This is a great time to buy a home in Tarrant County and Southlake. Housing prices here are still affordable. Sellers are still willing to negotiate on everything from sales price to closing dates. And, best of all, mortgage interest rates have fallen to new lows once again.
Freddie Mac reported that the average interest rate for a 30-year fixed-rate mortgage loan fell to 3.53 percent on July 19. That figure fell to an even lower 2.83 percent on 15-year fixed-rate mortgage loans.
If both of these numbers sound low, that’s because they are. Both, in fact, represent the lowest that average interest rates have ever fallen on these loans.
That doesn’t mean, though, that taking out a mortgage loan today is an easy task. Sure, borrowing mortgage money is more affordable. But lenders are also pickier when it comes to passing out those dollars.
If you’re looking for a home in Southlake, here are some common mortgage mistakes that you can’t afford to make.
- Trying to time interest rates: You want to lock in mortgage rates when they’re at their lowest. That’s understandable. Problem is, no one can predict when rates have actually hit their bottoms.
Today’s record-low interest rates could start to rise again tomorrow. Or they could fall some more. Trying to guess in which direction they’ll move is a foolhardy task.
Besides, small changes in your interest rate won’t make a big difference in your monthly mortgage payments. If you take out a 30-year fixed-rate mortgage loan with an interest rate of 3.53 percent on a $200,000 home, you’ll have a monthly mortgage payment of $901.44. If you take out the same loan but with a rate of 3.40 percent, you’ll pay $886.96 a month. Is that monthly difference – not even $15 – worth all the anxiety that goes with trying to time interest rates?
- Forgetting to shop around: You wouldn’t buy a car without visiting several auto dealers. You wouldn’t take out life insurance without pricing policies from different providers. Why would you consider taking out a mortgage loan without first speaking to several different mortgage lenders?
Buying a home is the biggest financial decision that most people make. Make sure to talk with several different mortgage lenders before applying for a loan. You might be surprised at the difference in rates and fees quoted by each one.
- Not understanding the costs of a mortgage loan: Interest rate isn’t the only number that you should consider when shopping for a mortgage loan. The fees charged by lenders can add up to a hefty price, too. Before applying for a mortgage loan, make sure to understand exactly how much your lender is charging to originate it.
The Federal Reserve Board estimates that the costs of closing a mortgage loan run an average of 3 percent to 6 percent of the price of a home. For a home costing, $200,000, that could mean anywhere from $6,000 to $12,000.
- Not knowing your credit situation: Today, mortgage lenders rely heavily on your three-digit credit score to determine whether you qualify for a mortgage loan. In general, lenders reserve their best rates for those borrowers who have credit scores of 740 or higher on the popular FICO credit-scoring model.
Before you apply for a mortgage loan, obtain your credit report free from AnnualCreditReport.com – don’t trust other sites that promise this information. This report will list your outstanding debt and any negatives on your credit report, including missed payments, bankruptcy filings and foreclosure notices. If you pay extra, you’ll be able to see your actual credit scores, too. This might be a good investment.
- Lying: Your mortgage lender will ask you some potentially embarrassing financial questions, everything from your annual salary to the total amount of your debts. Your lender will also ask about any bankruptcies, divorces or foreclosures in your past. Don’t lie to your lender. Making false statements on your mortgage loan application is a crime. And even if your lies aren’t caught, you don’t want to trick your lender into approving you for a higher mortgage loan than you can comfortably afford. That’s a recipe for a future foreclosure.
If you need more information about the mortgage loan process, feel free to contact me at 817-697-2345. You can also find me online at www.jameskeoughan.com. I'm happy to provide you with all the resources that come with the national RE/MAX brand.
James Keoughan is a REALTOR® with RE/MAX Heritage III in Southlake. He can help you meet all of your home-buying and -selling needs.
James Keoughan
Real Estate Agent, RE/MAX Heritage III
2301 W Southlake Blvd #500
Southlake, TX 76092
817.697.2345
http://www.JamesKeoughan.com