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.
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.
Since the mortgage crisis when loans became almost impossible to obtain, Columbia SC mortgage lenders have begun to loosen standards again. This begs to ask the question, will lenders ever learn their lesson from loose lending practices?
Recently, the Federal Housing Administration (FHA) announced changes they hope will encourage banks to give more home loans to worthy but weaker borrowers.
The government has extracted billions of dollars in penalties from lenders that made mistakes on loans to borrowers who later defaulted. The errors ranged from small mistakes to ones that affected the riskiness of the Columbia SC mortgage they chose to underwrite in the first place.
Some banks, believing the penalties are too harsh relative to the errors made, have pulled back from originating a Columbia SC mortgage backed by the FHA and argue that the broad "certification" they must make when originating a Columbia SC mortgage should be limited to significant errors.
Will FHA Changes Help Those Trying to Get a Columbia SC Mortgage?
The FHA’s attempt to change the provision shows the tightrope policy makers and regulators are trying to walk. While they want to hold lenders accountable for crisis-era mistakes and retain recourse should the Columbia SC mortgage go bad, they also want the banks to extend loans to some consumers who have been largely shut out of the Columbia SC mortgage market since the crisis.
Lenders typically have pulled back on FHA lending by having more stringent requirements than what the FHA would allow. For example, even though the FHA will guarantee loans to borrowers with credit scores of as little as 580, on a scale of 300 to 850, a bank might not give a Columbia SC mortgage to borrowers with a score below 640.
Meanwhile, Columbia SC mortgage rates remain near a two-year low, even though rates inched up slightly in the past few days. Freddie Mac says the average rate on a 30-year fixed rate mortgage is now around 3.69 percent, that's up just a fraction from 3.59 percent a week ago. A year ago, 30-year rates averaged 4.28 percent.
We'll continue to monitor the FHA decisions and how they may affect (negatively or positively) getting a Columbia SC mortgage as we continue moving through the housing recovery in 2015.
In the meantime, you can get more information about news that may affect the Columbia SC mortgage market in our section on Columbia SC Mortgage Info to your right under Columbia SC Real Estate Categories.
Remember, we post tips daily to Twitter, and also on our Facebook Page. We'd love you to check us out there too.
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In our Columbia SC Real Estate News for February 2015:
Protect Your Columbia SC Mortgage Until It's Funded
Getting a Columbia SC mortgage does not just entail applying for the loan and getting an approval letter. There are still things that can go wrong, and you need to be aware of these so you don't find yourself out all the cash to get the loan, and still not get the funds you thought you were approved for.
Why Your Columbia SC Mortgage May Not Get Funding
You've gotten the call that your Columbia SC mortgage was approved, and your lender coordinates a closing date with you. You get the movers all lined up, you notify the utility companies to switch the untilites over to your name effective on your closing date, and you send out the change of address notices. Everything's all set to move in, until you get another call from your lender that says, your loan has fallen through.
There are no formal statistics on deals that are approved but then don't actually close. These 11th hour disapprovals happen more often than many people realize. What they also don't know is that losing the loan at the last moment is almost always preventable and possibly fixable.
The most common mistake people make after their loan has been approved but before it closes is taking out additional credit after the lender has reviewed your credit report. Buying furniture on credit after you've been approved, or new appliances for the house, are both big no-no's! If your income to debt ratio was close during the initial documentation review, taking on more debt might push you into a debt ratio the bank deems unacceptable.
The bottom line is — just don't do it. Wait until your deal has completely closed before taking on any new debt. Your normal purchase of gas and a night at the movies isn't likely to cause any problems. It's a major purchase or opening new accounts that will get your loan denied.
Another mistake that may or may not be repairable is changing jobs during the loan funding process. Lenders almost always verify your employment shortly before the loan is set to close. If anyone that submitted financial documentation for your loan is planning to changed employers or stop working, it's best to wait until after the loan closes.
One you will never recover from is if you submit fraudulent income statements. When getting a Columbia SC mortgage, there are no undocumented income statements. The lender will validate your income statement with the IRS or other taxing authority. What you submit to the lender must be exactly what you submitted to the IRS. Often the original loan approval is based on a contingency that your income be validated by the IRS.
Between the time you are initially approved for your Columbia SC mortgage and when the deal closes, try to keep everything the same regarding your financial situation.
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Columbia SC Mortgage Rates Up
Columbia SC mortgage rates ticked up this week for the first time in 2015 following positive home sales reports.
Freddie Mac says a 30-year fixed-rate Columbia SC mortgage averaged 3.66 percent this week, up from 3.63 percent last week. A year ago, 30-year rates averaged 4.31 percent. The all-time low of 3.31 percent was set in November 2012.
A 15-year fix averaged 2.98 percent this week, up from 2.93 percent. A one-year adjustable-rate mortgage rose to 2.38 percent.
New-home sales in December rose 11.6 percent, a better monthly gain than had been expected. Existing-home sales rose 2.4 percent in December.
A separate report from the National Association of Realtors said pending sales of existing homes, a more forward-looking gauge of housing market activity, fell in December, though contract signings remained above year-ago levels.
We'll continue to keep you updated here on any news that might affect Columbia SC mortgage rates, either up or down.
During the days of the housing boom, "sub-prime mortgages" — aka 'home loans for people with bad credit' — were very popular. After the housing bust and the financial crisis of 2008, most banks stopped issuing sub-prime mortgage loans, and it became much more difficult for people with bad credit to qualify for a loan to buy a house.
Now the sub-prime mortgage market seems to be making a come-back. There are more options now than there have been since the days of the housing bubble for people with bad credit who want to get a home loan.
Getting a Columbia SC Mortgage When You Have Bad Credit
If you have bad credit, banks and lenders view you as a bigger risk to fail to repay the money they loan you. You can lower your risk by paying more money in advance — otherwise known as the down payment — on your house. Borrowers with bad credit usually have to make down payments of 25%-40% of the purchase price of a home, depending on their credit scores. For example, on a $300,000 house, a 25% down payment would be $75,000.
Prepare For Higher Rates
Getting a Columbia SC mortgage with a sub-prime loan will have much higher interest rates than conventional loans. Even at a time of historically low interest rates (3% or less on many mortgages), sub-prime borrowers paid interest rates of 7.95% or higher. Terms and conditions will vary by lender, of course, but it's worth knowing that when sub-prime mortgage loans are available, they come at a higher cost.
Prove That You Can Pay
During the height of the housing bubble, people were getting a Columbia SC mortgage approved for sub-prime loans at irresponsible levels. People were getting a Columbia SC mortgage even if they didn't have jobs or any money at all. There was even a joke about "NINJA" loans for people with "No Income, No Jobs/Assets."
Today the situation is different. If you want to get a sub-prime loan, be prepared to show ample proof of income and have a solid work history. This is not an unreasonable expectation for getting a Columbia SC mortgage loan, but it goes to show how relatively insane the situation was during the housing bubble. But banks do their customers no favors when they give them loans that they cannot afford to repay.
The Good News
The housing market is improving. House prices are on the rise again. Millions of homeowners who were "under water" on their mortgages are now getting some relief, and many other people who were blocked out of being able to qualify for a home loan are once again getting a Columbia SC mortgage.
Even if you have bad credit, it is still possible to get a mortgage, but you need to be prepared to offer a sizable down payment, pay higher interest rates, and have your personal financial life in order so you can prove you are a good risk.