The recent stagnation in the market may have you feeling like there's no good news in real estate.
But if you are looking to buy or refinance your home, now could be a great time.
Reasonable loan rates combined with the slackening in the residential market are creating great opportunities for homebuyers.
Whether you are looking for a new home for your family or a long-term investment property, today's low rates and fast closings are making standard fixed-rate mortgages more appealing than ever. If you already own, refinancing with a 15-year, fixed-rate loan can help you cash in on some of the equity you've built in recent years, or protect you from future spikes in an adjustable rate mortgage.
With so many mortgage options to choose from, finding the right one for your situation can feel a little like finding the perfect shade of white paint.
Here's how to sort it all out.
Think ahead: Consider your plans for the future, and look for a home loan that fits. Fixed-rate conventional mortgages are still the most popular. However, with all the variations now available, your finances, assets and personal style have more importance than you might think in your choice.
Staying put or moving on: Will you remain in this house for a long time? Or will you want a bigger, smaller or better house later? If you are staying put, you'll want to get the best long-term mortgage rate. Fixed-rate mortgages dominate the market more than ever now, and they are the best option if you expect to stay in your house for many years. If you do plan to move again, you may be better off with a shorter-term mortgage.
How long to pay: Most homebuyers assume they'll get a 30-year fixed-rate mortgage. The rate is locked in so it will not change for the life of the loan. There are also popular adjustable rate mortgages, which can be amortized over 15 years. This lets you start out at a lower interest rate and build up equity in your home sooner.
Borrow for a shorter-term: If you expect to move within five years and can qualify for a slightly lower rate, a 5-year adjustable rate mortgage is for you.
By amortizing your loan over 15 years you pay off the loan faster, translating into more resources that you can invest. This is especially good if you have college expenses coming up or plan to retire within 15 years.
Plan for long-term financial goals: Look at your mortgage as a form of fixed savings. The payback comes in the form of a mortgage interest deduction on your taxes. Consult your tax advisor and your financial institution for ways to maximize your resources for your financial plans.
Find a lender: Shopping for a mortgage is like shopping for any other large purchase.
You can save a considerable amount of money if you take the time to do your homework.
Look for a lender familiar with the many options available today, and consider working with a financial institution in your community.
Choose a lender who is familiar with the local market as well as your personal needs and can help you get the best deal for your situation.
This article was submitted by Alan Boggs, Riverside Bank President in Brevard County.