Mortgage Tips for 2017
2017 is almost upon us, and several predictions about what the real estate market will be like next year have already been made. It’s pretty much a given that home sales are expected to accelerate, but industry insiders are less certain about mortgage rates. They were low throughout 2016, only spiking up after the elections, but in general and when measured against historical standards, they still remain fairly low. They may or may not remain low next year; there is definitely not much room for them to go any lower.
While it may be hard to predict what might happen regarding mortgage rates next year, if you are planning to buy a home or if you are thinking of refinancing your current loan, here are a few tips you can follow in 2017.
1. It is actually possible to make a down payment of less than 20%—or even none at all. Most prospective home buyers go into the process believing that they have to make a down payment of at least 20%; this is, after all what most blogs and articles say. But some lenders in fact offer loan programs that allow qualified borrowers to purchase a home with down payments as little as 3 or 3.5%, and some with no down payment at all.
If you are a veteran, active-duty service member, or a qualified member of the National Guard and Reserves, the Department of Veterans Affairs guarantees zero-down VA mortgages for qualified borrowers. Similarly, the Navy Federal Credit Union also offers zero-down mortgages for qualified members to purchase primary homes. Finally, mortgages insured by the Federal Housing Administration allow down payments as low as 3.5%, while several lenders offer conventional mortgages with down payments as low as 3% with private mortgage insurance.
2. You can save money by refinancing into a 15-year loan. Compared to 30-year loans, 15-year mortgages tend to have lower interest rates, and you would be paying interest over a shorter time period. The monthly payments on a 15-year loan are usually higher than on a 30-year mortgage, but if you calculate the total interest paid over the life of the loan, it would amount to less.
3. Inquire about no-closing-cost mortgages. Typically, mortgage loans come with thousands of dollars’ worth of mortgage fees and other closing costs. You can usually get the lowest interest rate you’re qualified for if you pay those fees out of your pocket. Generally, if you plan to live in your new home longer than five or six years, your total costs will be lower if you pay the closing costs out of pocket. Bear in mind though that doing so could also push you into making a smaller down payment, which might in turn force you to pay for mortgage insurance, so it’s important to get the balance right.
If you are looking for a real estate agent who can assist you in buying a new home, I would be more than happy to help make the process go as smoothly as possible for you. Give Robin a call at 714-812-3535 or send me an email at [email protected] to talk about your real estate needs!