Some variables affecting mortgage rates
Lenders consider several items when pricing your interest rate. Here are some of the more important ones:
Credit score. The higher your score, the less risk you pose to a lender, so you’ll receive lower rates. FHA guidelines won’t allow a loan with a credit score below 580. 760 and above gets the best rate.
Down payment. 20% down eliminates private mortgage insurance (PMI).
Property location. This can affect rates. Is the property in an appreciating area or depreciating area? Is it too close to commercial properties? A highway?
Loan amount/closing costs. If you ask a lender to roll your closing costs and other borrowing fees into your loan, your rate may increase.
Loan type. The type of mortgage you choose, Fixed or Adjustable Rate Mortgage (ARM), will have a different rate. Surprisingly, an ARM starts at a lower rate, but in the long term, those rates could increase.
The lender you choose. Different lenders may have different rates, however, not all lenders are created equal. Sometimes the lowest interest rate may not necessarily be the best lender. Get references. Choose wisely.
Premier Mortgage Group Boulder CO
Homeowners benefit by refinancing as rates drop.
According to Diana Olick of CNBC, there are more than 5.9M homeowners who could see their rates drop by at least 75 basis points by refinancing.
Black Knight, a mortgage software and analytics company, indicated to Olick that more than 2M people in just the last month could take advantage of refinancing and drop their rates. Just think of it…May 21 of this year had interest rates at 4.23% and now rates are 3.94%.
This 2M people represents the largest group of eligible candidates to benefit by refinancing in nearly 3 years. This 2M people also represents $1.6B in potential monthly savings to the tune of approximately $271/month.
Potential homebuyers could also benefit from these lower interest rates especially since home prices are in a “cooling off” mode. In March 2019, home price appreciation was up +3.8% annually, the “first time growth has fallen below its 24-year average of 3.9% since 2012,” according to Black Knight.
Due to interest rates, affordability is the “best it’s been in a year,” wrote Olick. Monthly payments on an average-priced home are down -6% (with a down payment of 20%) over the past six months.
Ben Graboske, president of Black Knight’s data and analytics division says, “When we factor income into the equation, we see that it takes 22% of a median income to purchase the average-priced house, not the more usual 25% that may be difficult for buyers with excessive non-mortgage debt.”
Thanks to Tim and Julie Harris www.timandjulieharris.com 6/12/2019
There are some myths when it comes to renovating your home. Today we’re breaking those down so that you can avoid catastrophe.
A common misconception of home renovations is that you can simply add the cost of renovations to your home price tag. While this would make all sellers happy, this is simply not true. Some renovations you make in your home may merely be an expectation of buyers in the market, therefore if you tell them you’re charging extra for something that should already be there, they’ll probably walk away.
Something that is important to know before you make renovations is this: permits are not optional. Knowing this can save you a lot of stress down the road. If you make renovations without a permit, you could be required to undo all the changes and do it the right way, all the while paying for all of these costs. Additionally, some people believe it is cheaper to DIY, but we can not stress how untrue this is. Unless you’re an experienced professional, you should always hire someone to do the job right so that you aren’t having to retrace your steps and pay for the damages to be repaired.
Lastly, a big misconception is that repairs are cheaper than replacement. In no way is this true as some repairs are temporary fixes which would be cheaper to simply replace. Always talk with a professional as to what actually is a repair as opposed to a replacement.
Thank you to Premier Lending, Boulder, CO May 2019