Your Home: Mortgage rates
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Every so often here on Your Home, we like to take a look at how the real estate market is doing. Along those same lines, we check in with some mortgage experts to see how real estate interest rates are shaping up.
“They're still extremely low. I mean on an FHA right now, which is a loan insured by the federal government, rates are still 3.75 with zero points. An extremely low rate. We had actually come up a little bit above four percent but we dipped back down again, so rates are extremely good,” said Jim Cardinal of Syracuse Securities.
While those rates are low, they won't necessarily be the one that you get. What your rate will be is based a number of factors.
“We're looking at your FICO score, going through your overall credit history with you. We're looking at the debt to income ratio. How much are you comfortably paying back every month. And then really factoring in how much money you have to put down,” said Chris McKenna of Homeowners Advantage.
And how much money you have to put down will also determine if you need PMI, or Private Mortgage Insurance.
McKenna said, “PMI is a way that banks or mortgage lenders ensure against loss. So typically the standard is if you're putting less than 20 percent down when you're buying a house, you're then required to pay PMI.”
There are a variety of options when it comes to mortgages and rates, which can be confusing. What it all breaks down to is how much house you're going to get for your money.
McKenna said, “An example would be say at 3.875 percent, a $1,000 payment mortgage, principle and interest, might account to a $212,000 mortgage loan. If rates go up and you're at 4.875 percent, that may take you down to $188,000 and change. Same borrower, same payment amount, totally different amounts of house that they can afford to buy.”
One thing to keep in mind is to explore and crunch these numbers before you even start looking for homes.
Cardinal said, “Getting pre-approved and knowing those numbers inside and out. Because I can tell you that you're pre-approved for a house for $350,000 but if you don't feel comfortable at that, you only feel comfortable at $250,000, you should know those numbers so that you're not out there looking at the wrong types of properties.”
Current homeowners should keep in mind these low interest rates are also available for refinancing, should that be something you're considering.
For more information, visit jimcardinal.com and www.homeownersadvantage.com.