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We all are looking for positive aspects to daily life, especially in light of the current status of our world. It was just announced that the rates have been reduced to aid it helping the economy right now. I am a believer in researching and finding more information before I suggest to my clients or act myself on making a decision to buy or refinance a home. Is this a great time to buy? YES. Is this a great time to refinance? YES. However, not everyone can nor should move forward without objectively looking at the fine print.
In an article posted Sunday by Matthew Graham entitled; "What The Fed's Emergency Rate Cut Means For Mortgage Rates", he offers us a closer look at what the reduction means as well as this valuable advice:
Make a game plan. Talk about where rates are now and what rate you're looking to lock. They HAVE to have what they need from you in order to lock, and they may not have a very big window in which to pull the trigger (that window was less than a few hours wide at the all-time low rates last Monday morning). Above all else, please don't call them and ask if you can get a lower rate now. Don't ask them if the Fed just cut mortgage rates to 0% or if your rate is now going to be 0.50% lower (that could happen, but it didn't happen today). I can give you the answer right here:You can't get a lower rate right now just because the Fed cut rates again-if you didn't check on Friday afternoon, rates got a lot higher than you may have realized. You CAN, however, probably get a lower rate at some point in the coming weeks thanks to the Fed's reinvigorated mortgage bond buying effort-slower rates aren't immediate or guaranteed, so make sure your originator has what they need from you in order to lock it when and if your desired rate becomes available. (http://www.mortgagenewsdaily.com/members/mgraham/default.aspx)
An aspect to consider before purchasing is to know what you need in your home, taking the time to really look at what it is you and your family need in order to make the move beneficial beyond the new home excitement. After a few months the new wears off and you are again at HOME. Taking this opportunity to look at all of the aspects the homes on the market have will help you to build this list. If you are considering building, finding a builder that will work with you to make the home as custom as possible, insuring that you have all of the areas covered will be time well spent.
Before you start to pound the pavement looking at homes, make your top ten list...yes that is right 10! List them in order of favorites. Next, go drive by them at different times of the day. This will help you see what the home will look like and sometime mean it gets ruled out without going inside. Location is everything! Is it close to your work, to the school, to shopping, friends, etc. Is the neighborhood in good condition? You are buying not only your home but EVERYTHING you see, neighborhood included. Then give your final list to your realtor to schedule your showings. This is the very best use of both of your time. Right now with the social distancing, driving around in the safety of your vehicle will enable you to get the leg work done before you go see a home.
Don't forget to get a PRE APPROVAL, it is NOT the time to start looking for a lender after you have seen countless homes and are ready to make an offer. You should get on that task immediately before you start to look at homes with your realtor. This positions you to be able to make an offer when you find the home you want, eliminate lag time waiting for the process to be done, and eliminates the likelihood that it will go under contract while you wait. Finally, work WITH your lender. Be honest with them about what you want to do upfront. This way you will know the amount you qualify for and even more important what you can afford (the two are NOT always the same). Remember, if you buy at the highest amount you qualify for will you still be able to afford the property taxes? Will you be able to fill the home with furniture? Will you need to make any repairs or updates before you move in or after you move in? Stretching yourself too thin is never a good idea. It may feel great initially to have a home at the top of your price point, but it will be disastrous if you can't really afford it. Can you say...foreclosure, bankruptcy?
As far as refinancing, I always suggest looking at your monthly mortgage amount and if I can see that it will save me $500 or more a month OR if it will save me significantly over the TIME I PLAN TO LIVE IN IT then I will refinance. If you only save a few hundred a month it may sound tempting but you do have money that you will need to pay in order to refinance. If you pay more than you will save, then that is not a wise decision. If you can save a point or more then it is normally a wise option to consider. You will need to have documentation ready, tax returns for three years, bank statements, proof of employment, etc. Get as much ready as you can before you reach out to the lender. This will make the process less hectic since you can do it on your time schedule and not be rushed by a lender. SHOP AROUND...that is right look at rates everywhere, find a lender that is reputable. Once you find several, pick your top three. Then reach out to each of them and get a quote for your rate. Once you find the lowest, do the math and make sure you are saving money and it will benefit you to refinance. When you have the decision made, make the call and get started. It is a satisfying experience when you save yourself thousands of dollars in interest and reduce your monthly mortgage payment.
