House hunting these days? You will be happy to know that 30 year fixed rate at one of lowest historical levels. The key driver is a healthy economy with low unemployment, stable growth with low risk of inflation. Consequently, homebuyers will have access to lower mortgage payments. Additionally, lower rates allow a homebuyer to purchase more house. Furthermore, home buyers from previous years can take advantage of not only lowering their rate. But also, they can take equity out to use on a home update or other personal needs through a refinance.
How do I get the best rate?
The 30 year fixed rate and other published interest rates by lenders and banks have a set of assumptions upon which they are based. The key factors in getting the best rate include: your credit score, your debt-to-income ratio, the length of the loan, the downpayment you are able to make, cash in reserves, and income (and employment) stability. Even the type of home you plan to purchase can affect the final interest rate. Therefore, it is essential to do your homework up front in order to find the best possible rate for your scenario.
What is a discount point?
A homebuyer or homeowner thinking about refinancing also needs to consider the whole story of a great rate. For example, some advertised rates are contingent upon discount points or mortgage points or even pre-paid interest. Each point represents one percent of the loan amount. The lender charges this point to the borrower so she may secure a lower rate.
Is it worth the benefit?
However, a borrower needs to decide if paying the discount point to buy down her interest rate is worth the benefit. If the borrower intends to stay in her home for a long time, then there is the possibility that the borrower may break even on paying the point. Although another consideration is that that money can be used in other investments that yield a higher return which then in turn can be used to pay the mortgage. Alternatively, the interest paid on discount points is tax-deductible.
Each home buyer has unique needs.
Ultimately, it is dependent upon a personal needs and can be complicated. Therefore, a buyer/borrower needs to be clear about her intentions as she plans to purchase her home. Finding a lender who is willing to consult on various scenarios is helpful in determining the best financial strategy. Steer clear of lenders who are not willing to take time to evaluate the best lending scenario for your needs.
How do I know where to find the best rate?
There are many resources available research interest rates. Mortgage lenders and brokers work with different banks and can provide rate information. However, it is essential to know whether each broker, lender and banker are quoting apple-to-apples rates. Again, here is where a experienced, knowledgeable, and reliable lender consultant can come in handy to help you sort through the information. Feel free to connect with me as your resource. As a local Austin resident, I have been a trusted resource to thousands of clients and am ready to serve you.