Mortgage Advice You Can Do Without
Buying a home is a process that almost everyone needs guidance in. There are so many moving parts from the escrow company to the title company and appraiser to the real estate agent. It’s natural to have questions and to want to ask your family and friends for advice. But when it comes to mortgage advice, be careful who you listen to. Often times, the people you’re going to for advice may not have the most recent information available or the knowledge in general to provide the advice you’re looking for. Keep reading for outdated mortgage tips that could help you down the road.
5 Outdated Pieces of Mortgage Advice
Meet Your Lender in Person
There was a time when you would meet everyone involved in the process of buying your home. But now, we live in a digital age. With all of the secure banking applications out there that allow you to electronically wire funds and sign documents, it isn’t necessary for you to meet with your lender in person before or during the home buying process. You can even applyfor mortgages online and get your pre-approval before you start house hunting.
Wait for Lower Interest Rates
Interest rates are at historical lows, despite what economists predicted at the end of 2018. Because of economic turmoil in China and Europe, interest rates have continued to stay at all-time lows, hovering right around 4 percent. In the 1980s, interest rates were 14 percent or higher. If you wait, you may end up with a higher interest rate than you want.
Get a 30-Year Fixed Rate Mortgage
Nowadays, people aren’t purchasing their forever homes right away. A 5 or 7-year ARM mortgage could be beneficial for a couple or young professional that isn’t purchasing their forever home right off the bat. 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. A 30-year fixed rate mortgage is the most common type of mortgage, but it doesn’t necessarily mean it’s the right option for you. Make sure to speak with your lender about all your options and don’t make a hasty decision.
20% Down Payment
When you’re buying a home, saving for the down payment is the hardest part. Traditionally, a 20 percent down payment was recommended and actually forced by financial institutions. If you didn’t have the down payment, it was hard to even qualify for a loan. Thankfully, there are programs out there now that require as little as 3.5 percent down, depending on if you go the FHA or conventional loan route. If you’ve been holding back from buying a home because you’ve been trying to save 20%, it’s time to reevaluate.
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.
Find a Home in Orange County
Buying a home can be a confusing process. Working with a top local real estate agent in Orange County can help make the process more seamless and transparent. I’ve lived and worked in Orange County for more than 18 years now. I know the area like the back of my hand, and I know the Orange County housing market even better. Your forever home is waiting for you; we just have to find it. Contact me today to find a home in Orange County.