Columbia SC mortgage holders agree, a mortgage is probably the single largest financial obligation most American homeowners will ever assume. Unlike personal loans, car loans or other consumer loans, the interest rate on a home mortgage loan can add up to a substantial amount over the life of the loan. Conversely, the lower your mortgage interest rate, the more you can save over time. For example, on a mortgage loan amount of $250,000, half a percentage point (.5%) can represent a $23,427 difference in the interest amount paid for the life of a 30-year fixed-rate loan.
Columbia SC Mortgage Search: Rating Rates
In today's digital lending environment, most mortgage lending institutions have made it easy and convenient for borrowers to go online to get information on interest rates, different loan programs and answers to their money questions. Of course, you may still want or need to work with a mortgage broker to assist you in the borrowing process. This is especially true if you have credit concerns, blemishes, bad credit or non-standard sources of income. Most mortgage brokers can offer options available with different lenders to find the best product and service for your specific financial situation. Plus, brokers are often able to find the best interest rates because they search a variety of sources on your behalf.
So, how do you get the lowest interest rate on the Columbia SC mortgage that best meets your needs? Consider these tips from seasoned mortgage brokers.
Tie up any loose ends on your personal finances.
Cleaning up your financial situation prior to applying for a mortgage will help you find a lower interest rate. If your credit score needs a little boost, plan ahead to raise your score by paying your monthly obligations promptly when due, avoiding adding new debt or additional credit accounts, and periodically checking your credit. By checking your credit report on a regular basis, you can better manage or correct any errors that may appear. It's better to address them ahead of time rather than dealing with them during the loan application process.
When it comes time to figure out how much money you qualify to borrow, the mortgage brokers offer this advice. Mortgage lenders analyze your debt-to-income ratio by calculating the relationship of your total liabilities to your gross income. So, brokers suggest, lower the amount of debt you owe by paying down or paying off credit cards, student loans, or other consumer debt to be able to afford a higher priced home. The normal accepted debt-to-income ratio for qualified borrowers is a maximum of 43%. In other words, your total monthly obligations –including the PITI payment you're seeking – should not exceed 43% of your gross monthly income.
In addition, it's important for borrowers to fully understand the relationship between their overall mortgage qualifications and the resulting mortgage interest rate and terms. Among the qualifications are income, job history and stability, other available assets, liabilities, credit score, and source of down payment. Borrowers with good qualifications are likely to enjoy the lowest interest rates available in the Columbia SC mortgage market. Those borrowers are considered by lenders as prime customers based on their ability to repay the debt, and are rewarded with the best rates and terms.
Make the best choice on rate type.
One important decision that most borrowers face is whether to obtain a fixed-rate loan or an adjustable rate mortgage (ARM.) While fixed-rate mortgage loans – as the name implies – have a locked-in interest rate during the life of the loan, an ARM starts with a fixed rate period that typically is lower, but after the prescribed period the rate can vary based on market volatility. The interest rate could increase or decrease.
Both loan types have their advantages and disadvantages. The low cost of ARMs offers a degree of appeal during the initial period, yet because the rates can increase it can make some borrowers uneasy. Fixed-rate loans offer greater rate peace of mind, but can be more expensive in the long run. Usually the deciding factor, according to mortgage brokers, is the length of time the borrower plans to stay in the home. If a borrower plans to own the home for a period of, say, 5-7 years, an ARM may be the best choice. For a borrower planning to stay in the home for a longer period, a fixed-rate loan could better suit his needs.
Consider the term of the loan.
The term of the mortgage loan is also a key component in affordability and in obtaining a lower interest rate. The shorter the loan term, the lower the interest rate. However, with the shorter term and lower rate comes higher monthly payments. For borrowers contemplating a shorter term with higher payments, consider this. If you have a personal financial emergency and are already near or at the maximum payment for which you qualify, the emergency may temporarily impact your ability to repay. Most mortgage experts recommend taking the longer term and – as additional finances permit – make additional principal payments. That way, the loan will be paid down as if it had a shorter term. Simply put, you can always pay down the loan and even pay it off ahead of schedule, but unless you refinance the entire mortgage, you won't be able to reduce your payments once you sign the promissory note.
