How to be Sure about Getting a Mortgage?

How to be Sure about Getting a Mortgage?


Consumers in the US think that the mortgage rates will rise within the next 12 months. As per a recent survey by Fannie Mae’s National Housing Survey, majority of the consumers are of the opinion that the mortgage rates will be much higher than what they are now within one year from today. This survey covered 1000 households and brought about a change in consumer attitudes towards housing and mortgage worldwide. Only 4% of those who were surveyed thought that the rates are going to drop. As a homebuyer or as an existing homeowner, you would do well to ignore the opinion of public.

2016 has not been an exceptional year for the mortgage industry. Since the initial part of the year, the interest rates on 30 year mortgages have dropped by as much as 40 basis points and now they’re stagnant at their lowest point since 2013 May. 15 year fixed rate mortgage interest rates are also down and now the average is below 3%. Low mortgage interest rates would mean lower monthly payments and hence the homebuyers are on an advantage now.

Consumers anticipate more home price gains in the year 2016

Wait on, it’s not just mortgage rates which the consumers predict for this year, they also expect the prices of homes to rise too. According to what Fannie Mae and Freddie Mac believes, 93% of consumers think that the home prices will remain steady or rise in 2016. Values of homes usually rise faster than what they’re surveyed by the participants. Since the last few years, home values were expected to rise by 2.5% in a year but in actuality, it has climbed by 5% every year since 2012. Most probably, the same thing is going to happen again. The sales of real estate properties remain at their strongest levels since the last 8 years and this also makes supply of homes scarce. As the mortgage rates also approach their 3-year lows, demand of buying homes will definitely rise.

Being sure about grabbing the best mortgage – Some tips for 2016

Interest rates might just reach up to 4.5% level by the end of 2016, as per the National Association of Realtors. So, here are some tips that you may take into account if you wish to snag the best loan in the market.

  • Boost your creditworthiness: Remember that your credit profile is extremely vital for your lenders. Whenever you’re preparing yourself for purchasing a home, ensure managing your debt in the best way possible. Make sure you pay off your bills on time and trigger off that high interest outstanding balances by making more than the minimum amount payments. Lenders would also check your debt-to-income ratio which should be either 36% or less than that. Get free copies of your credit report and then check your score.
  • Save for the right down payment: Though the ideal down payment for a mortgage loan is 20%, but it is not something mandatory. There are many lenders like the Federal Housing Administration which ask the lenders to put down as little as 3% of the total loan amount. But if you’re more eager to build a huge amount of equity right away, you should save enough money and take a fat amount to the table of the lender. Try your best to pay 20% in order to grab a good loan with a reasonable rate.
  • Get pre-approved: Before you switch on your house-hunting mode, you should get pre-approved for a mortgage. Unless you know the amount of mortgage that you can take out according to your income and repayment ability, how would you know what kind of house to look for? Therefore it is always better to get pre-qualified as this will set you with a more realistic expectation about the kind of house you should look for keeping in mind your budget.
  • Get multiple quotes and shop for a lender: The entire process of buying a home is more than just looking for an interest rate which is favorable for you. You also have to locate the best mortgage lender for the current financial situation you’re going through. Hence, make a comprehensive market research, keep getting quotes from them, know about the fees that they charge and then compare such rates with those of others. Choose the lender who offers you lowest rate and also favorable terms and conditions as well.

So, if you’re someone who is into the mortgage market to take out a home loan for buying a house, you first need to know where you’re standing financially and in terms of credit and net worth. Consider the above mentioned points before taking the plunge into mortgage industry.

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