95 percent of Columbia SC homebuyers know that credit scores play a significant role when purchasing a home, and those who know their credit scores feel better prepared to buy. This recent data comes from a survey from Experian Consumer Services. In addition, 45 percent of future Columbia SC homebuyers say they have delayed buying a home in order to work on their credit so that they can qualify for a better interest rate on their mortgage.
No one likes walking into a lender's office, whether buying a home or refinancing their current mortgage, and not knowing the state of their credit. The Experian survey shows when people interact with their credit by tracking it and learning more about the factors affecting it, they feel more confident about their buying power.
Experian's survey results show the effect that knowledge of credit can make in the homebuying or refinancing process.
More Columbia SC Homebuyers Know Their Credit Score
According to the survey, 70 percent of Columbia SC homebuyers who know their credit scores feel significantly more prepared to buy a home versus the 54 percent of those who do not know their credit scores. About 62 percent of Columbia SC homebuyers know that their credit scores could mean the difference in the interest rate they'll qualify for when buying or refinancing their home.
The survey also indicated that future buyers are sometimes uncertain about the homebuying process. They are usually anxious about good interest rates, with 41 percent concerned their credit score will cause them to not qualify for the best rate available. Of the respondents that expressed concern about their credit score hurting their ability to buy a home, 27 percent do not even know their credit score. Of those who don't know their credit score, 48 percent are concerned that their score could hurt their ability to become Columbia SC homebuyers.
Actively working to improve their credit score has become a priority for 58 percent of future Columbia SC homebuyers so they can qualify for a better home loan interest rate. Of those who are making an effort to improve their credit score, 55 percent are paying off debt, 54 percent are paying bills on time, 28 percent are keeping credit card balances low, 20 percent are protecting credit card information from fraud/identity theft, and 16 percent are not applying for or opening new credit card accounts.
Seventy-four percent of recent Columbia SC homebuyers indicated they understood the impact a poor credit score can have on getting a good interest rate, but 61 percent know the potential effects of identity fraud on the financing process. Sixty-two percent of future Columbia SC homebuyers are confident about their credit status, and 60 percent feel financially prepared to buy a home.
Find more articles pertaining to credit scores and getting the best mortgage under our Columbia SC Mortgage Info to your right just below our Columbia SC Real Estate Categories.
We also post tips on Facebook and Twitter. Follow us there for many other mortgage related tips as well.
There are some expensive Columbia SC mortgage mistakes you need to avoid at all costs. Scoring the best deal on a mortgage or refinancing involves shopping around. Yet 77 percent of borrowers applied for a loan with a single lender instead of checking out several to compare costs.
A recent study by the Consumer Financial Protection Bureau indicated that people may actually put more time and effort into shopping for smaller products such as appliances and televisions than they do in shopping for the right Columbia SC mortgage. On a $250,000 30-year fixed rate mortgage, that could cost you tens of thousands of dollars. Following these steps will help you get the best deal on your Columbia SC mortgage.
Tips for Getting the Best Columbia SC Mortgage
Get Your Credit Score – To get the most favorable rate on a loan, you need to have a credit score of at least 740, according to Bankrate.com. Recently, if your score was 740 and you applied for a $300,000 30-year fixed mortgage, you could qualify for a 3.75 percent interest rate. If your score was below 680, the best rate was 4.25 percent for the same loan, which would cost you $31,130 more over the life of the loan.
Finding a free FICO score has become easier. About a dozen lenders now provide it to customers, although you may have to have a particular kind of account. If you don't do business with a company that offers free scores, you can pay $20 for a FICO score and one credit report at myfico.com.
Make sure you get your credit score at least 6 months before you plan to shop for your Columbia SC mortgage. That will give you some time to fix any errors and time to boost your score if necessary.
Determine the Type of Mortgage That's Best for You – Determine how much you want to borrow, which type of Columbia SC mortgage you want, and how long a term you need so you can compare different lenders' products.
