It's the spookiest time of the year. Aside from haunted houses, horror movies, tricks and treats, home buying can be scary. As always, Wilkes Mortgage Group is here to provide you with education and support in your home buying journey. The current real estate market is not for the faint of heart, luckily we've got you covered! Let's take a look at what the rest of 2023 and early 2024 has in store. Here are 5 spooky truths you need to know about the mortgage industry.
#1 Trick or Treat: Be Wary of Getting Tricked Into A Bad Deal
Just like any other industry, the mortgage industry is full of tricksters and people looking to make a quick buck off you. Finding a lender with your best interest at heart is a lot harder to come by nowadays. A good lender will tell you "no" when they know it is not a good deal, they would rather have you wait for a better deal than to just make money off you right then and there. Let's take refinancing for example, in my professional opinion I think that refinancing that actually makes sense is harder than ever before.
Refinancing can be a smart financial move under the right circumstances, but it may not be a good idea right now for a variety of reasons. Your lender should be honest with you to let you know if refinancing is in your best financial interest. Refinancing is often pursued to secure a lower interest rate on your mortgage. If interest rates have risen since you originally obtained your loan, refinancing may not result in real savings. It’s crucial to compare the current rates to the rate on your existing loan to see if there’s a meaningful benefit. You also have to consider closing costs and the remaining loan term. Ultimately, the decision to refinance should be based on your unique financial situation and objectives. A good lender will help you carefully evaluate the costs, potential savings, and long-term implications before proceeding with a refinance, and it may not be the right choice for everyone at a given time.
#2 Not All Mortgage Lenders Are Created Equally
Who you work with in your home buying process MATTERS. Not all mortgage lenders are created equal and not all of them will have your best interests at heart. Mortgage lenders can vary significantly in terms of their offerings, services, and overall quality. When seeking a mortgage or considering a refinance, it’s crucial to do thorough research and choose a reputable broker that suits your specific needs. Different lenders may offer varying interest rates, loan terms, and types of mortgages. It’s crucial to compare these factors to find the best fit for your financial situation.
Lenders may have different fee structures and closing costs. Some lenders may offer low or no origination fees, while others may charge higher fees. You should consider these costs in your decision-making process to be wary of saving yourself extra money. This may go without saying but customer service is HUGE and it matters significantly in your home loan search process. Some lenders will just find you a loan and you'll never hear from them again, while others, like our team at Wilkes Mortgage Group, stay with you throughout your journey as a homeowner to help you with whatever you need. The level of customer service can vary widely between lenders. Read reviews and seek personal recommendations to find a lender known for being responsive, trustworthy, and easy to work with. Some lenders will also offer special programs, down payment assistance, or incentives for certain homebuyers. Research which lenders may have programs that benefit you. Before committing to a broker, it’s advisable to obtain quotes from multiple lenders or brokers, compare their offerings, and ask questions to ensure you understand the terms and conditions of the mortgage.
#3 You might be missing out on your VA Home Loans
This specifically applies to former U.S. military. VA (Veterans Affairs) home loans are mortgage programs designed to help current and former members of the U.S. military, including veterans, active-duty service members, and eligible National Guard and Reserve members, purchase or refinance homes. These loans are provided by private lenders but are guaranteed by the U.S. Department of Veterans Affairs, making them an attractive and cost-effective option for eligible borrowers. The benefits to these home loans are endless and it's definitely something you don't want to miss out on as a veteran.
One of the most significant advantages of VA loans is that they typically require no down payment. This allows eligible borrowers to purchase a home without saving for a significant down payment, which can be a significant barrier to homeownership for many. VA loans often come with competitive interest rates, which can result in lower monthly mortgage payments compared to other loan types.VA loans do not require borrowers to pay for private mortgage insurance (PMI), even with a zero-down payment. If you're looking for investment properties, VA home loans will be your best friend. VA home loans can be a valuable opportunity for eligible veterans and service members, providing a path to homeownership with favorable terms, benefits, and investment opportunities. A common myth is that you only have one time VA usage. This is totally false! In reality, you may be able to buy multiple homes with a VA loan. A great way to make use of this perk is to invest in multi-family properties. When done right, this is an excellent way to build a portfolio. Simply live in one part of your unit, rent out the rest and have up to 75% of your mortgage paid off by your renters.
#4 Don't Be Fooled By Smoke and Mirrors.
When looking to buy a home, look at the full picture, yes your mortgage rate might be higher than you'd like, but with your interest write off you might come out ahead in the end. A mortgage interest rate write-off refers to the tax deduction you can claim on the interest paid on your mortgage loan when you file your annual income tax return. Mortgage interest deductions are a common benefit for homeowners. Sit down with a broker to figure out what you're really paying after your write off and that may put you in a better position financially. It’s important to remember that while mortgage interest deductions can provide tax benefits to homeowners, they are just one aspect of the overall financial picture of homeownership. Other costs, such as property taxes, maintenance, and insurance, also play a role in the financial implications of owning a home. Looking at your overall financial goals and situation will help you make the right final decision for you and your family once you sit down and dissect that price tag.
#5 We Can't Predict The Future.
The future is out of our hands, there may or may not be a recession of some sort in the near future, but we don't know what areas this will affect. You can't plan for the future of the market, you have to do what's best for you and your family now. The best thing you can do is educate yourself now and work with what's in front of you at this point in time. There is never going to be a perfect time to buy a home, only the right time for YOU.
My best piece of advice is to saddle yourself with a broker who is going to be on your side in all the ups and downs. The only certainty is that we DON'T know what the future holds. So choose the broker that will be ready to navigate even the spookiest of seasons with you.