortgage. Typically, the rate is fixed for a certain amount of time, but it can change after that. Adjustable-rate mortgages will vary depending on the market. Is an ARM a smart loan option?  There are some situations where an ARM loan can be helpful, but people need to be careful with them.

The Risk Of An ARM Loan

First, it is important to understand why ARM loans contributed to the housing crash more than a decade ago. Many people took out ARM loans to buy houses that they could not afford. For example, if an ARM loan is a 5/30 loan, this means that it is a 30-year mortgage that has a fixed interest rate for the first five years. Then, after five years, the interest rate can change. There are typically caps on how much the interest rate can rise, but for many people, a three or four percent increase in the mortgage rate is enough to price them out of their homes.

What Are The Advantages Of An ARM Loan?

There are a few advantages that come from taking out an ARM loan. First, they usually have lower rates than fixed-rate mortgages. They might only be lower than a fixed-rate mortgage by a quarter point, but this adds up over time. Furthermore, they are a great option for real estate investors who are planning on buying and selling properties quickly. If someone is only planning on holding onto the property for a year or two, it might be a smart move to take out an ARM loan because the rate will not have a chance to go up before the property is sold. 

When To Take Out An ARM Loan For A House

Ultimately, people should consider taking out an ARM loan if they do not plan on living in the property for a long time. That way, they can sell the property before the interest rate increases. This could be a way to save money on property purchases and housing expenses, but there are risks involved, so be careful and speak with a mortgage professional to help guide you with the best loan option for you.

 

11
May
By First Rate Financial Group
Mortgage

The Younger Generations Are Interested In Owning A Home

The Younger Generations Are Interested In Owning A HomeThe real estate market has been red hot this year, with many people looking to purchase a home because of record-low interest rates. This includes younger individuals, as younger generations are interested in owning a house for the first time. The past couple of years have been anything except normal, and the housing market has taken off, with demand far exceeding supply. Why is this taking place?

Record Low-Interest Rates Are Driving People Into the Market

Even though there are many reasons why people are interested in purchasing a home, incredibly low-interest rates are one of the biggest reasons. Many people are interested in taking out a home loan with a 30-year term. Potential homebuyers think that they may never see interest rates this low again. As a result, many are looking to capitalize on this opportunity before it disappears. This is increasing competition for homes on the market, driving up their values.

Interest Is Skyrocketing Among Younger Individuals

Record-low interest rates are appealing to just about everyone, but it is a particularly attractive option for young homebuyers. Many are just beginning their careers and are looking for ways to build wealth. One of the best ways to do so is through homeownership. Many research bureaus have noted that there is a sharp increase in younger individuals looking at houses. 

Many Are Facing An Uphill Battle

Even though there are many young individuals and families looking for houses, there are a number of challenges they will need to overcome. One of the biggest challenges is that there is a historic shortage of inventory. Even though potential homeowners might be able to lock in a low interest rate on a loan, they might not find a house they can purchase. It is difficult for young home buyers to compete against older individuals and families who can make a cash offer. If a bidding war takes place, younger homeowners rarely have the cash to come out on top. 

Asking For Help Is Key

Even though today’s mortgage rates are attractive, it is critical not to overpay for a house. Asking for help from a professional can help potential homeowners make the right decision. 

 

06
May
By First Rate Financial Group
Home Mortgage Tips

Honesty Is the Best Policy: Why You Need to Be Truthful on Your Mortgage Application

Honesty Is the Best Policy: Why You Need to Be Truthful on Your Mortgage ApplicationThere are few things better than finding your dream home and being able to afford it, but simply because you’ve found the perfect place doesn’t mean you should stretch the truth. It might seem tempting to polish your mortgage application a little in the hopes of making a better impression, but here are a few reasons why you should stick to the truth when signing off on your home.

Your Credit History Tells All

It can be tempting to bump up your salary or make some hefty deposits into your savings account. However, lenders will be taking a look at your financial history by way of your bank statements, credit report and paystubs so they’re likely to discover any erroneous details. If you’re not honest about your financial situation, the lender may suspect that you’re not a reliable buyer. Not only that, making false statements about your finances may give you more home than you can really afford, which can cause setbacks down the road.

Mortgage Fraud Is Still Fraud

A little white lie on your mortgage application might not seem like such a big deal, but because you are painting a picture of yourself that is not true, this can actually be considered mortgage fraud. While there are mistakes that can be made on any mortgage application given all the details required, it’s very important not to mislead the lender or home seller on purpose. It may not be common, but mortgage fraud can be punished with hefty fines or even prison time.

A Bad Way To Begin

There’s nothing like the feeling of moving into your newly-purchased home and feeling enthusiasm for all the things it entails, but being dishonest about your financial situation can sully that. A lie may just be a small detail, but mortgage lenders look at a variety of factors to ensure you’re a good fit for a loan that will stay manageable month after month. While a minor mistruth may seem insignificant, it disables lenders from being able to assess if your financial situation is right for the home you want to purchase.

It may be enticing to fudge a few details on your mortgage application, but there can be serious implications involved in not being honest about the information on your application. If you’re currently in the market for a home, contact one of our mortgage professionals for more information.