Over the last two years we’ve seen a little bit of everything. Rates overall going lower and lower, the stock market up a little one day and down a lot the next which indirectly moves the rates and mortgage underwriting guidelines continuing to change. It all can be a little overwhelming for those in the market to buy a home. With all that being said it is probably one of the best times to buy a home!
Thirty year fixed rates in the mid 4′s make payments much lower than when they were in the 6′s just a few years ago – it can also give borrowers more purchasing power.
A $100,000 30-year mortgage at a fixed rate of 6.5% (where it was just a few years ago), makes a principle and interest payment $628.
A 30 year fixed rate at 4.5% makes a principle and interest payment $504 per month which is a $123 per month savings!
Another way to look at it is with a rate of 4.5% a borrower could finance $125,000 and have a principle and interest payment of $630. So, in other words, to have the same payment at 6.5% a borrower could afford a loan of $25,000 more to have roughly the same payment.
What this does is completely open up borrowers to a whole new range to look for their dream home! On top of these historically low rates, FHA financing remains a very strong program with as little at 3.5% down payment and a minimum 600 credit score needed.
While it is true underwriting has changed some over the years, the borrowers that should be buying still are able to with not much change to the underwriting process.
Attention home buyers! You are probably aware that the federal government offered tax credits on home purchases with contracts accepted by the end of April, 2010. For first-time buyers that could have amounted to as much as $6,500. That was certainly an incentive to buy.
If you think you missed the boat, consider this. If you commit to a home purchase soon while mortgage interest rates are the lowest anyone in our industry can remember, you should be able to save nearly the same amount in interest as you would have received in a tax credit! How so, you ask?
Here are the numbers for a very common scenario in the Toledo real estate market, and you can substitute different numbers to fit your family’s specific circumstances. A $100,000 mortgage last September would likely have been made at an interest rate of 5.1%. Today, you are likely to get a mortgage loan at 4.5%. In our market, many people remain in their home about ten years. The difference in the interest a homeowner would pay after ten years on those two mortgage loans amortized over 30 years would be approximately $5,848. In other words, those who missed out on the tax credits can realize nearly the same benefit over time simply because of declining interest rates!
Of course the interest savings are much more significant over the life of the loan and definitely greater for higher mortgage amounts – this was simply intended as one typical example. If you would like to calculate your own mortgage payment, The Danberry Co., Realtors and First Mortgage Consultants can help! Just go to: http://www.danberry.com/mortgage_calculator/
…have truly become the mortgage of choice in the Toledo real estate market.
When I was a kid Realtor, we had a terrible time getting sellers to consider offers that called for FHA of VA mortgages. And I have to admit, there were valid reasons from the seller’s viewpoint. FHA appraisers would come back with lengthy lists of repairs that the seller was required to complete prior to closing, and even the ones that went smoothly seemed to take twice as long to close as conventional transactions. Even points often needed to be paid.
Fast forward to today’s market. The times, they have changed, as FHA mortgages have become the mortgage of choice. The primary attraction is the low down payment requirement (3.5%), which puts this financing within the reach of most buyers. And what makes sense for buyers has become the best action in town for most sellers.
So, how much do you know about FHA financing? Here’s a quick way to find out. Take this QUIZ from the National Association of Realtors, click the “submit” button, and you will instantly be shown the correct answers.
How can we help you? Danberry Co. professionals are ready to take your calls and answer your questions, as are the Home Mortgage Consultants from First Mortgage who can be found under the “Financing” button above. We’d love to hear from you!
Any prospective homebuyers who backed off from their Toledo, Ohio, and metropolitan area house-hunting because they feel they missed out on the tax credits should consider this. Maybe a check won’t arrive from Uncle Sam, but you might get a mortgage today at a rate considerably below the one you would have gotten during the program. The net impact could be that you will actually realize a greater savings over the time you own your home than if you had gotten the tax credit!
Many “experts” nationwide speculated that the expiration of the tax credit program would take the wind out of the sails (sales?) of a rapidly improving real estate market, but the mortgage market is definitely propping up activity.
If you made it this far reading the blog, chances are good you might be among those searching for Toledo real estate who could benefit. What are you waiting for? “Historically low rates” will not last forever! Contact The Danberry Co., Realtors or a First Mortgage Home Mortgage Consultant today!