Most borrowers go with a fixed-rate mortgage, usually for a 30-year term, in order to spread out the cost of their home purchase over time while making predictable fixed payments each month. But also consider an adjustable-rate mortgage. If you're going to be in your home for a short period of time, the ARM may make more sense, and it's almost always lower than a fixed rate loan to begin with.
Many first-time homebuyers can qualify for Federal Housing Administration (FHA) loans. They usually have less rigid borrowing requirements, low down payments, and more flexible income requirements.
Compare Several Columbia SC Mortgage Options – Compare the deals you can get from a mix of large national banks, online banks, local regional banks, credit unions, mortgage brokers, and mortgage companies. Interest rates can fluctuate daily, so try to shop on the same day or within a few days, if possible.
After you have found the best offer, try to negotiate even better terms. Ask the lenders whether they will waive or reduce any of the fees they are charging or offer you an even lower interest rate (or fewer points). You are unlikely to get fees waived from third parties, like those for a title search, government processing fees, and appraiser fees. But you may be able to cut the lender's fees, like its underwriting, document processing, and document preparation costs.
Find more articles pertaining to getting the best Columbia SC mortgage under our Columbia SC Mortgage Info to your right just below our Columbia SC Real Estate Categories.
We also post tips on Facebook and Twitter. Follow us there for many other mortgage related tips as well.
Average Columbia SC mortgage rates followed 10-year Treasury yields higher and rose for the third consecutive week last week. At 3.85%, the average 30-year fixed-rate Columbia SC mortgage rate is just below the high for 2015.
The 15-year fixed Columbia SC mortgage rates averaged 3.07% with an average 0.6 point last week, up from the previous week when it averaged 3.02%. A year ago at this time, the 15-year fixed rate mortgage averaged 3.29%.
Higher Columbia SC Mortgage Rates Mean Less House
Higher Columbia SC mortgage rates will mean more expensive mortgages and less house. Right now, the 30-year mortgage costs nearly a half-percent cheaper than the same mortgage cost a year ago, and more than a full point cheaper than mortgages cost five years ago. If you agree with (almost literally) everyone else that interest rates will rise over the next 12 months, the time to lock in a low rate is now.
The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 2.89% last week with an average 0.5 point, down from the previous week when it averaged 2.90%. A year ago, the 5-year Adjustable rate mortgage averaged 3.01%.
The 1-year Treasury-indexed adjustable rate mortgage averaged 2.48% last week with an average 0.4 point, up from the previous week when it averaged 2.46%. At this time last year, the 1-year ARM averaged 2.43%.
The labor market continues to improve with the U.S. economy adding 223,000 jobs in April, a solid rebound from merely 85,000 job gains in March. Also, the unemployment rate dipped to 5.4% in April as the participation rate ticked up to 62.8% and jobless claims were far less than expected.
Pending sales of existing homes in March rose 1.1 percent, according to the National Association of Realtors. The median price of an existing home nationwide was up 7.8 percent from a year earlier.
With just about everyone agreeing that Columbia SC mortgage rates are moving higher, there's simply no time like the present to get started looking for a Columbia SC home.
Get more information as it pertains to Columbia SC mortgage rates in our section on Columbia SC Mortgage Info to your right under Columbia SC Real Estate Categories.
Remember, we also post tips daily on Twitter and Facebook. Check us out there as well.
If you're looking to buy Columbia SC real estate in the next year, you might want to do so before higher interest rates make financing such big-ticket purchases a lot more expensive. The Federal Reserve, which controls the supply of U.S. dollars and short-term interest rates, has indicated that it could start raising rates as soon as June.
Mortgage rates for those buying Columbia SC real estate have been so low for so long that people might have forgotten what it's like to pay "normal" mortgage rates of 6 percent to 8 percent for a home mortgage. But if rates rise, the impact will be felt by nearly everyone trying to buy Columbia SC real estate and even those trying to sell their home as well.
