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“After closing, you can paint an ugly house, but you can’t paint over ugly financing.” Jo Garner

Real estate is still hot, and mortgage rates are still low.  When a home buyer gets his offer accepted, he had better be able to move –and fast.  As a mortgage loan officer, the best advice I can give anyone getting a mortgage is to get preapproved and compare more than one financing option.    When you sign the last paper at the closing table, you want the contented feeling of satisfaction, knowing that you made the very best decision.

Here are some general rules of thumb to consider:

1. If you plan on keeping the mortgage for over five years, strongly consider getting a mortgage with a fixed rate and not a variable interest rate.  You will enjoy the stability of a principal and interest payment with a fixed interest rate that never changes. Steer clear of variable rates and payments that can wreck your budget and lifestyle.

2. If you plan to have a mortgage less than five years, you can compare some mortgage products with lower-than-normal interest rates that adjust over time.   To lessen some of the risks of payments ratcheting up, look at mortgage programs with strong safety caps on how far the interest rates can move at each adjustment.   

Example:  Some loan customers want to save time and avoid providing lots of documentation by opting for a quick, variable-rate home equity line of credit instead of getting a more stable fixed-rate mortgage. It may be easier today to get the equity line to buy a home. It may be tempting to consolidate debt or fix up your home using quick variable-rate financing, but will you be paying the piper big bucks when the rates start going up again? 

If you plan to be in the home over five years, compare the equity line with its variable rate risk with a standard and stable cash-out fixed-rate mortgage.  The standard fixed-rate mortgage with no prepayment penalty can be a cost saver over time. 

3. If you know you will be getting a lump sum within less than five years to prepay the principal balance owed on the mortgage, take a look at how that lump sum prepayment will affect how much you will pay over the life of the variable-rate loan.   Depending on the large lump sum you can prepay against principal early in the loan, the variable rate might be your best bet on that scenario. 

4. For homebuyers paying less than ten percent as a down payment, compare the FHA loan program with the conventional program. Borrowers will pay less private mortgage insurance to the lender on the conventional loan program, but the FHA program is more forgiving for borrowers with challenged credit. 

5. For borrowers with little or no down payment, explore loan programs such as the VA 100% loan for veterans, the 100% Rural Housing loan, and programs using down payment assistance.

Our customers appreciate the opportunity to choose when it comes to their home and their financing.  As real estate and financial professionals, we earn the status of “trusted advisor” when we present sound options that help our clients feel good about their choice. 

Posted On Monday, 03 May 2021 00:00 Written by

Here we go again! The constant whine about how hard it is to be in real estate because of the lack of inventory. How tough it is to deal with multiple bid situations, houses selling well over asking, blah, blah, blah, blah, blah!

I might even buy into the challenges if it weren’t for a few things:

• 2018 was a record setting year – highest from 2006
• The 2019 came along and sold more homes than 2018
• Then, despite COVID-19, 2020 surpassed 2019. 

Now we are seeing projections from many groups that expect 2021 to outpace 2020, and 2022 to be even stronger. So I ask this again, “Why is everyone so upset that so many people want to buy houses?” You would think people would be happy? I remember when the housing market went bad and there was what seemed like years’ worth of inventory sitting with nobody to even bother looking at them. Was being bored and broke, better than productive and profitable? The fact we all may have to work a little harder and process more transactions is a problem? Does everyone forget that there are no commissions paid on inventory?

Listings are great and begin the process, but without a buyer, you have nothing! I get that there are challenges, but thousands of people overcome the odds and win the contract to buy their home! In fact, as I wrote about last week, and spoke to in my interview with Realty Times Magazine published last Friday, if you focus on what is winning, you stand a better chance of being the one that wins!

So please; how about we focus on winning instead of whining; look at how deals are won in your market, not the reason you lost your bid, and put your mind straight as to the magnitude of the opportunity, not the difficulty or excuse of what needs to be done to WIN!

There are no commissions paid on inventory, you get paid when your client WINS!

Questions or comments: This email address is being protected from spambots. You need JavaScript enabled to view it.

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