It is difficult to know when to lock a mortgage rate or float to keep options open. Unfortunately, you can't accurately predict the direction of interest rates, but what you can do is follow the trends and only lock when you're satisfied that the rate will yield an affordable payment that you'll be financially comfortable with for the months and years to come. The following are a few pieces of advice for buyers and refinancers wondering whether or not to take advantage of the current mortgage rates.
Buyer Tips
Consider the current mortgage rate, term and type
The current rates are just around 5.5 percent, and are expected to fluctuate just above or slightly below. Depending upon your closing schedule, buyers have the option to float a rate and risk the chance of rising rates, or lock and risk the chance of missing out a lower rate. But don't select a new mortgage based only on its annual percentage rate. It is important to also consider the term of the loan, whether the interest rate is fixed or variable and if you have the option to pay fees upfront in exchange for a lower rate. Whatever the case, buyers should keep their ears to the ground and work closely with their Merit Mortgage Services, Inc. mortgage professional in order to find the best rate and program available.
Ensure long term affordability
In many markets, home prices are at their lowest. If you couldn't afford a home 4 or 5 years ago, chances are you can now. When deciding on whether or not to buy a home and lock a rate, consider your long term financial situation. Can you comfortably pay your mortgage each month at the rate you're considering? If you can't answer that question on your own, then visit us online at http://meritmtg.net or speak directly with one of our mortgage specialists at 229-386-9797 to see if homeownership is right for you.
Take advantage of first time buyer incentives
A buyer's market and government incentives have combined to create a highly desirable climate for first time home buyers. The government incentive program allows entry level buyers to reduce their federal income tax bill by 10 percent of the home's price or $8,000, whichever is less. First time buyers have a bit of financial padding, for if they lock at a higher than desired rate, they have Uncle Sam's $8,000 to pay discount points to keep it low.
Discuss your mortgage options with a Merit Mortgage Services, Inc. mortgage professional, but do so quickly because the government incentive program is set to expire on the 1st of December.
Refinancer Tips
Calculate the potential savings
The old rule of thumb is to hold off on refinancing until your rate has dropped by a certain percentage point. This is still good to follow, but in order to truly determine whether it's in your best interest to refinance, you need to calculate your break-even point. To discover your break-even point, simply divide your mortgage fees by your monthly savings. The resulting figure represents the number of months you will need to stay in the home to make refinancing worth your while. Contact your Merit Mortgage Services, Inc. mortgage professional at 229-386-9797 to learn what rates are available and/or to receive savings calculation assistance.
Understand the additional costs
There are quite a few additional costs to consider before deciding whether or not to refinance your mortgage. When calculating your savings, be sure to factor in the refinance application fee, legal fees, appraisal fees, title search fees and title insurance fees. Refinancing fees vary from state to state and lender to lender, ask your Merit Mortgage Services, Inc. mortgage specialist to determine the additional fees you may be required to pay when refinancing.
Get finances in order before applying
Ensure you qualify by getting your finances in top shape. Lenders will review your home value, credit score and income to determine whether you qualify for a mortgage refinance. If you are one of the many homeowners who owe more than their home is worth and are struggling to make your monthly mortgage payments, you may qualify for the government's Home Affordable Refinance plan. Contact your Merit Mortgage Services, Inc. mortgage specialists by calling 229-386-9797 to determine your refinancing options and if you qualify to refinance or for the government foreclosure relief program.
The end of July showed improved rates and many homeowners and home buyers took advantage and locked their loans. If you were one of them, give yourself a pat on the back. If your rate is still floating, consider contacting Merit Mortgage Services, Inc. to discuss the current rates and potentially locking. Many experts foresee the trend of rates to continue to periodically dip to just near 5 percent; make sure you're ready.
