 By Jason Gelios REALTOR®/Author | 8 Min. Read There are many factors that determine what mortgage rates will be. In this brief article I share the most common factors that set the rates.
Factors you can control Credit score Credit scores can play a huge part in what mortgage rate will be offered. The lower the credit score the higher the interest rate. This is due to the lender viewing a lower credit score as higher risk. Loan To Value Ratio (LTV) Loan to value ratios are based on how much a borrower will need a loan for against what down payment or equity is available. For example, a home buyer could purchase a home for 80% LTV meaning they are putting 20% down. A current home owner looking to refinance could have 20% equity in their home. Therefore obtaining an 80% LTV mortgage. Type of mortgage you are getting Lenders often increase the rate due to the type of mortgage you are getting. If a current home owner is looking to get cash out when they refinance, they will pay a slightly higher rate. Factors you can’t control Overall economy The state of the economy plays a huge role in where mortgage rates are. Typically mortgage rates tend to be better when the government wants to stimulate the economy. Inflation Inflation oftentimes sends mortgage rates higher. Your parents have probably told you how the dollar isn’t worth as much as it was years ago. Job growth Mortgage rates are very much ties to how the job market is doing. This is a great indicator of how mortgage rates will be because when the job market is great, people tend to purchase more. Other factors that play a part in what mortgage rates will be are things like retail sales, home sales, etc. Jason Gelios is an award winning top producing REALTOR®/Author with Community Choice Realty in South East Michigan. Author of the real estate book ‘Think Like a REALTOR®: A little book about buying and selling residential real estate through the eyes of a REALTOR®. (Click here to buy) Creator of The AskJasonGelios Real Estate Show, Jason educates aspiring home buyers, sellers and existing home owners tips and real world knowledge to help achieve their real estate goals. Jason is also a local speaker educating home buyers on the process of purchasing a home.  8 min. read by Jason Gelios REALTOR/Author
Here are some tips on how to save or obtain money for a down payment on your next home. Tap into savings Tapping into existing savings can help you obtain a home by lowering the risk for the lender. Often times this relates to a better interest rate and payment. Government programs Many down payment assistance programs and government options are available. These programs tend to favor first time home buyers. Ask your lender or real estate professional about what options are best for you. Cut your living expenses Do you really need that subscription for NetFlix? Cutting unnecessary expenses can help you save faster for a down payment. Generate more income Getting a side hustle or a job that pays more can be a great way to get additional income for your down payment. After all, having extra money never hurts. Private loans While this should be a last resort, obtaining money from family or friends can help you get your down payment faster. Just make sure you are in a position to pay it back if it is not a gift from them. If it is declared a private loan, then have an agreement drafted up so that both parties are on the same page. Existing equity If you are selling a home and you have sufficient equity, you can use that money towards your down payment on your next home. Remember to calculate how much you will walk away with after closing minus your selling costs and mortgage payoff. Withdraw from your 401k This is a good option to jump start your home purchase. Be sure to know the terms of borrowing from your 401k. Gift money Family members can provide gift money to a home buyer. The lender will want a letter of explanation stating this is a gift that will not be required to be paid back. Many times parents like to help their child purchase a home without co-signing. Cash out investments Investments can be a source of money for a down payment. If you are working with a financial advisor, ask them what the best route would be.  7 minute read By Jason Gelios REALTOR® There are many myths about the home buying process. In this short article I will share with you what I feel are the top five.
Myth 1: An appraiser is always hired by the home buyer. It may seem obvious that since the home buyer pays for the home appraisal that they also get to choose who appraises the home. Truth be told, the buyer will submit payment to the lender to have the appraisal ordered. Once the payment is received the lender then orders the appraisal and the appraiser is chosen out of a group to ensure that the appraisal is not biased. Myth 2: The more money a home owner/seller puts into a home the more it will appraise. Putting more money into a home will not guarantee the value will go up. Many times people over upgrade their home only to find out that the market will not support the higher price. It is key to making sure the right upgrades are performed can help you get the right money back on your investment. Side note: Sometimes the market is in disarray and causes a home owner to lose money if they have to sell at that time. Myth 3: An appraiser sets the value of the home. Appraisers do not set the value of the home. They merely provide an opinion of what they feel the home is worth. if you had three appraisers out in the same day, all three numbers would more than likely be different. Myth 4: Appraisers and home inspectors do the same thing. The main focus of a home inspector is to look at current and potential problems of a home. They provide the buyer with a report card of the home. Typically a home inspection is optional. A home appraiser merely provides an opinion of what the home is worth. In some cases such as FHA/VA purchases, the certified appraiser will make sure that the home is viable for those types of loans. Myth 5: The most important factor of a home appraisal is the square footage. While square footage does play a big a part in a homes appraisal, it is not the most important. Appraisers look at what other homes sold for in the area, upgrades and other details. About Jason Gelios REALTOR®/Author Jason Gelios is an award winning top producing REALTOR®/Author with Community Choice Realty in South East Michigan. Author of the real estate book ‘Think Like a REALTOR®: A little book about buying and selling residential real estate through the eyes of a REALTOR®. (Click here to buy) Creator of The AskJasonGelios Real Estate Show, Jason educates aspiring home buyers, sellers and existing home owners tips and real world knowledge to help achieve their real estate goals. Jason is also a local speaker educating home buyers on the process of purchasing a home. He is known for his transparent and honest way of representing buyers and sellers to help them achieve their real estate goals. |
AuthorJason Gelios is a Husband and Father. After that, a Top Producing REALTOR®, Author of the books 'Think like a REALTOR®' and 'Beating The Force Of Average', Creator of The AskJasonGelios Real Estate Show and Expert Media Contributor to media outlets across the country. Archives
October 2024
Categories |
RSS Feed