Category Archives for "VA Mortgage"
Those who’ve been thinking about purchasing a home should start getting their finances
together and be ready to take the big step.
2016 is a great year to buy a home, and here’s why:
1. Mortgage rates are at historic low points
Interest rates are still lower than ever. In fact, Freddie Mac’s recent survey showed that
September’s 30-year fixed-rate mortgages were .25% lower than last year. The interest
rates cannot stay this low for long. In fact, they are expected to increase quite soon.
Rates are expected to slowly go up, bringing about an increase in the monthly mortgage
payments and borrowing costs. 2016 will possibly be the brief window of opportunity for
getting the best interest rate ever.
2. Home prices will most likely go down
House prices have been going up for a while, but that rise is finally expected to slow
down. Svenja Gudell, Zillow’s chief economists, predicts that overall prices will rise by
3.5%, which is much less than the rate they’ve been going up in the past few years. This
gives buyers a chance to finally get into their home. Unfortunately, the house price
growth is still expected to outpace the wage growth, so you may have to get creative with
how to buy.
3. Rent prices will get even higher
There are a low supply and high demand of rentals, which is why the rent rates are so high
at the moment. Unfortunately, they are expected to go even higher. In fact, 68% of all
property managers predict that the rental rates will go up in 2016, which means that in
most cities, it will be cheaper to buy a home than rent one. According to Ralph
McLaughlin, Trulia’s housing economist, the interest rates will have to go up to 6.5% for
the buying cost to equal the renting cost, and that’s very unlikely.
4. More houses will be put on the market
As home prices stabilize, and/or decrease a bit, there should be more people looking to
list their homes for sale, in hopes of still getting top dollar. It is predicted that the new
home market will grow substantially. With so many homes for sale, buyers should have
many more to choose from, and there should be fewer bidding wars.
5. Clear mortgage terms
First-time buyers can now rest assured that there will be no surprises at the closing
table. There is a new TRID rule, which is designed to help home buyers understand all of
the terms of the transaction. Buyers will be fully aware of their financial commitment
and will be fully prepared for everything, as they have more time for review, before fully
committing to the products that are offered.
To buy or not to buy a home is always a huge decision that involves looking far into the
future and assessing your financial capabilities and wishes. However, if you know you
want to buy a home in the near future, 2016 is the perfect time to do it!
Many first time buyers get pre-qualified for a mortgage and take it to mean that they have been pre-approved for a loan. What they don’t realize is that these are two completely different things, and mistaking one for the other can cause home buyers a lot of trouble.
So, what is the exact difference between pre-qualification and pre-approval?
Pre-qualification is just an estimate. It is an informal way to see how big a mortgage you might qualify, based on “verbal” information given only. It should be free of charge, and usually just involves the buyer giving the banker their overall financial picture, including their income, debts, and how large a down payment they will be able to afford. No credit report is required and the buyer’s overall ability to buy a house is not taken into account. A lender can use the provided information to give the buyer an
A lender can use the provided information to give the buyer an estimation of the approximate mortgage amount they can expect to qualify for. Because the pre-qualification does not take into account everything, and is based solely on the information you verbally submit, there is no guarantee that the pre-qualified amount will be the same as the actual approved amount.
Pre-approval, on the other hand, is a real commitment a lender makes to the buyer. It is a much more complex procedure than pre-qualification but it carries actual value. Pre-approval requires the buyer to give the necessary information to the banker to have credit pulled and supply all the necessary financial documents the lender needs to do an extensive check on the buyer’s financial background. The lender will be able to use this information to determine a specific mortgage amount to approve the buyer on,
and the best program options available for buyer to compare. The pre-approval is a
The pre-approval is a commitment made in writing for an exact loan amount, based on the rates “at that
time”. It shows the buyer where he or she stands financially and shows sellers that the buyer is serious about buying, and able to obtain the necessary financing.
Although pre-qualification is a fast and easy way to get a general idea of what you can expect to get, there is little value to it as it’s not exact. The only result you, as a homebuyer can rely on, is the one that comes from lender pre-approval.
Karen Cimera Mortgage Banker