With Trump soon to enter office and anticipated interest rate increases, you’ve probably heard that many things are about to change… including mortgage rates. Well, there’s still a way you can get the ideal mortgage rate in 2017! There’s many different strategies and things to consider when buying a house is on the line. We have some tips listed for you below.
Try an FHA Loan if you have imperfect credit
If you have less than appealing credit or work as an independent contractor then an FHA Loan could be the right one for you in 2017. They are widely available to potential homeowners with low credit scores, and the down payment could be anywhere from 3.5-20%.
An FHA loan offers easier credit qualifying guidelines than many other types of loans. This is due to the fact that the Federal Housing Administration insures this type of loan. The FHA does not lend the money, they guarantee the loan. Therefore the lender doesn’t take as great a financial risk by extending credit to a high-risk borrower. Due to the fact that the government is backing the loan, a lender is able to offer a competitive interest rate. A low interest rate can really help save the borrower a lot of money over the long term.
Refinance to a 15-year Loan
Mortgage rates are supposed to rise in 2017, but in certain circumstances refinancing might still be the ideal option to get a better rate. Some of these situations include:
- Recovering from a low credit score
- Getting rid of mortgage insurance
- Having positive equity
- Save money long-term
15-year mortgages tend to have lower interest rates than 30-year loans, and you pay interest over a shorter period. In most cases, the monthly payments on a new 15-year mortgage are higher than for a 30-year loan, but the total interest paid over the life of the loan is less.
Ask about a mortgage with no closing costs
Your typical mortgage comes with thousands of dollars in fees and closing costs. If you pay out-of-pocket, then you could be able to get the most competitive interest rate. If you accept the higher interest rate instead and have the lender pay some/all of the closing costs then you could save in the short-term.
This is good for those who want to sell within five years due to the short-term purchase. If you stay longer than five years, then your costs end up being higher with the long term, high interest rate.
Get a VA Loan with zero down
A lot of homebuyers are not actually aware of the VA Loan benefits, or know little about how they work. It’s not just for veterans or retirees, which is a common misconception. You’re eligible if you’re:
- On active duty
- Completed 6 years of service in the National Guard or selected Reserve Units
- Honorably discharged
- Certain surviving spouses of veterans
The perk of a VA Loan is that you have no down payment and taking advantage of that in 2017 will be a great asset if you’re eligible!
Keep your finances boring
Don’t change up any finances if you’re applying for a mortgage, or anytime before you close on the loan. You want your accounts to stay as boring as possible – no moving money around or making any large purchases. This also means not racking up any additional credit on your credit cards or anything else that might change your credit score.
This is because shortly before closing, the lender surveys your credit again. If there’s a substantial change the lender might have to delay your mortgage closing. So no maxing out your credit cards to buy furniture and appliances or getting another loan for a new car! This could definitely increase the interest rate on the loan.
Takeaway
I’m sure you’ve heard a lot of projections about a rise in mortgage rates and other things that might happen in 2017. Whether if you are a buyer or a saver, maximizing returns and minimizing lending interest payments is the highest priority. 2017 can still be the year that you buy your dream home, so it’s important to begin preparing now.
Keep an eye on current interest rates and forecasts of future rates so you know the ideal time to buy and what you need to do to prepare. Don’t let the word ‘rise’ get you down, because rates may be projected to rise slightly, but they’re still low in comparison to historic numbers. Your home loan goals are still attainable and you have plenty of choices/options that will help you and your family!
