When it comes to the Columbia SC mortgage market, these days the choices can be a little confusing. Mortgages typically fall into one of three categories: fixed rate, adjustable rate (or ARM) or hybrids (a combination of features of both fixed rate and adjustable rate offerings.)
No matter which type you choose, it’s best to select the Columbia SC mortgage that you can afford the easiest, pay off the quickest and repay as little interest as possible over the life of the loan.
A fixed rate loan offers a set rate that won’t change during the term of the mortgage. If you qualify for a payment based on a shorter-term mortgage, you can save a substantial amount of interest — even though your monthly payments will be higher.
An ARM is a popular choice since the initial rates may be lower. However, if you choose an ARM, remember these two factors:
1) WHEN the interest rate can adjust, and
2) HOW MUCH it can adjust
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In many ways, the Columbia SC real estate market is still paying for the sins of lax lending practices in the last housing boom. It's been five years since the Dodd-Frank financial reform bill was enacted, putting into motion new credit extension and lending rules for mortgage lenders.
What it Means for Columbia SC Real Estate
The Dodd-Frank legislation encompass reams of documentation and have required Columbia SC real estate mortgage lenders to incur millions in expenses to comply with the regulations. The requirements, however, are fairly forthright and logical. Gone are the days of the extreme risk loan offerings such as negative amortization mortgages or no documentation loans. Today, lenders are required to obtain full documentation from their borrowers for both income and debt, and lenders must further verify the borrowers credit history and ability to repay the mortgage loan. And while that may sound like the proverbial "no brainer," it's one of the basic reasons that led to the Columbia SC real estate meltdown. Lenders granted mortgage loans that borrowers simply couldn't pay back.
The end result has created a current environment in which consumers find it more difficult to obtain financing. Lenders report the average FICO score required on approved mortgage loans are higher than ever before and many point to tighter credit as the reason the homeownership rate is at its lowest in more than twenty five years. Lenders also contend that while loan approvals are still being issued, the additional documentation and verification makes the mortgage approval process lengthy and cumbersome. Borrowers, on the other hand, say it’s not only the process, but the higher credit levels that is thwarting their home buying efforts in the Columbia SC real estate market.
The Dodd-Frank legislation seems to have almost had the reverse affect from what was intended. Mortgage lenders are skittish when it comes to taking risks and, while that’s not a totally bad result, the legislation was designed to improve lending practices and stimulate the Columbia SC real estate market’s recovery.
Time will ultimately tell how Columbia SC real estate will be affected, but one thing’s for sure: since fewer homebuyers are paying cash for homes, affordable and readily-obtainable mortgage loans will always be necessary. Lenders and regulators need to find a common ground on which they can stand, and at the same time offer consumers products that are innovative, attractive and that affordably fit their needs.
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A Columbia SC mortgage is probably the single largest monthly obligation you'll ever have if you own a home here. Everybody likes saving money, whether they live in Columbia SC or another American city! And whenever you're able to save money it's especially satisfying.
There are, among potential others, at least a half-dozen ways you may be able to reduce that large mortgage payment looming before you each month. Monthly mortgage payments are comprised of four main costs: principal, interest, (property) taxes and (homeowners) insurance, commonly referred to as “PITI.” If you’re able to reduce one or more of these component parts, it can make a substantial impact on your monthly payment… and quite possibly make living in the Columbia SC area more enjoyable than ever!
Six Tips for Lowering Your Columbia SC Mortgage:
1. Refinance Your Columbia SC Mortgage at a Lower Interest Rate
Whenever possible, and assuming your closing costs aren’t prohibitive compared to the amount of interest you’re saving, it’s probably best to refinance your existing loan at a lower rate of interest. That will reduce your monthly principal and interest payment. More importantly, over the life of the new loan it could save you thousands of dollars in the amount of interest you’ll pay.
Furthermore, even though it won’t necessarily reduce your monthly payment, you may elect to opt for a 15-year or 20-year term when you refinance, rather than the longer 30-year term. A shorter term will increase your monthly payment amount, but it will substantially reduce the number of years of remaining payments. Consult your real estate agent or mortgage lender. You may be surprised at how popular a shorter term Columbia SC mortgage is.
