Home Buyers Face Decisions that Affect Their Long-Term Financial Picture

Home ownership is one of the most important financial decisions a person will make in his or her lifetime. There are many factors to consider when embarking on this adventure. Literally hundreds of loan programs are available, and it is important to find the one that best fits your personal short and long-term goals.

What should you expect from a mortgage consultant? Should you choose a mortgage consultant solely on the basis of rates that he/she quotes?

Prospective home buyers sometimes turn to Internet-based services just to see what current interest rates are. But a web site will not take the prospect’s future financial planning into consideration or guide the potential borrower through the many nuances of the loan process.

When shopping for a home loan, be wary of web-based services that offer programs to attract prospects with attractive rates that are based upon unrealistic time frames. If a lender is offering a terrific rate based on a 10-day lock-in period, it is unlikely that the potential home owner would actually be able to find their dream home, get through the negotiation process and win approval from a lender within such a short period of time. This is called short-pricing, and when it comes time to close the transaction, the rate that was originally offered is simply no longer available.

A mortgage consultant should assist you in choosing a loan that meets your short term and long term goals. It is important to  communicate these goals are as well as the concerns you may have as you consider what may be your most important financial decision.

Are you a two-income family but one of you hopes to stop work in the next year or two to raise a family? Do you anticipate significant additional income each year or will your income be stable or decline? Are you close to retirement age?

One of the most important factors to consider is the length of time of your loan. For example, if you know you will only be in the home for five years, it may not make sense to opt for a 30-year loan program. On the other hand, should keeping the home as a future rental be a possibility, you would want to lock in a loan fixed for thirty years at today’s low rates.

If you want to pay off your mortgage, prefer a lower interest rate and are comfortable with larger payments, a fifteen year loan may best meet your objectives.

Based on the information that you have provided, your mortgage consultant can provide you with a spread sheet showing the loan scenarios that may work well for you. He/she can also speak with your financial planner or tax consultant so you have the benefit of their thoughts about the type of loan that you may wish to choose.

Home ownership is a rewarding vehicle for building wealth and a strong financial future. Your mortgage consultant should be there for you when your loan closes as well as later when you may need advice about managing your loan.

Renters Have Much to Gain by Pursuing Home Ownership

Buying a home vs. renting is a big decision that takes careful consideration, as most mortgage consultants will agree. But the rewards of home ownership are great. For many years, purchasing real estate has been considered an extremely profitable investment. It is an achievement that offers a sense of pride, financial stability and potential tax advantages.

Yes, there are certain responsibilities associated with owning a home. Landlords will often argue the benefits of renting, and for obvious reason. If you are renting, you’re helping them make their mortgage payment.

The numbers are staggering if you look at it this way. If you are paying $1,000 per month for an apartment, and you know your rent will increase 5% every year, then over the next five years you will pay your landlord $66,309. If you are currently renting a house, you may be paying much more than that each month. Either way, you gain no equity by shelling out this monthly housing expense and you certainly won’t benefit when the property value goes up!

However, if you were to purchase your own home or condominium, you would be on your way toward building equity. By choosing a fixed-rate loan program, you can have the comfort of knowing that your monthly mortgage payment will never go up. In fact, you would have the option of refinancing to a lower interest rate at some point in the future should interest rates drop lower than the rate you’d currently be locked in at. This would cause your monthly mortgage commitment to go down.

And not only would your own home give you added space, your own backyard and overall privacy—home ownership would also give you some tax advantages. Depending on your tax bracket, owning a home is often less expensive than renting after taxes. Interest payments on a mortgage below $1 million are tax-deductible. Your mortgage consultant should help you evaluate the tax advantages of various loan scenarios, and share this information with your tax consultant to glean feedback on your behalf.

To find the loan program that is right for you, your mortgage consultant will need to evaluate your monthly household income, current assets and savings, as well as any monthly obligations you may have for credit card payments, car payments, child support, etc. These prequalification factors, along with the report of your credit score, will determine how much house you can afford and what interest rate you will pay for financing. It is also important to let your mortgage consultant know what your future goals are, because this will help narrow down which loan option is the best fit for your long-term needs.

There are many different types of loan programs available, including “low” down payment mortgage programs. A loan frequently used by people buying their first home is the FHA loan, which only requires a 3.5% down payment. Many people also don’t know that FHA allows the lowest credit scores of any loan available today, only needing a 640 score in most cases.

Did you ever have a time where you felt like an opportunity passed you by? If only you had taken the opportunity that presented itself you might be in a different situation today. Well this is one of those times because home prices are low today. Interest rates are low. There is a buying opportunity right now. Please contact us so we can help. Getting your financial picture clear is the first step.