Steven Cancel asked:


It has never been a better time to consider getting a home loan with rates at historic lows and home prices softening. Purchasing a home is often the biggest investment one will make within their lifetime. Prior to purchasing a home there are many things to consider. You will want to have goals in place that support your decision and loan type. Different loan types can cater to your current and future financial needs. Always understand that mortgage companies understand that your needs and future expectations change. At any point you’re within your loan you can refinance and adjust your loan type and length but this often includes fees and charges that can be avoided by not changing the terms of your loan.

The first step one should take in consult with a seasoned loan professional. This would include a mortgage broker or loan officer that has been originating mortgages for a long period of time. It is not wise to make such a large investment with someone who is not familiar with each aspect of the industry. Create a list of questions that you have prior to contacting the professional so they will get a good feel of what your goals and expectations are. Be prepared for a credit check and be able to provide up to 2 years of income documentation. Your loan specialist will then provide you with an amount you will be able to get approved for along with what the expected monthly payment will be should you decide to take a loan out for the given amount.

If your goal is to purchase a home to live in it for at least 30 years it is best to get a 30 year fixed mortgage. This will allow your new home to be fully paid off over a 30 year period. After 30 years you will only have the loan paid off but you will also have equity that was obtained. Over the history of the real estate industry, housing pricing has shown incredible returns for their owners. Many other options are also available such as lower fixed periods, ARM, and jumbo loans. Your mortgage professional will best fit you with your loan type.

As a consumer it is also important that you trust your loan professional. Should you decide purchasing a home is the right path for your future you should make sure that the origination process is completed in a reasonable manner? Loan professionals are paid on what is known on the industry as points. Each point is a percentage on the actual amount being provided from the lender. These points can be clearly stated on the loan forms but also can be included in the actual rate you are being provided. Ensure you are aware of all the charges you acquiring to prevent from being over charged by a loan professional.



ALLAN

Kristin Abouelata – Home Loans asked:


You hear quite a bit lately that “the Fed is cutting the interest rate.” Maybe you’ve been considering a refinance, and you’re waiting to move forward till the Fed takes action again. But be smart about waiting and watching. A Fed cut doesn’t directly affect long term rates (for instance a 30 year fixed mortgage), but it does impact long term mortgage rates. The problem is the impact might not have the result you’ve been waiting for.

Who is the Fed? Well, it’s really the Federal Reserve. And when the Fed cuts rates, it usually cuts the Fed Funds Rate, which is the rate banks lend each other money. However, when the Fed lowers the Fed Funds Rate, Prime Rate, the rate banks give their best customers, usually drops as well. Ok, that’s great. But what does that really mean to the average person on the street? It means that anything that has an interest rate tied to Prime is directly affected by the Feds’ rate cut. Typically, these are short term loans. For instance: a credit card or a Home Equity Line of Credit (HELOC). In general, these rates decline when the Fed lowers rates. On the flip side, a Fed rate cut means your savings will perhaps not yield as much interest and your CD (certificate of deposit) won’t be at such a great rate. So, it’s not all good.

Why aren’t mortgages directly affected? Because mortgage rates are typically longer term rates and are influenced by buyers and sellers in the bond market. Daily movements in the bond market cause mortgage rates to change. That’s why you might get a quote from a loan officer on Tuesday, and on Wednesday, your quoted interest rate has increased .125%. The Fed lowers rates to help stimulate the economy. Ultimately a healthy economy is good for the real estate market. Jesse Lehn, Senior Vice President for Mortgage Investors Group, believes, “…a liquid real estate market is beneficial for the mortgage market and that keeps rates competitive.” So, when the Fed lowers rates, indirectly it can help mortgage rates, but there is no direct correlation.

Another misconception is that mortgage rate changes occur in direct relation to when a Fed rate cut happens. In actuality, most mortgage rate changes, positive or negative, occur regardless of whether the Fed is actually meeting. That’s because the mortgage market anticipates what the Fed is going to do.

A good loan officer should have their finger on the pulse of the market, but again it’s a gamble. Remember to have a target interest rate in mind if you want to lock a loan but are watching the market. Trying to lock an interest rate on the day the mortgage rates have reached their lowest point in a year is like trying to get a royal flush in poker. It happens, but it’s not a realistic goal. It just means you were lucky. Just stick to your home financing goals and consider the big picture, and you’ll be fine.



DWAYNE