August 31st, 2018 7:55 PM by Jackie A. Graves, President
With fall just around
the corner, intrepid homebuyers still have time to find a home and score a deal
on a mortgage. Some factors are working in buyers’ favor, such as lower
mortgage rates, as well as slower home-price growth and more inventory in some
of the nation’s pricier markets.
Here are three
mortgage tips to help you navigate the lending landscape in the month ahead.
1. Lock in your mortgage rate ASAP
As summer gives way to
fall, sellers become more motivated to get buyers through the door and sell
before the end of the year. That means buyers who’ve been sidelined so far this
year could see their luck turn around as prices drop and competition thins.
To capitalize even
more on potential savings, it’s a wise move to lock in your
mortgage rate as soon as possible, says Elizabeth Rose, sales
manager with Nations Lending in Dallas. Although mortgage rateshave fallen
in recent weeks, positive economic news tend to push them higher, Rose says.
Failing to lock in before rates tick up could cost you thousands in interest
payments over the life of your loan.
Let’s say you
lock in a 30-year, fixed-rate mortgage for $300,000 at 4.5 percent on Sept. 1.
You’ll pay $247,220 in total interest throughout the life of the loan. But if
you take a wait-and-see approach and rates move up to 4.75 percent near the end
of the month, you’ll pay an additional $16,159 in total interest over the life
of the loan.
guarantee that pricing is going to improve; there’s always a chance it will get
worse,” Rose says. “We may have some good days (where rates fall), but more
often than not, today is better than tomorrow.”
Use Bankrate’s mortgage calculator to
determine what your monthly payment will look like.
Give cash-out refinancing a look
homeowners with mortgages have a record $5.8 trillion
in tappable home equity, but many of them aren’t using it. If you
have a cash need but are hesitant about using your home equity for
it, you might be more at ease with a cash-out refinance than a home equity
loan product. Many homeowners choose cash-out refinancing because you can get a
single, fixed-rate loan rather than a piggyback home equity loan or home equity
line of credit that typically have higher interest rates.
whether to tap your home’s equity depends on how you plan to use the money. One
strategy for a cash-out refinance: Use it to pay off high-interest revolving
debt to reap short-term cash savings, says Brian Surgener, senior vice
president of strategy and analytics at BBMC Mortgage.
tap your home’s equity, though, be mindful of how often you’ve refinanced in
the past and what you plan to use the money for. Refinancing won’t make much
financial sense if you don’t plan to stay put long enough to recoup borrowing
costs, Surgener says.
refinance too often, the costs incurred can strip the equity you have in your
home,” Surgener says. “But if you’re smart about it, you’ll shop around and
look for the right lender who can advise you on your credit situation and
whether it makes sense for you.”
Get a conditional loan approval
It’s still a
seller’s market in many places, and you’ll want to be in the best position
possible to make an offer if the right home hits the market. Gain an edge over
other buyers by having a conditional approval in place, Surgener says.
approval takes preapproval a step further. It means the
lender has reviewed and vetted your financial documents, income and employment,
and has approved your loan — with some caveats. For example, a lender may give
you a conditional approval and ask you to provide a source for a large deposit,
or a donor letter for a down payment gift.
“You can act
fast if a good listing comes up, and you can use that bargaining power,”
Surgener says of securing a conditional approval before making offers. “You
might be able to negotiate (on the home price) and get a lot of value in
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