Buying Home During an Uncertain Market

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Buying a home can be a very exciting yet stressful time in one’s life. This can be very stressful when you are buying during an uncertain market. The Financial Mobility Survey reports, most consumers are still planning on making big-ticket purchases this year, with two-thirds (66%) intending to make at least one large purchase in the next year. KeyBank, who released the survey, gives these tips to those who are looking to buy a home in our current uncertain market.

1. Assess finances

Before you start searching for a home, you need to review your budget to see how much home you can afford. When looking at your budget for home expenses, you need to include the down payment, monthly mortgage payment, interest, taxes, homeowners’ insurance, moving costs, renovation fees and other expenses. A good tool to use to make sure you understand the costs associated is an online mortgage calculator.

2. Save for a down payment and additional expenses

A down payment can be a big expense that you need up front. For a mortgage, the typical down payment can cost you anywhere from 5% to 20% of the loan amount. Closing costs will also need to be considered along with moving costs or renovation costs. Talk to a local mortgage lender or banker who can help explain the different down payment programs.

3. Find the right mortgage loan officer

Finding a loan officer is just as important as finding the right Realtor. You want to find someone that clicks with you and understands your wants and needs. A loan officer can offer you tons of advice and additional insights and considerations while you are making your decision. Choose a lender that is familiar with your market and has a history of closing on time.

4. Consider all financing options

Last, you want to make sure to look at all of your options from adjustable-rate mortgages to fixed-rate mortgages. Different loan programs such as FHA, VA and USDA loans have different options to fit different needs. You will want to understand the differences to make sure you choose the right one for your financial obligation.

Remember owning your own home has tons of rewards but you need to work with both a Realtor and a mortgage lender who knows your current market. Remember, real estate is a long-term investment and homeownership can help provide a tangible asset in an uncertain market.

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Assumable Mortgages How To Get a Low Rate

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The 2023 mortgage rates are almost double the rates of 2021, and this is only part of it. Home financing costs have gone up while housing inventory is still short. What can potential home buyers do in the current market?

Those in the industry say to try assumable mortgages. This is where a buyer takes over the seller’s current mortgage with the same rates and terms. This might mean you will get a lower rate as 85% of mortgages out there and have an interest rate below 5%. This incentive could make it easier for a seller to sell their home. Before you decide to go this route, you need to understand the ins and outs of assumable mortgages.

How do assemble mortgages work?

A buyer will take over the seller’s mortgage and the buyer will keep the same interest rate, payment schedule and the loan balance as the seller’s current mortgage. In order to do this, a buyer will still have to meet the lender’s qualifications which means a buyer will still have to apply the way they would for a standard mortgage.

Unfortunately, not all types of mortgages are assumable. Government-backed loans that are conventional are typically the kind that can be assumable. These loans include FHA loans, VA loans and USDA loans. According to Mortgage Bankers Association’s Weekly Applications Survey around 18% to 26% of residential loan applications are government backed loans.

Pros and cons of assuming a mortgage

As mentioned before, this can be good for a buyer who wants to get a lower rate than what is currently available. A seller will also have more potential buyers that will be interested in their home. “It’s something that differentiates you from the marketplace,” says Ted Tozer, of the Urban Institute’s Housing Finance Policy Center. In a nutshell, they have a potentially lower mortgage rate, can have lower fees and it is easier to find a buyer.

The biggest downside of an assumable mortgage is the down payment. Tozer says that the down payment on an assumable mortgage is 15% or more. Government-backed loans typically have a down payment from 3.5% to zero. So basically the cons are that you may need a second mortgage with its own upfront fees, and may require a bigger down payment.

Whether you go with an assumable loan or a regular conventional loan there are both pros and cons to both. If you are trying to avoid the rising interest rates, then trying to get into an assumable loan might be the best way to go. Talk to your local real estate agent who can help you with the ends and outs of mortgages.

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