These days, things are changing so fast, it’s tough to keep up–especially with coronavirus. That’s especially true in the mortgage industry, where interest rates and the home loan landscape are shifting so quickly. It’s easy for outdated information to circulate–causing confusion for home buyers.
Robert Brown, loan officer with Rock Mortgage, joins us to help home-buyers and homeowners separate fact from fiction.
There’s a lot of buzz about record-low mortgage interest rates lately. Does that mean everyone qualifies for them?
The short answer is no, not everyone qualifies for the lowest rates. The long answer: borrowers with a good credit score will get the lowest rates. Most lenders require a minimum credit score of about 620, while others may require an even higher threshold. Your credit score isn’t the only factor affecting your interest rate. It also depends on the size of your down payment, type of home, type of loan and much more. So, keep your expectations in check, and make sure to shop around to increase the odds you’ll get a good rate.
Fact or fiction: getting a mortgage today is easy.
Many assume today’s low interest rates mean that getting a mortgage will be a breeze, but that’s actually not true. These low rates mean just about everyone is trying to get a mortgage or refinance the one they have. This influx of applicants means some lenders may tighten loan requirements. For example, some lenders may require higher minimum credit scores and larger down payments. Plus, because of the low rates and high volume of refinances, the process of getting a loan is taking longer to complete.
Ask your lender how long the process will take to close, and make sure you’re aware of the expiration date on the interest rate you’ve locked in – because with rates this low, they could go up.
Should everyone refinance their mortgage?
With mortgage rates hovering near record lows, a refinance can make sense and free up monthly cash flow, but that doesn’t mean it is for everyone. Homeowners should make sure to take a good hard look at their situation to see whether it makes sense for them.
For one, it will depend on your current interest rate. If it’s already low, it may not be worth the trouble – particularly since refinancing comes with fees commensurate with your loan amount. Given the upfront costs, refinancing sometimes makes sense only if you plan to remain in your house for a while.
The Covid-19 pandemic has left millions of Americans struggling to pay their mortgages. Does mortgage forbearance mean you don’t have to pay back your loan?
Forbearance is not forgiveness. Rather, it’s a timeout from having to make a mortgage payment and the company you send your payments to will make sure you’re protected from negative impacts on your credit. However, because forbearance is not forgiveness, you will need to reach some sort of resolution with your loan servicer about the missed payments. The paused payments may be added to the back end of the loan or repaid over time.
Can you apply for a mortgage after you’ve found a home?
Many people assume that you can find your dream home first, then apply for the mortgage. But that’s backward–now more than ever. Today, your first stop when shopping for a house should be at your mortgage lender to get pre-approved for a home loan. In the era of the coronavirus, mortgage pre-approval is essential because many home sellers are leery of letting just anyone tour their home, they want to know the buyer is serious and has the cash or financing to make a firm offer. Aside from getting their foot in the door of homes they want to see, home buyers benefit from pre-approval in other ways. Since pre-approval lets you know exactly how much money a lender will loan you, it also helps you target the right homes within your budget. After all, you don’t want to get your heart set on a home only to find out you can’t afford it.
Every situation is different and you want to get a knowledgeable lender who will support you and guide you through the process to find the right mortgage for your specific situation. Feel free to contact us at Rock Mortgage with any questions. Now more than ever, our team is committed to supporting our community in any way possible.
For more information, visit www.rockmortgagelending.com or call 479.321.3355