Sonia Rollins
EXIT Premier Real Estate | 781-454-6043 | [email protected]


Posted by Sonia Rollins on 6/21/2020

Photo by Nattanan Kanchanaprat via Pixabay

Of course, you want to stay within your budget when buying a house. You certainly want value for your dollar. But a buyer should never lose sight of the fact what they truly desire is getting the home they want and that fits their needs. To that end, potential buyers may put in a “low-ball” offer on a house they truly want. They may risk losing a home that meets all of their qualifications by placing an offer that is five or ten thousand dollars less than a price the seller is willing to accept. What can be even more frustrating is that even if a buyer's offer is accepted by a seller, the buyer may just waste that money, or more, on the mortgage they acquire.

Buyers may be surprised to learn how much even a half of one-percent difference in a mortgage rate can make.

Example One

In our first example, after a down payment, a buyer gets a mortgage for $250,000 over 30 years at 4.5% interest. The monthly payment would be about $1,267 monthly. Over the course of 30 years, those payments would total $456,120. The net cost of the loan is $206,120.

Example Two

In our second example, we take that same $250,000 mortgage over 30 years, but the buyer compared mortgage rates and was able to find a lender offering that same loan at 4.0% interest, one-half of one-percent less. The monthly payment would now be $1,194, totaling $429,840. The net cost of this loan is $179,840. The difference between the two loans is $26,280. All because of a .5% interest rate difference. 

The Best Way to Save Money on a Home

Rather than chancing to lose a home you really like by making an offer that is too low, consider instead performing due diligence on mortgage rates. Seeking out a lower rate can be critical in saving you five, ten or twenty thousand dollars or more. That's a far better solution than losing a home you really wanted.

There are a lot of factors that go into determining loan rates for mortgages. These include the buyer's credit rating, work history, income to debt ratio and loan to value ratio. The bottom line is the better your credit the more options you will have in securing a mortgage loan.

One of the best ways to save money on buying a home is saving money on your mortgage rates. The best way to do that is by monitoring your credit rating and working to build it. When it comes time to buy a home, get pre-qualified and compare mortgage rates. You can even use an online calculator to compare rates on your own. Need further assistance in determining how to find the right mortgage for you? Feel free to reach out, and we can embark on your mortgage and home journey together.




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Posted by Sonia Rollins on 2/19/2017

Do you know the difference between adjustable-rate and fixed-rate mortgages? An adjustable-rate mortgage (ARM) includes an interest rate that will change periodically based on market conditions. In many cases, homebuyers prefer fixed-rate mortgages (FRMs), as these mortgages enable homebuyers to pay the same monthly mortgage payment for the life of their loan. Conversely, an ARM may start with lower monthly payments but could rise over an extended period of time. This means that an ARM is likely to result in mortgage payments that vary over the years. Although an ARM may seem like an inferior option to its fixed-rate counterpart, there are several scenarios in which a homebuyer may prefer an ARM, including: 1. A Homebuyer Is Purchasing a Residence for the First Time. A first-time homebuyer may enter the real estate market with lofty expectations. But upon realizing there are few housing options that meet his or her needs, this buyer may settle for a house that represents a short-term residence. In this scenario, a homebuyer may be better off selecting an ARM. With an ARM, a first-time homebuyer may be able to make lower monthly payments in the first few years of homeownership. And then, when a better homeownership opportunity becomes available, this buyer may be able to work toward upgrading from his or her starter residence. 2. A Homebuyer Expects His or Her Income to Rise. The economy may fluctuate at times, but those who are assured of a higher income over the next few years may be better equipped to handle an ARM. For example, a student who is enrolled in a medical residency program may be a few years away from becoming a doctor. At the same time, this student wants a nice place that he or she can call home and may consider an ARM because it offers lower monthly payments initially. After this student completes the residency program, he or she likely will see a jump in his or her annual income as well. Thus, this homebuyer may be best served with an ARM. 3. A Homebuyer Is Facing an Empty Nest. Will your children soon be moving out of the home in the next few years? If so, now may be a great time to consider an ARM if you'd like to move into a new residence. Parents who are facing an empty nest in the next few years may be better off living in a larger residence for now, then downsizing after their children leave the nest. Therefore, with an ARM, parents may be able to buy a nicer home with lower monthly payments. And after their kids move out, these parents always can look into downsizing accordingly. Deciding which type of mortgage is right for you can be challenging for even an experienced homebuyer. Fortunately, lenders are available to answer any concerns or questions you may have, and your real estate agent may be able to offer guidance and tips as well. Explore all of the mortgage options at your disposal before you purchase a new residence. By doing so, you'll be equipped with the necessary information to make an informed decision that will serve you well both now and in the future.







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