You can find a lot more Columbia SC mortgage information in our Columbia SC Mortgage Info section of articles to your right just below the Columbia SC Real Estate Categories. We also constantly update mortgage news on Twitter and Facebook. We hope you'll check us out there, too.
Columbia SC mortgage holders often ask questions about the best way to prepay their home loans – and save money in the process. Follow these tips and you can save thousands of dollars in interest over the life of your mortgage. In addition, prepaying your loan will mean it will pay off earlier than the original term.
Columbia SC Mortgage Holders Can Save Thousands
Prepaying your mortgage by just one additional payment a year can reduce a 30-year loan down to roughly a 23-year term. When you pay bi-weekly (every other week) for example, you're really making 26 half-payments (52 weeks divided by 2 equals 26 weeks.) You could also make an additional payment at some point during the year to effectively make 13 monthly payments instead of 12. Still, some people like to add 1/12 of their mortgage payment to each monthly payment and accomplish the extra payment that way.
Some mortgage lenders charge a fee for prepayments. Hopefully, if you already have a mortgage, yours doesn't contain a prepayment clause. The majority of Columbia SC mortgage lenders allow prepayment without penalty. If you're shopping for a mortgage or are considering refinancing, avoid signing a mortgage with a prepayment penalty.
Prepaying your mortgage works best when you pay the same amount each month. Decide whether you're going to pay an extra $50, $100 or whatever amount you choose and stick with that amount for at least a year. When you change the prepayment amount, just make sure you keep a written record and check your statement closely to see that the extra amount has been subtracted.
Regardless of how you make any extra payment(s) – or if you decide to make a lump-sum payment – make sure your lender enters the payment properly. If you question how, or if, it was applied, contact your Columbia SC mortgage lender immediately so they can either explain it to you or correct it if it's in error.
You can find a lot more Columbia SC mortgage information in our Columbia SC Mortgage Info section of articles to your right just below the Columbia SC Real Estate Categories. We also update mortgage news constantly on Twitter and Facebook. We hope you'll check us out there as well.
The Columbia SC mortgage lending market experienced something unusual in the past sixty days. The Federal Reserve raised the interest rate back in December 2015. Since that time, mortgage interest rates have dropped to their lowest level in three years! Most economists and mortgage lenders pointed out at the time that an increase in the Fed Funds rate wouldn’t necessarily translate to an increase in mortgage rates. However, few saw the resulting lowering of mortgage rates in their crystal balls.
Columbia SC Mortgage Rates: Time to Refinance?
Mortgage interest rates usually drop when volatility fueled by uncertainty in the stock market makes investors sell their higher-risk stocks in favor of buying safer bonds. When bond prices move higher as a result of the brisk buying, the yield on those bonds go down. A quick look at the stock market over the first 45-50 days of this year shows exactly what’s happened. Investments in U.S. Treasury bonds and mortgage bonds have been strong – for the time being.
In December 2015, fixed rates on 30-year conventional conforming loans were roughly 4%. Due to increasing bond trades, interest rates on this and other mortgage products have dropped as much as .5%. To better put that in perspective, a half-point interest rate reduction can significantly reduce monthly payments. It results in an $85 savings per month on a $300,000 Columbia SC mortgage, $170 per month on a $600,000 mortgage and a $900,000 mortgage payment will be reduced by $253.
As if these savings weren’t reason enough to consider refinancing, according to some analysts it’s possible that rates could fall even lower over the next several months. But there’s more to refinances than just interest rates. Other factors come into play like income and assets, property eligibility, and home equity. In the past, specifically in other post-housing crisis interest rate drops, some homeowners were unable to refinance. Many people were underwater with their mortgages – they owed more than their home was worth. In addition, other problems contributed to their inability to refinance such as income instability, slow credit and changing lending policies and guidelines.
In today’s Columbia SC mortgage environment, refinances are more prevalent. Home prices have either leveled off or are still increasing, unemployment has dropped and income growth is on the upswing. In addition, cheap oil prices have helped keep inflation low, and mortgage lending guidelines are more flexible than during any previous post-crisis rate reduction. All these reasons and more make it easier, more conducive and a smarter move to refinance than perhaps ever before.
