When interest rates are declining, it can be a good time to acquire a mortgage to purchase a home. Lower interest rates reduce the monthly payments due on a mortgage and that is a positive for prospective homebuyers. The buyer also needs to be aware of price trends in the neighborhood where they want to live and be an educated buyer in terms of the home itself and the neighborhood where it is situated.
Why buy instead of rent?
The buy-versus-rent decision is based upon what the user can afford to pay on a monthly basis and what housing options are available in the area where they want to live. Buyers own the property and pay all of the attendant costs like taxes, utilities, upkeep and the rest, and these costs should be factored into the decision. When you own your home, it’s an asset that can appreciate (or depreciate) depending on market conditions. History has shown that long-term ownership of a home – if properly maintained – can be an attractive investment. Because of recent tax changes, prices on rental properties have gone up here in Jacksonville, making it hard in some cases to find attractive rental opportunities.
We’re coming up to an election year. Should I wait?
The dynamics of the housing market are driven by many factors, most importantly the health of the economy overall. Election year dynamics are not a dominant factor in housing trends.
What’s the first step in choosing a lender?
The choice of a mortgage lender can incorporate many factors. When advising clients, Family Foundations advisors generally tell them to start with current banking relationship (checking, auto, credit cards) and then to shop around with at least two other lenders, including a credit union. What they should be focused on beyond the interest rate itself is what upfront fees are charged, whether require private mortgage insurance is required and whether there is any upfront assistance on mortgage costs. Most mortgage lenders have mortgage calculators on their website to allow prospective buyers to enter the interest rate and all fees to figure out the true cost of the mortgage offering thereby allowing for comparison between lenders.
Should I apply at more than one mortgage lender?
Buyers can apply at more than one lender if they want, in a 30-day window, without impacting their credit. We do not usually recommend it since it adds administrative hassle and can attract duplicate upfront fees.
How do I get the best interest rate?
Interest rates usually tie directly to the credit profile that a prospective buyer presents. All lenders check credit scores (the history of how a borrower has handled obligations). Prospective homebuyers should always know their credit score and manage it to the best of their ability when they are considering a home purchase.
What are points?
Points are upfront fees that a borrower sometimes pays to receive a mortgage from a lender. Beware, oftentimes a lender will offer a lower interest rate on a mortgage but charge upfront points that add to the cost of the transaction for the buyer. When comparing between lenders, make sure to add the cost of points to the interest rate offered.
Are there first-time homebuyer incentives?
Home buyer assistance can come in many forms. Sometimes, in competitive marketplaces, lenders will agree to give qualified buyers assistance on closing costs. Buyers should make sure to consider these incentives when choosing between lenders. Another incentive for lower income and first-time homebuyers is down payment assistance up to $7,500 offered by the Florida Housing Finance Corporation.
What are mortgage lenders looking for in a borrower?
Mortgage lenders are attracted to borrowers who can afford to pay the cost of home ownership and manage other budgetary items. The four Cs of credit include capacity (ability to pay), collateral (appraised value of the home), capital (savings for down payment and closing costs), and character (willingness to pay).
William Haley has a long history of working in the nonprofit organization management industry. He has a Master of Science degree in business policy from Columbia University - Columbia Business School.
Family Foundations is a financial, family counseling and education organization in Northeast Florida, providing services on an ability-to-pay basis. The firm has helped over 120,000 families in the last 50 years take control of their financial future, buy a first home, save their marriage, cope with a troubled child or pay off debts and restore their credit.
Family Foundations offers tools, skills, support and solutions for families and individuals to benefit by translating financial knowledge into better financial behaviors. Our community benefits from the thousands of families who become financially stable because of Family Foundations. Financially stable families buy houses they desire and can afford, making neighborhoods stable. Children thrive when they live with financially fit families. We nurture and counsel people so they are able to develop devoted, loving families who know how to communicate with each other.
