There has been a term banded around of late with lots of realtors and industry professionals “Date The Rate”, why? Well with the climb of mortgage rates over the last few months and the sift in the market many are looking for ways allay fear and change your mind set on holding off on purchasing a new home because of those increases. So, what does “Date The Rate” mean, basically what this amount to is, find the house you love, buy it and you’re married to it, however you are only dating the mortgage rate, as there can be options to change that rate down the line.
But as we mentioned “Dating The Rate” is not the only strategy that is available to home buyers, far from it. ARM or Adjustable-Rate Mortgages look good in this current climate dependent on how long you plan to stay in the home. ARM’s secure a rate for a pre-determined period, and once that period ends the interest rate can fluctuate periodically based on performance benchmarks or an index. ARM’s typically have ceilings that limit how much the interest rates and or payments can rise in a year or over the life of the loan.
FHA (Federal Housing Administration) loans might also be a good option, these are loans that are insured by the government and issued by banks or lenders that has been approve by the agency. They require lower minimum down payments, more so than conventional loans and applicants may have a lower credit score than is typically required. FHA loans are popular with first time home buyers and are designed to help low to moderate income individuals attain homeownership.
VA Loans could get you in a home if you qualify, and are available to active and veteran service personnel and their surviving spouses, they are backed by the federal government, but issued through private lenders and offered by a U.S Department of Veteran’s Affairs program. VA loans have magnanimous terms, like no down payment, no mortgage insurance and no repayment penalties.
Mortgage Rate Buy-downs can be a lucrative option. A buy-down involves purchasing discount points against the mortgage loan which may require an up-front fee. The buy-down allows homeowners to obtain lower interest rates when taking out the loan and result in saving money over the life of the loan and lowering the monthly outflow or mortgage payment.
As with most things in life, one size does not fit all and the same is true when it comes to purchasing options and strategies when buying a home, so talk to a profession who can guide you through those options and potential pit falls, and who can get you into the home you want. Who you hire matters!