Let’s take a look at the reasons home owners refinance. First and foremost, of course, is to lower their interest rate, which lowers the monthly mortgage payment. However, there are other reasons to take into consideration when you’re contemplating refinancing.
Reduction of loan payoff term.
Borrowers looking to reduce the length of time they have to pay on their mortgage should consider refinancing a 30-year loan to a 15-year loan. Naturally, a shorter term loan carries with it higher payments – though the interest rate is usually lower. With today’s even lower interest rates, it may be surprising at how affordable a 15-year loan term can be.
Cash accessibility.
As your home equity builds over time and as a result of higher home values, the nest egg your home represents can be substantial. A “cash out” refinance can give you access to your home’s equity to do with it as you wish. Many homeowners refinance their Columbia SC mortgages to make investments, purchase additional real estate, pay for college expenses for their children, or make home improvements.
Debt consolidation.
For qualified borrowers, non-housing related debt can be included into a home refinance. These debts could include auto loans, credit card debt, student loans and other consumer debt. Debt consolidation can help improve a credit score by showing that certain accounts have been paid in full. In addition, by rolling existing debt into a mortgage the borrower is able to deduct that additional interest, converting non-tax-deductible debt into tax-deductible debt.
Elimination of mortgage insurance or cancellation of a second mortgage.
Homeowners who purchased homes with a mortgage with less than a 20% down payment were probably required to carry mortgage insurance. Mortgage insurance protects the lender from the borrower defaulting on the mortgage loan payments. If the home’s value has appreciated enough to where the loan-to-value ratio (LTV) is 80% or less, a borrower can refinance the mortgage and eliminate the mortgage insurance requirement. For borrowers who have a second mortgage on their homes, refinancing is an excellent way to combine both the first and second mortgages into a new first mortgage.
Now that you know the reasons homeowners typically refinance, let’s examine the steps in the actual process itself.
Decide on a Columbia SC mortgage lender.
While your existing lender may be a good place to start, there are a variety of lenders offering similar interest rates and refinancing options. Choose the one that best fits your needs. Most rate quotes are based on a refinance being closed within 30-45 days. If you need to lock in your interest rate for a longer time period before you close, you can expect the rate to be slightly higher. Therefore, it’s important to get your lender the needed documentation and paperwork as soon as possible.
Assemble the documentation.
When it comes to documentation, a refinance is really no different than a purchase money mortgage. Federal lending regulations require that mortgage lenders have current employment and income verification, asset and liability statements and an updated credit report.
Appraise your home.
There are two parts to the refinance equation: one is the borrower, the other is the collateral on which the mortgage is made. Of course, the borrower must qualify, but the home has to, too. Your Columbia SC mortgage lender will require an appraisal to determine the value of your home. They then use that appraisal amount to decide whether the loan amount you’re seeking is within their guidelines concerning the LTV ratios for refinances.
Closing costs.
Refinancing is always an exercise in comparing the total payment savings against the costs of closing the loan. While closing costs vary according to loan size and lending market, they typically range from $2,500-$4,000. If you paid to refinance and rates dropped lower you’d risk losing money. Enter the no-cost refinance.
A no-cost refinance carries with it a rate that is slightly higher. If rates dropped, however, you wouldn’t be wasting money if you elected to refinance at the new lower rate. Discuss this option with your lender and see if it’s right for you.
Lock in your interest rate.
Work with a lender that will pre-approve you for the refinance. That way, you can be assured you’re being locked into a program and a timeline your lender can meet. Plus, once pre-approved, it’s easier to lock in a rate when they may fluctuate day to day.
Because rates change almost daily, if rates drop after you agree to your rate lock, most lenders have policies allowing you to renegotiate to the lower rate prior to closing.
We have a lot more Columbia SC mortgage information for you in our Columbia SC Mortgage Info section of articles to your right just below our Columbia SC Real Estate Categories. We also update the mortgage situation constantly on Twitter and Facebook. Check us out there as well.
