Get a Good Deal On Your Mortgage!

According to Zillow.com buyers spend more time researching a car purchase than they do a home loan. Yikes, a house costs a lot more money than a car, well at least in the Northwest it does, and people don’t research their options? I guess it makes sense, people feel more knowledgeable about cars and their values and buying a house is a pretty complex deal. All the more reason to be informed! Here are some tips to get a good deal on your mortgage, it’s not like you can get a coupon in the Sunday paper for your mortgage but knowledge could save you money!

1. Get ready! Review your finances and figure out what you can afford. Don’t forget to include taxes and insurance, allow for higher heating bills in the winter, etc. A good rule of thumb is your mortgage payment should not be more than 30% of your take home pay. Having a good credit score will get you a better interest rate!

2. Know the different types of mortgages. I’ve known people who got into an Adjustable rate mortgage (ARM) and then got slammed when the rate went up and they couldn’t make the payment. Some things look good right now but you have to look at the big picture and the possibility that your rates will go up on an ARM. A fixed rate mortgage has the same rate, no surprises!

3. Shop Around! Get a lot of loan quotes, ask people to match an offer, you never know unless you ask. Most important, go with a lender that you trust!

If you need help with anything give Dave a call at 425-330-0663. We are happy to help in any way!

Maybe You Should Consider Recasting?

Have you ever heard of recasting or re-amortizing? Yeah, I hadn’t either but this could be another way to lower your mortgage payments.

According to Daily Real Estate News recasting means the borrower pays off a lump sum of the loan’s principal and then resets monthly payments at the loan’s original interest rate and terms. For example:

$230,449 is left on a 30-year fixed rate loan for a $300,000 mortgage taken out at 7.93 percent in 1995. The borrower pays $20,000 toward the principal and asks the lender to re-amortize their payments over the remaining 15 years of the loan. The monthly payment then drops by $52, from $2,187 to $2,135 per month. ($100,000 toward the lump sum would save $730 a month.)

The best part is you are not asking for a new loan so no closing costs or credit checks! Sweet! Recasting is something to consider if you know you are going to be getting a large sum of money.

Is a Reverse Mortgage Right For You?

For many people who need to increase their cash flow, a reverse mortgage can be a nice option. A reverse mortgage lets you take advantage of the equity you’ve accrued in your home over time. It provides money to homeowners over the age of 62, and is attractive to people who have paid off most or all of their conventional mortgages. The extra money can help individuals who have retired, are unable to continue working, or need some extra financial stability during their golden years.

There are numerous benefits from a reverse mortgage. The most obvious advantage is the extra cash that can be distributed to the borrower in a variety of ways: a lump sum payment, a schedule of monthly disbursements, a credit line which is available as needed, or a combination of these choices.

A New Ford Car for $1,339?

In 1950 you could buy a House: $14,500 and a new Ford car between $1,339-$2,262. What’s that have to do with the rest of this post?

Nothing really other than the fact that waiting can cost a lot of money.  – When people decide to buy a home, monthly payments are usually an important factor.  Underwriters look for borrowers to allocate no more than about 30% of their gross monthly income for a house payment.  Said differently, this means if your monthly income is $4,000, you should keep your house payment under $1,200 a month.

What’s in your wallet . . or, How much can you afford?  –  How much house is usually comes down to home price, interest rate and down payment.  The most important variable today and the one most at risk are rates. Home loan rates are still at historically low levels. But they can’t stay this low forever.  Many experts feel home loan rates should really be higher than their current levels, due to some of the stimulus that has benefitted Mortgage Bonds.  Right now homebuyers can get more for their money than they realize, but if rates go up even a little bit they could miss out.

Here’s a simple formula to make the point!  – In simple terms, every 1% increase in loan rates reduces your buying power by 10% in home price. This means that if you qualify for a home priced at $200,000 today and home loan rates increase 1%, the amount you could qualify for would be reduced to approximately $180,000 to maintain the same payment.

If you’ve even thought of moving to a home that better meets your current needs, or if you are looking to buy your first home, don’t wait, don’t let this time pass you by.  I’m seeing home prices starting to level out and even increase in many areas, but homes are still at incredibly affordable levels. By making a move now before home prices or rates increase, you can get more for your money and still get the payment comfortable to you.

As always, I’d be happy to answer any questions and help evaluate any scenarios that would help with your decision-making. Just call or email me today.