Interest rates outgrow their skinny jeans

Saint Charles, IL – Mortgage rates are still under the label of Hot Topic  in early 2014 and it is not too late to lock in a low rate.  According to the Huffington Post, http://www.huffingtonpost.com/realtorcom/how-rising-mortgage-rates_b_4719700.html, mortgage rates are expected to rise to 5-5.5% by the end of the year.  This is a modest increase, not exactly a fattening up of rates, but the skinny jeans are getting uncomfortable for interest rates this year.

Watching the rates tick slowly back up will be a popular tipping point for a lot of home buyers this year, across Elgin and the Fox Valley area as well as the rest of the nation.  Regardless of whether your home loan comes from Cherry Creek, Mortgage One or Chase, home buyers still need to be pre-approved before house hunting and should be comfortable with their lender and loan amount.

Get the mortgage loan process moving today!

  • Check your credit rate and straighten out any inconsistencies.  Visit a website like Credit Karma.com https://www.creditkarma.com/credit-report-card to get a free report or do a Google search to get a list of credit report companies.
  • Shop around for a mortgage lender in your area who is in experienced in residential mortgage loans.  The longer they’ve been in business, the more likely it is that your loan officer has seen it all and can help evaluate the best loan products for your individual needs.
  • Lock in your interest rate as rates are very likely to climb as the Federal Reserve Bank is slated to reduce the economic stimulus program in 2014.  There is no better hedge against rising rates than to lock in a low one today.
  • Make sure your loan application paperwork is in order, such as paycheck stubs, bank statements, tax returns and more.  Your lender will walk you through exactly what you need to attain a pre-approval, be aware that final documents may require additional proof of income or other information.
  • Skip the exotic loans.  The 1 year ARMS,5 year ARMS or mortgages that pay interest only are not the best option for a long term mortgage.  The standard, plain vanilla conventional loan is still the most enduring, most boring loan available and for good reason.  A 30 year loan means your payments stay the same from year 1 to year 5 to year 12 and so on.  Meanwhile, taxes and your pay rate may change, making your locked in mortgage rate (and monthly payment) consistent and possibly easier to pay as you go forward.
  • Remember the 90 day window.  Mortgage lenders like to see a steady income and no large chunks of cash inbound or vanishing from your accounts.  If you are going to be accepting a gift for a down payment from a family member, move it now and let it sit for 90 days’ in one account.  Also, do not open any new lines of credit once you’ve applied for your mortgage loan.  Adding additional credit cards will skew your ratios that the lender takes into consideration for the amount you can qualify for on a home loan.
  • Don’t panic.  Protect yourself with a locked in rate.  This way, if rates creep upward while you’re in the middle of the home buying process, your locked in rate will offer shelter and not price you out of the housing market overnight.  A small rate increase won’t affect the monthly payment too much.  But waiting until rates rise a full percentage point from 4.5%  to 5.5% will impact your buying power.  Don’t wait any longer if you’re ready to make a move.  This is the time to do it.

If you need more information and don’t have a mortgage lender, contact a local licensed buyer’s agent and ask for their list of referrals.  There is no obligation and it can be a great place to start.

Let me help you find your next home in the beautiful Fox Valley area!  Call or email me today:
Jennifer@ElginFoxValley.com
630-854-4360

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