Columbia SC credit repair is very important these days. Good credit can ensure you get a preferred interest rate when you borrow and it's important to landlords when you rent. Insurance companies and prospective employers are using credit scores more and more. Because it's such a hot topic, if you have credit blemishes or bad credit, getting that fixed is receiving more attention than ever before.
Tips for Columbia SC Credit Repair
Taking the necessary steps to improve or repair your credit can be something you undertake yourself. Still, others use the services of credit repair professionals. If you choose to work with a Columbia SC credit repair agency there are things you should know.
Some so-called "professionals" aren't totally legitimate. They will try to talk you into starting a new credit file by getting a new tax ID number, the equivalent of a Social Security number for businesses. Don't do it. It's downright illegal.
In addition, don't dispute all the bad marks on your credit history. When you do that, the credit bureaus are obligated to remove them from your report while they're being investigated. With those items temporarily off your report, some people will apply for new credit accounts. Don't do that, either. It's fraudulent and can lead to additional problems including legal consequences.
Another often used trick of the unscrupulous credit repair trade is to charge upfront to repair your credit. Don't fall for that. It's against the law. The law says the services have to be performed prior to being paid for them.
One last Columbia SC credit repair tip: if an agency says only they can do things that you can't, don't buy it. If you're being promised a quick fix or dramatic results, you're being misled.
We also post articles on Facebook and Twitter, so follow us there for more information on real estate and mortgage related topics.
Columbia SC homeowners are enjoying higher home values and are using their equity to take cash out of their properties by refinancing. Surprisingly, however, they are doing it conservatively –– more than any other time in recent history. A closer look reveals why that may be the case.
"Take Only What You Need" – Columbia SC Homeowners
In earlier times, such as the years leading up to the housing crash in 2008, homeowners regularly used their properties like ATM machines, taking as much cash out as their lenders would legally allow. With values inflated and equity almost non-existent, the amount they refinanced for was high compared to the home's worth. That and other actions led to millions of American homeowners being "upside down" or "underwater" on their mortgages. Ultimately more than 7 million homes ended up in foreclosure.
Since then, lending practices have been shored up dramatically to safeguard against the same thing happening again. In addition, today's borrowers are considerably more risk conscious – and are slower to add debt they don't need. Homeowners are still borrowing against their equity, with 42% of refinances in 2015 being for the purpose of taking cash out, not just refinancing to get a lower interest rate.
For most recent refinances, the average cash-out amount was slightly more than $60,000 and the average LTV ratio was 67%, the lowest level in history. The total amount of equity received through refinances in 2015 topped the $64 billion mark, the highest amount for any 12-month period since 2008-2009. Despite the record amount, homeowners showed remarkable fiscal restraint by not tapping into the remaining equity.
Economists say consumers are saving more now than they did during the years immediately after the housing crash. According to the Commerce Department, the savings rate in December 2015 climbed to the highest level in over three years. In addition, the borrowers refinancing to get cash enjoyed an average credit score of 748 – high for homeowners seeking refinances. This reinforces the position of mortgage lenders being risk-averse, but it's also a sign borrowers are taking only what they need. Simply put, they're leaving money on the table.
While Columbia SC homeowners still have most of their equity intact, they seem to be just fine with that. The memories of financial crises like the housing crash or even the Great Depression has had a lasting, memorable effect on a generation who vows not to go through it again. Plus, since interest rates on savings accounts have been so low, many baby boomers are staring at retirement wondering how they'll manage. Other workers of all ages have learned to look at their finances more cautiously. They've seen high unemployment, and they know the horrors of losing a home to foreclosure.
As a result, Columbia SC homeowners in today's economy take out only what they need when they refinance or get home equity loans. They begin paying it back almost immediately every month. For home equity loans, some banks require amortized payments, but not all do.
Borrowers typically are using their cash equity for home improvements, college tuition and rising health care costs. This is in stark contrast to the borrowers of just a decade ago, when home equity was used to purchase luxury items like boats, RVs, vacations and other extravagances.
We have a lot more mortgage related tips and information for you here.. just click on the Columbia SC Mortgage Info section of articles below Columbia SC Real Estate Categories to your right. We also post mortgage related information frequently on Facebook and Twitter. Be sure to find us there as well.