How Columbia SC Real Estate Will Cost More
When applying for a mortgage, lenders will assess your ability to pay back the loan based on your income and the monthly mortgage payment. The higher your income, the larger the allowed payment, but interest rates play a big role in how large the payment will be. Even a slight rise in historically low interest rates could make it a lot more expensive.
A 1-percentage-point increase in mortgage rates from 4 percent to 5 percent on a 30-year mortgage results in a 13 percent jump in monthly payments. A 2-percentage-point increase results in an incredible 26 percent increase in monthly payments.
The reason those higher payments are important is that they play into how much borrowing power you have. A lender is trying to figure out how much it can loan you and still expect you to pay it back on time, but the lender doesn't necessarily care how big the loan is. What it really cares about is whether you can make the monthly payment.
Why Columbia SC Real Estate Could Suffer
Mortgage rates and borrowing power could have a profound impact on the Columbia SC real estate market that's still recovering from the recession.
It's no secret that wages haven't risen much at all recently, so recently the improving Columbia SC real estate market has been driven by the borrowing power that low interest rates have provided rather than extra income from higher wages. If interest rates rise, even slightly, they could actually send home prices — and home values — lower, simply by reducing the ability of new buyers to pay for a home.
If you buy any Columbia SC real estate with 20 percent down and then sell it a few years later but can only get 90% percent of the price you paid, your loss is half of your down payment. That's a big loss on an asset that people don't usually expect to lose money on.
It's not a question of IF higher mortgage rates are coming, it's a matter of when. And no one really knows the answer to that question. With the economy and unemployment improving, the market is currently betting that the second half of 2015 will start to see higher mortgage rates, and consumers should know how it could impact them.
Higher mortgage rates mean lower borrowing power, so whether you're thinking about buying or selling Columbia SC real estate, you might want to start thinking about how those changes will impact you in the future.
Get more tips and articles pertaining to buying Columbia SC real estate in the Columbia SC Home Buying Tips section of our site below Columbia SC Real Estate Categories in the column to your right.
Remember, we also post daily on our Facebook Page, and over at Twitter. We'd love you to check us out there too.
The Federal Housing Administration (FHA) is exploring alternative credit scoring models for those seeking Columbia SC mortgages. The alternative credit scoring models could expand access to mortgage credit for responsible borrowers who may have thin credit histories or extenuating circumstance like medical debt.
Many Unable to Obtain Columbia SC Mortgages
Due to restrictive lending many of the qualified Columbia SC borrowers are not able to enter the housing market because they can't get Columbia SC mortgages.
The National Association of Realtors (NAR) first called on federal regulators and the credit and lending communities in 2011 to reassess the entire credit structure and look for ways to increase the availability of credit to qualified borrowers who are good credit risks.
Work by the Harvard University Joint Center for Housing Studies indicates that borrowers with lower incomes as well as minorities face higher rejection rates on applications for Columbia SC mortgages. A NAR analysis of mortgage data from 2007 to 2013 indicates that the share of rejected loans due to credit scores was significantly higher for African Americans and American Indians.
The newer credit scoring models put less emphasis on the impact of unpaid medical bills, and the effect of missed payments on debts that have subsequently been paid off is eliminated. FICO 9 and VantageScore 3.0 incorporate public utility and rental housing payments, information that helps lenders to evaluate younger persons and minorities who might not have a history of credit use. FICO estimates that its new model could improve scores by 25 to 100 basis points.
The biggest limitation to borrowing is tight credit standards. These conditions are exacerbated by outdated credit scoring models that don't take into account the unique spending and savings patterns of Hispanic borrowers. Alternative credit scoring models need to consider these patterns so creditworthy borrowers are not turned away from obtaining Columbia SC mortgages, and along with that, the American Dream of homeownership.
We will keep you posted right here on our website about this potential change in scoring by the FHA, and how it may affect those trying to get Columbia SC mortgages.