Monthly Archives

July 2016

How Low Can You Go? Refinancing Your Home.

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How Low Can You Go?

As mortgage rates creep towards all-time lows, potential savings beacon to homebuyers and refinancers alike. Homebuyers are presented with the opportunity to lock in lower than ever long-term loan rates, while those with existing loans have the opportunity to refinance to record-low rates.

Buyers and Sellers

Whether you are a potential first time homebuyer or a homeowner looking to sell, rates this low are certainly worth your attention. Even just a .5 percent cut in mortgage rates could be great news for your wallet.

When looking at what mortgage rates can mean for you long-term, a drop in rate from 4 to 3.5 percent will save you money on both principal and investment. How much money you save is dependent on the amount of your loan. For example, say you are looking at a mortgage of $200,000 with a 20 percent down payment and 30-year loan term. Your monthly payment drops from $984.83 at 4 percent to $898.09 at 3.5 percent. You can calculate your projected monthly payment online with this mortgage amortization calculator.

In addition to saving money over the long term, these rates mean an initial lower qualifying income to secure a loan. For example, say you were looking at the same $200,000 mortgage with a 20 percent down payment and loan term of 30 years at a rate of 4 percent. However, your application was denied due to income requirements by the lender. At a 3.5 percent rate, your qualifying income drops by $2,431. You can calculate your own required income for a mortgage online here.

These kinds of savings are not only important to first time homebuyers, but to sellers as previously locked-out purchasers enter the marketplace.

Refinancing

Many factors come into play when deciding whether or not to refinance your home, and it’s important to measure upfront cost against long-term savings. This will vary based on interest rate, loan term, closing costs, and how long you expect to stay in your home.

Typically, refinancing makes sense when interest rates fall by at least .75-1 percent. However, even those with smaller margins between their current interest rate and those offered now might consider refinancing. If you plan to remain in your current home long-term, even modest monthly savings can accumulate to warrant the expenses of refinancing your loan. Moreover, at Delmar Financial, we often cover the closing costs of refinancing. Thus, even refinancing savings as low as .125% become worthwhile. Online calculators such as this one are extremely helpful in determining whether or not refinancing is appropriate in your given financial situation.

Additionally, record low rates make the current climate ideal for those looking to switch to a different type of mortgage. For example, lower rates enable those wanting to payoff their home faster to move from a 30-year loan term to a 15-year term with less financial burden.

The Big Question

We can all agree that falling mortgage rates are great for first-time homebuyers, sellers and refinancers alike. But for how long will mortgage rates stay at or near current levels? Unfortunately, no one has the answer.  According to BrankRate’s Rate Trend Index, just 11 percent of experts surveyed believe rates will increase over the coming weeks, 56 percent believe rates will fall and the remaining 33 percent believe rates will remain unchanged.

What the future holds for mortgage interest is anyone’s guess. So if refinancing is enticing to you now, playing the waiting game could save you a little more green. However, it’s equally possible for your advantageous opportunity to vanish into thin air.

So evaluate your current situation and ask yourself some basic questions such as: What percent rate decrease justifies refinancing? How long will it take for monthly savings to counterbalance transaction cost? And, does my income qualify me to purchase the home I want?

Contact one of our expert loan officers at Delmar Financial today to get the answers to all these questions and more: (314) 434-7000.

Ready to take the next step? Visit us online to fill out a mortgage application today!

 

Selecting a Mortgage Company

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From waving goodbye to troublesome landlords, to endless decorating possibilities, the transition from renting to homeownership is an exhilarating one. However, many first-time homebuyers find the path to homeownership trickier to navigate than initially expected. Once you’ve purchased a home you’re in it for the long haul so before making any decisions, it’s important to choose a mortgage company that best meets your needs. After all, you’re entering into a financial relationship you could be committed to for the next fifteen, twenty or even thirty years.

That’s why, at Delmar Financial, we’ve compiled a short guide to help you sidestep some of the common mistakes homebuyers make when selecting a mortgage company.

Preparing for Your Search

Your financial status is of critical importance when applying for a mortgage loan. The more information you are able to provide a lender with, the easier it will be to navigate the complicated mortgage application process. Putting together a financial portfolio containing a summary of your current financial status for potential lenders can be an enormous help in getting the ball rolling. Your portfolio should include:

  • 2 years of tax returns
  • 2 years of W2s
  • 2 recent monthly bank statements
  • 2 recent paystubs

Once you have gathered your financial data and are familiar with your financial status, it is important to have a basic understanding of your mortgage options and which options make the most sense for your situation. Ask yourself questions such as:

  • How long do I anticipate owning my home?
  • Am I interested in a single family home or a condo?
  • How much money do I have for a down payment?
  • Where do I want to live?
  • How much do I want to spend and what is my time frame for purchasing?

Have an idea of how much annual property taxes and homeowners insurance are in the locations you are interested in, as well as a basic understanding of terms such as lender fees and “Good Faith” estimates.

Shopping Around

You have a seemingly unlimited number of options when it comes to selecting your mortgage lender, which is why it’s important to do your due diligence. Ask friends, family and your real estate agent for recommendations of reputable lenders, and check out lender reviews online. Additionally, the National Mortgage Licensing System & Registry maintains a website offering consumers a free way to confirm administrative and licensing information for state regulated mortgage lenders in all 50 states.

Compile a list of questions to ask your prospective mortgage lenders, such as what their interest rates are, the loan durations for the types of mortgages you are considering, and request “Good Faith” estimates— written explanations of the estimated charges, costs and fees the lender requires at closing. Additionally, confirm with your lender they are able to meet commitments and closing date deadlines and ask if they require any upfront fees. Be sure you understand and receive an explanation of all necessary terms and jargon in order to make an informed decision.

When narrowing down your choices of lenders, compare the offered interest rates and fee structures for the types of mortgages you are considering, and have a thorough understanding of each loan type being offered. It is, generally, in your best interest to select the most reputable lender that offers you the most inexpensive combination of interest rates and fees.

At the end of the day, you’re running the show. And with so much at stake, feeling 100% comfortable with your choice of mortgage lender is of the utmost importance. With 50 years of experience under our belts, at Delmar Financial, it’s our mission to work with you to develop a comprehensive mortgage strategy that best enables you to achieve your goals and dreams in homeownership.

You can get the answers to any lingering questions you might have and more by contacting one of our mortgage loan experts today at (314) 434-7000. Together we can turn your mortgage loan goals into a reality!

Ready to take the plunge? Get started online today with Delmar Financial!