Get Some Expert Help When Obtaining a Mortgage

Buying a house can be a very exciting time for you and your family, but trying to find ways to afford it can be stressful. It is vital to compare mortgage brokers so you will not only get the best service, but get an expert in this field. 

Great service includes putting you first; they don’t treat you as customer, but as a person. By being an expert, the mortgage broker will give you advice to help you when making critical financial decisions. 

Putting these two together, you want a mortgage broker who truly cares about you, but also has the expertise in the mortgage process. When choosing a mortgage broker, there are more things to consider such as the term, rates, and fees. 

Once you know everything, you are ready to choose a mortgage broker who will fit your lifestyle.

How to Choose a Mortgage Broker

There are many mortgage brokers out there, so the best way to choose one is through a referral. Ask any homeowner who their mortgage broker was, such as a friend, co-worker, or a family member. When asking your friend about their mortgage broker, find out about the customer service to see if they were treated fairly. 

If you want to go a little further, you can also ask your real estate agent for a referral. You don’t want to take their word for it, so ask questions about the broker’s experience, professionalism, and commitment. After talking to someone, you want to do further research by looking on their website and on any online reviews. After your research, interview a few mortgage brokers, and ask for references. 

It’s best to compare brokers, that way you can choose one that meets your needs. After this whole process is finished, you will develop a trusted relationship with your mortgage broker. 

Mortgage Broker Process

A mortgage broker is the “middle man” who works with you and a bank/mortgage lender to help you obtain a mortgage that fits your needs. A mortgage broker counsels you through the process of obtaining a mortgage and any problems that might occur, such as credit problems. 

When you meet the right broker, you will be asked to fill out an application with your financial information, which will then be put in a file that will be sent to the lender. After you finish filling out the paperwork, the mortgage broker will work with you to find the lowest rates available by looking up all the different banks/lenders. This is actually their greatest advantage. 

Once you are finished looking for a lender, the mortgage broker puts all your paperwork in a file and sends it off to the lender, who then gives you the loan. Having this type of professional makes everything much easier on you. It can be a stressful time in your life, but having this kind of help can make you treasure this milestone a bit more.

Rates

The interest rate is what the lender charges you to pay off your mortgage. There are two forms of interest rates: adjustable and fixed rates. An adjustable rate is when your interest rate will change over the course of your loan. 

When interest rates are low, adjustable rates are not the way to go because the rates are more likely to go up. The best time to have an adjustable rate is when the interest rates are high because it is more likely the interest rate will drop. A fixed rate, on the other hand, is when your interest rate stays the same each year. 

The best time to have a fixed rate is when the interest rate is low because you will have that same rate for the whole term of your loan, no matter what. Right now, a fixed rate is the best option because right now, the interest rate is low. When you meet with a mortgage broker, they will help you choose which option to have.

Term

The term is the period of time in which you are going to repay the loan. The most common terms are fifteen and thirty years. When having a fifteen-year fixed rate mortgage, the interest rate is a little lower, but the monthly payment is higher than having a thirty-year fixed rate mortgage. 

Having a fifteen-year fixed rate mortgage, you will pay off your mortgage by the time your children enter college, which is great because you will get this done sooner rather than later. When having a thirty-year fixed rate mortgage, the monthly payments are lower than fifteen years, which allows you to have extra money and invest in other things.

There are many other options to pay off your mortgage such as 10, 40, or 50. Your mortgage broker can help you determine what’s best for you.

Fees

There are two common ways that homeowners pay their mortgage broker. The most common way is through a loan origination fee. This is when your broker charges you a certain percentage, depending on your loan. 

Therefore, if you have a high loan amount, your mortgage broker will charge you a low percentage, but if you have a low loan amount, you will be charged a high percentage. If you don’t want to pay your broker this way, another common way is upfront. 

Instead of paying your mortgage broker over time, you pay them right there all at once. Homeowners who buy expensive homes go for this type of fee. There are other options, but these are the most common among homeowners.

There are many aspects to obtaining a mortgage, and these aspects can be stressful. When this happens, it is a great idea to get a mortgage broker because they will help you with this long, stressful process. 

Be sure to weigh your options when it comes to a broker, in order to find the best service possible. To secure a mortgage, know all about the rates, terms, and fees. If you experience any questions, you always have that professional there to help you with everything.

How Much Home Can I Afford?

Obviously, everyone wants to own a home, and this can be easier as long as there is sufficient money to buy a new one. However, there are many ways and options to consider in buying and owning a home. The first thing that comes in mind when planning to buy a home is the amount of the house. If you are thinking of getting a home loan, then you should first determine how much you can afford for the home loan.

There are several factors to consider in getting a home loan since the payments can be on par. This makes sense in considering your current financial situation before deciding to buy a house. Likewise, you should also take into account your income, the credit history, debts and the cost of the house. In this way you can easily determine how much home you can afford to loan. Before making your final decision, it is important to consider some pointers.

