Wednesday, January 14, 2009

Interest rates....why the @@##!! you should care:

Monthly Payment!
Lower rate=more house
for less-who wants a mc mansion?

WHEN you go to the bank to qualify for a mortgage
they look at MANY things(in fact you feel like
you have just had a financial physical-sans rubber
glove of course)
And among the things that determine how much money
you can borrow(monthly income, debt, credit score)
is what INTEREST RATE you qualify for.

For those that understand this already-good for
you smarty pants-but for me--when I bought my
first and even second home this stuff was just
well: Confounding and I just went along with
whatever the credit union told me.

Simply put: An interest rate on a home loan
is how much the lender(bank or credit union)
is going to charge you(in %) to borrow money
from them.

Bottom line: you want this number to be
AS LOW AS POSSIBLE!!! All the news reports
squealing about how low interest rates
right now are basically saying:
"money is cheaper to borrow than ever before
to buy a house!"

Why this matters to you:
Here is how I look at it:
IF you are lucky enough to be in a position
to be able to buy a home right now your luck
couldn't be better!
Because interest rates are LOW(it is cheap to
borrow money) and it is a buyer's market, you
can afford MUCH more house than you ever have
been able to, and this may or may not last.

What to do to find out if you ready to buy:
Ask yourself:
-Do you feel stable in your currant situation?
-How much do YOU feel you can afford for a mortgage every month
(banks are smart, but don't ever let anyone tell you can afford more
than you are comfortable spending every month)
-Shop around!
Rates are negotiable as are closing costs(mosts often paid by seller)
DO NOT let just anyone pull your credit or it will hurt it, but be sure to
at least get good faith estimates(no SSN required) from 2-4 credit unions/mortgage brokers/banks
Often if you are a good candidate they will fight to keep you as a customer.
ONCE you find 2-3(more than that and your credit is going to suffer) that your are comfortable with THEN and only then fill out a
loan application. From there you will be pre-approved for a certain amount of money
NOW you are ready to shop for the dream house!

NOTE: you can certainly shop for houses and even put an offer in for one without being pre approved. But it certainly does make you look like a more attractive buyer
to have a preapproval letter with your offer, AND if you know how much you can spend
it is MUCH easier to stay within your budget!

Call or write with questions!