2. Compare Prices for Homeowners Insurance Coverage
Shopping around for the best homeowners insurance premium is another way you can save a good deal of money each month, each year and over the life of your home ownership. Insurance premiums are based on a variety of factors, including the amount of deductibles, the nature and numbers of claims filed and, in cases where you “bundled” your auto insurance with your homeowners insurance, your driving record. Some companies in Columbia SC will offer you premium discounts on your homeowners insurance and your auto insurance if you have a safe driving record.
In addition, making certain home improvements may qualify you for a premium discount. For example, if you live in an area prone to hurricanes, your home could be reinforced with high wind-resistant glass and roofing improvements to better protect your home. Such improvements, among others, may enable you to qualify for savings to your homeowners insurance premiums. Discuss with your insurance agent what improvements may be applicable in Columbia SC that would potentially reduce your premium.
3. Contest Your Real Estate Tax Bill
If you have sufficient evidence to appeal or petition your town or county for a lower tax assessment it may be something that they may consider. There are probably companies in Columbia SC that can handle the process for you or you could handle it yourself.
4. Pay an Additional Columbia SC Mortgage Payment Every Year
By making one extra principal and interest payment each year you can save hundreds or more in interest over the life of your Columbia SC mortgage. Plus, it will reduce the length of the term of your loan.
5. Ask Your Lender to Recast Your Mortgage Loan
"If you like your bank, you can ask to recast your loan at a lower rate,” so says industry expert, Rich Zito, co-founder of Flynn Zito Capital Management in Garden City, New York. Tito goes on to say that whether the lender will recast your loan depends on the bank’s policy and certain other factors, but it doesn’t hurt to ask. Realistically, however, most lenders probably would prefer — and perhaps require — that you refinance your mortgage. Columbia SC mortgage lenders and those in other parts of the United States earn greater fees through the refinance process.
6. Eliminate Private Mortgage Insurance (PMI)
When you originally bought your home, if you financed more than 80% of the purchase price you probably were required to have private mortgage insurance on your loan. If your home in Columbia SC has appreciated significantly and other lender requirements have been met, you can request that your mortgage lender eliminate the PMI on your loan. The lender may require a new appraisal at your expense, but in the long run the savings will pay for the cost of the new appraisal.
The number of delinquent Columbia SC mortgages continues to fall, but the foreclosure crisis is still taking its toll on thousands of borrowers locally, and hundreds of thousands nationwide.
Nationally, of the approximately 952,000 borrowers who are 90 or more days past due on their monthly payments but not yet in foreclosure, 62 percent have already been through some form of home retention program, according to Black Knight Financial Services. They are, it seems, beyond help. Home retention programs were established by lenders and the government to work with borrowers to enable them to keep their homes.
In 2010, homeowners on average could have received a $530 monthly payment reduction. That has dropped to a $450 range today. Larger payments are now looming for many people who participated in federal mortgage relief programs and for many who took out home equity lines of credit before the housing crisis.
Banks More Aggressive With Delinquent Columbia SC Mortgages
Banks are getting more aggressive in pushing delinquent Columbia SC mortgages through the foreclosure process, rather than offering more modifications. As home prices rise and demand surges, banks can sell the homes more easily in today's market than they could during the height of the foreclosure crisis. Retention actions are down 42 percent over past two years, but of the new modifications or payment plans, 70 percent have already been through one or even more modifications that failed.
Banks are also favoring short sales more, rather than taking the home to final foreclosure and selling it. A short sale is when the bank allows the home to be sold for less than the value of the mortgage.
The ongoing shift away from final foreclosure sales is a driver of improving home prices since bank-owned properties typically sell at a larger discount than short sales. Distressed homes accounted for 12 percent of March home sales, down from 39 percent at the peak of the foreclosure crisis.
Although the number of both delinquent Columbia SC mortgages and those in active foreclosure is down dramatically, they are still two and three times their precrisis norms, respectively,
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