Take Advantage of Low Interest Rates on Mortgages
Historically low mortgage rates over the past several months have made this an appealing time to buy a home. But it’s also important to figure out if the time is right for you, instead of making a decision just based on the market alone.
It’s a Good Time to Take Out a Home Loan if:
- Your credit score is ready
- Your income is stable
- You’ve saved enough money
- Mortgage interest rates are competitive
If Your Credit Score is Ready
Most mortgage lenders will use your FICO score to determine if you’re eligible for a home loan. Your FICO score is pulled from three credit-reporting agencies – Equifax, Experian, and TransUnion. The higher your credit score, the higher your chances of getting approved for a mortgage. You can also earn a lower mortgage rate if your credit is in the Very Good or Excellent range. If your credit score is below 580, it’s highly unlikely you will be granted a mortgage home loan. But, you can still work to improve your score by paying off debt and making sure to make any future bills on time.
Credit Score Ranges
- Excellent: Above 800
- Very Good: 740-799
- Poor: Below 580
If Your Income is Stable
Since we can’t predict the future, mortgage lenders want to see that you have been employed consistently in the past to prove that you are able to maintain a steady income. In order to do this, they will take a look at your tax returns for the past couple of years to see your level of income, where you were employed, and for how long. They are also looking to see what monthly mortgage payment you would be able to afford based on your total yearly income. If you are in-between jobs, just started working somewhere new, or are new to the workforce, it’s most likely not the best time to apply for your mortgage. You’ll have better luck getting a good rate if you wait until your income is more stable.
If You Have Enough Money Saved
Everyone has different opinions on how much money you need to save before applying for a mortgage. The most common figure is 20% of the purchase price of the home, but the percentage required can be significantly lower if you are a first time home buyer. You also need to take into consideration that the smaller your down payment is, the larger your monthly mortgage payment will be. If you can’t afford the pricier monthly cost, you may want to take some more time to save for a bigger down payment.
If Mortgage Interest Rates are Competitive
Data for February 2020 showed the highest jump in home sales in over 10 years, and 30-year mortgage rates hit a record low in March. With the onset of Covid-19 shaking up the mortgage market, it was expected that there would be a large housing inventory available for buyers. During July, the average 30-year mortgage rate was about 3%, and you can still get a similar low rate now. According to experts, the rates should stay competitive through the end of 2020, but how the market will fare beyond that is currently unknown. If your finances are in a good place, and you have good job security like a healthcare job or first responder job, then you should definitely look into taking advantage of these historically low rates.
At Homestead Financial, we want to empower you by providing all the information necessary for you to make an informed choice, while also delivering a stress-free mortgage experience. If you can confidently say, “yes” to the four factors listed above, then you’re ready to take the first step towards purchasing your home by filling out this form to get started. By completing this form, we guarantee that:
- You will be contacted by one of our friendly, experienced loan officers within the next 24-hours
- You will get clear, simple answers to any and all questions that you may have
- It won’t cost you anything
Getting a Mortgage During Covid-19
Homebuyers are still taking out and paying down mortgages during the Covid-19 pandemic. But, mortgage lending looks much different now than it did at the start of 2020, so there are lots of changes to keep up with. Surprisingly, there are actually some benefits to the current financial climate, like the record low interest rates. While it’s great to lock in a low rate, getting a mortgage during a pandemic does make things more complicated. You can conveniently file a mortgage application online, but you can’t do things like notarization, conduct a home appraisal, or sign closing documents.
Due to the number of layoffs occurring around the country on a regular basis, mortgage lenders are now taking extra steps to verify borrower’s employment status. Pre-Covid, a lender would likely run two to three employment verifications before approving a loan. Post-Covid, loan officers are reporting that they are seeing employment verifications being run up to ten times, and at increased frequency, like as often as every three days. Considering this, borrowers should be prepared to be very patient and not get flustered if they’re asked for more documents or paperwork than usual to prove their employment and income.
The Best Time of Year to Buy a House
The best time of year to buy a home can vary depending on the real estate market in your area, as well as your goals. It’s always a good idea to work with a knowledgeable real estate agent, who has their finger on the pulse of the local market. If you’re trying to find the perfect time to buy between the high inventory summer season and the good prices that winter offers, August through September can be that sweet spot. During these two months, inventory is still elevated but the market isn’t as hot, so you have the opportunity to negotiate a decent price.
Why You Should Use Homestead Financial Mortgage
Now is the time to take advantage of low interest rate mortgages. At Homestead Financial Mortgage, we work hard to get you into the house of your dreams at a low home loan interest rate. We have been a trusted mortgage company that the residents of St. Louis, Missouri and Overland Park, Kansas have turned to for decades. We’re always here to answer any questions you have on home financing and mortgages, with our friendly, prompt, and helpful service. As experts in the field of home loans and mortgages, we look forward to helping you take your first steps to home ownership. With many loan programs available, we’re sure to find you the best loan for you!
Learn more about the steps to homeownership here. Give us a call today at 1-636-271-4663 to get started!