Down Payment

One of the important pointers to consider in determining the amount of home that you can afford to buy is the down payment. Usually, home loan would require paying 20% down payment from the total house cost. However, you can also opt for non-standard loans that require lower amount of down payment. The downside of getting non-standard loan is the higher interest rates. This makes sense of asking for calculations before making your decision.

Income and Monthly Obligations

In determining how much home you can afford, you need to consider the monthly income and obligations. The mortgage company would require you to furnish the income details as well as the monthly obligations. These details will help the company in identifying the mortgage amount in which you can qualify. In calculating your loan capability, the mortgage company will check your credit card debts.

Interest Rate

Another factor to consider in determining the amount of home that you can afford to buy is the interest rate. Obviously, if the interest rate is lower, most likely you can afford buying bigger house. That is why home buyers should be aware about the prevailing interest rates in the area. It is also necessary to ask for quotes from different mortgage companies. In this way, you can compare which mortgage company can give you the best deals. In addition, you should also consider fixed rate mortgage than a variable rate mortgage. It is because the latter would impact your monthly obligations.

Location

The cost of the property that you want to buy also depends on the location. If you want to own a home in a commercialized area, then you should expect for higher cost. You need to conduct thorough research if you want to find a property located in your chosen area yet with the price that you can afford. Usually, if the property is of close proximity to the city it would be more expensive.

Indeed, it is very challenging to find affordable property. Nevertheless, St. Louis real estate can help you in finding the home that you can afford. If you cannot afford to buy a home, there are other options to consider. All you have to do is to seek advice from mortgage companies.

How Loan Rates Affect the Housing Market

Interest rates vary for a number of reasons. However, what affects them the most are changes in the decisions of the Federal Reserve, the current state of the economy, and the rate at which people are either borrowing or saving.

A huge percentage of home sales are normally financed. People buying homes usually apply for mortgages, which is actually just the act of borrowing money. Therefore, when the reasons mentioned above undergo changes, it is typical to expect that the housing market will be affected.

Interest rates refer to a percentage of the total money borrowed which is charged to the borrower by the lender for its use. Of course, the higher the interest rate, the larger the amount of money the borrower is expected to pay. The reason the housing market is affected by the change in the Federal Reserve’s decisions is because the Federal Reserve, just like lenders, sets an interest rate at which it lends money to financial institutions including banks. In turn, this interest rate that is charged to the banks and other financial institutions will affect the rate at which they lend money to businesses and potential home buyers who want to apply for a mortgage. Any increase in the rate of the Federal Reserve is proportional to the rate of the banks and other financial institutions.

For that reason, when the interest rate of loans and mortgages is lower, people are more encouraged to borrow as they know that in doing so, their loan will be cheaper and will cost them less. On the other hand, when the interest rate is high, borrowing money slows and the number of people applying for loans and mortgages are fewer. So, the lower the interest rate, the more sales there are in the housing market.

When mortgage rates are lower, there is no doubt that homes become more affordable. More people want to apply for a mortgage and purchase a home, which definitely helps boost the sales in the real estate market. Even those homeowners who are looking for opportunities to refinance take advantage of the times when rates are low. When refinancing, a homeowner can trade their current home loan for a new one, which can be more affordable for them. In addition, low rates also help development and construction companies. Since more people want to purchase homes, there is an increase in demand for houses. Therefore, not only do development and construction companies gain business but they also get to finance their construction at lower costs since they can borrow money with low rates.

Interest Rates (Photo credit: 401(K) 2013)

One important thing to keep in mind, though, is that even if loan rates are affecting the housing market’s mortgage prices, sometimes they aren’t in direct correlation. As mentioned earlier, low rates often result in more demand for houses, which home sellers sometimes take as an opportunity to increase the price of their house. However, if the prices get too high, buyers back off, which may result in a decline in demand, which could hurt the housing market.

If you are a home owner, you should know that adjustable rate mortgages are affected also by the Federal Reserve, the economy, and the rate at which people borrow or save. You are lucky if you have a mortgage which is locked in for a certain period of time; however, if you are tied in to an adjustable rate mortgage, then you should expect that the interest rate might vary at any time. It could change every year or as often as every month, depending on the state of the market and the three factors mentioned earlier. When the recession hit back in 2008, there were a number of homeowners who had to face foreclosure because they weren’t able to make their mortgage payments. Their mortgage rates increased to an amount which they weren’t able to afford any longer.

So, if you are currently locked into an adjustable rate mortgage, make sure to prepare for the possible increase or decrease. Monitor your credit reports and adjust your finances accordingly. Make sure to put away a little more money for your monthly mortgage payment than you usually pay. This way, you know that you have the money to make your mortgage payments, despite a change in the interest rates.

Author Bio:

Joy Mali is an active finance blogger who is fond of sharing interesting finance management tips to encourage people to manage their personal finances. More specifically, she advocates that people should check credit reports and scores regularly.