I’ve sold hundreds of houses over the course of my career and while every single client and every single house is unique, one thing always remains the same: houses cost money.
I know, I know – that’s the worst part, isn’t it? You’re all wrapped up in the glorious backyard and the stainless appliances and the fabulous school district and just as you are dreaming about paint colors and Thanksgiving tablescapes – WHAM – the money monster starts creeping in.
Don’t panic. Mortgage rates may not be at an all-time low right now, but they have found a nice, cozy spot at approximately 4.5 percent for a 30-year fixed loan. And while they may continue to rise, experts don’t foresee and huge jump on the horizon, which is good news for buyers now and in the near future.
So while luck (and a very good Realtor…ahem) may have led you to your dream home, finding the best mortgage deal takes a little more than good fortune. A recent article in The Denver Post simplified the process of securing a mortgage and, being the nice girl I am, I thought I’d share some advice:
Do Your Homework:
- Check your credit report with the three credit reporting agencies: Equifax, Experian and TransUnion. Don’t be nervous – I equate this to going to the dentist – it never is as bad as you expect.
- If you notice errors, get them corrected.
- If possible, pay down outstanding debt to improve your score.
- Resist buying new cars or other big ticket items (yachts, castles, Hope Diamonds) while applying for a mortgage and during the time until your closing date.
- Get pre-approved before shopping for a home – this will classify you as a strong buyer and sellers will be more attracted to your offer if they know it is solid. Looking for a good lender? Call me! I know the best lenders in town; people you can trust and who can get the job done quickly!
- Define how much you want to spend, or better yet, what you can afford. This will help you narrow your search and help you avoid over-spending when shopping for a home.
Find the Best Rates:
- A standard loan offers fixed interest rates for 30 years, while an adjustable-rate mortgage (ARM) provides a fixed rate for the first five to seven years.
- ARMs make sense for buyers planning to be in the house for a short period of time. Because ARMs offer a lower initial rate, but will grow exponentially in the years ahead, they aren’t the best bet for long-term, financially stable buyers.
Determine the Length of Your Loan:
- Ideally, a 15-year mortgage is a best bet for those buyers who can swing it. Actually, a cash purchase is fantastic (oh how I love the cash buyer!) but, alas, most of us are not floating in dough.
- A 15-year mortgage offers lower interest rates, but a higher monthly mortgage. Still, at the end of those 15 years, you will have paid significantly less in interest than those under a 30-year loan.
- A 30-year loan, the more typical choice for first-time or younger buyers, gives homeowners a little more financial freedom on a regular basis. For example, if your home carries a $300K mortgage, you pay approximately $1,520 per month on a loan with a 4.5 percent mortgage but a total of $248K in interest. That same mortgage with a 15-year term requires a payment of $2,182 per month, but the interest is significantly less at $93K. Either way, paying a bit more towards principle is always wise, if possible. And refinancing to a 15-year mortgage down the road is always an option. You know, once your money tree is in full bloom.
Lock It Down:
- Once you do land a great rate, lock it in. This can usually be handled at no cost or for a fee that is refunded at closing.
- Don’t play the guessing game when it comes to mortgage rates. Buyers trying to time their purchases to the fluctuating market usually wind up worse for the wear. And you’re going to need all your energy to pick out paint colors and get to work on those Thanksgiving decorations.
Thinking of Thanksgiving in a new home? Let’s talk turkey. Call me at 303-478-1201 or send me an email – firstname.lastname@example.org I’d love to help you!