Mortgage Advice You Can Do Without
Buying a home is a life changing experience, one that is shared with family members and friends that are close to you. Chances are, if you’re purchasing a home, someone has tried to give you their two cents about what you should do or how you should do it. But the reality is, they’re most likely giving you outdated advice, even though it’s coming from a place of genuine love and concern. As much as you want to listen you your father or Aunt Beatrice, they’re not the best resources available to you for mortgage advice. There are professionals out there willing to help you through this process, including your realtor. Here are some outdated pieces of mortgage advice you can start ignoring today.
5 Outdated Pieces of Mortgage Advice
You Need a 20 Percent Down Payment
Traditionally, it was recommended (to your parents), to put down 20 percent on your home at the time of purchase. In fact, many lenders didn’t give out loans if you couldn’t come to the table with a large 20 percent down payment. But thankfully, things have changed from the time your parents bought their home to now.
There are programs out there from lenders for FHA loans that require as little as 3.5 percent down and conventional loans that are offered with 10 percent down. There have been a lot of changes to that way that lenders are giving out financing. If you’ve been holding back from buying a home because you’ve been trying to save 20 percent, it could be time to reevaluate.
Meet Your Lender in Person
We live in a digital age. The differences between banking now and banking even 20 years ago are tremendous. There are mobile banking apps that allow you to wire funds, transfer money and even make deposits, all things that you previously needed to do in person. Additionally, mortgage lenders have moved to the digital side as well. It’s no longer a requirement that you meet with your lender in person to go through the financing process manually. Now you can applyfor mortgages online and even get your pre-approval before you start house hunting all from the comfort of your own home.
Get a 30-Year Fixed Rate Mortgage
A 30-year fixed rate mortgage is the most common type of mortgage. But that doesn’t mean that it’s the mortgage that’s right for you. Nowadays, people aren’t purchasing their forever homes right away. If you’re considering moving on to something bigger and better in a couple of years, it could make more sense for you to consider a 5 or 7-year ARM mortgage. If you’re planning on moving on in that amount of time, it could save you hundreds of dollars off your monthly payment since you’ll move on before the mortgage adjusts again. There are lots of options available to you. Explore them all with your lender before getting a 30-year fixed mortgage.
Wait for Lower Interest Rates
Historically, we are in a period of the lowest interest rates ever. In the 1980s, interest rates were 14 percent or higher. Now you can find rates as low 4.75 percent, which are pretty low. There’s always a chance that they may drop lower, but it looks like we’re at the end of the low cycle for 2019. If you continue to wait, they could raise again and you may be left feeling regretful that you didn’t act when you had the chance. Interest rates are as low as they’re going to get, so don’t let that keep you from buying a home now.
Pay Off Your Mortgage Faster
If you have a 30-year mortgage, you may have goals of paying it off in 20. In fact, people may tell you that’s a good idea. But liquidity has value. If you were able to keep that money you would be paying into your mortgage and invest it separately, you can retain a diverse investment portfolio that allows you some liquidity that paying into your mortgage and equity doesn’t.
Purchase Your Next Home in Orange County
Orange County is one of the most desirable places in all of Southern California. It’s booming with development and commerce and is a great place to purchase your next home. Whether you’re relocating or upgrading your current living situation, I would love to assist you in purchasing your next home. Interest rates are low and inventory is on the rise. Let me help you find your next home right here in Orange County. Contact me today to see the listings I have available.
- M: 949.285.3215