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Mortgage News Matters

How to Navigate a Seller’s Market

Since the start of last year, homes for sale have been on the decline, while housing prices have continued to rise.

The combination of stay-in-place orders brought on by the pandemic and the rise of low mortgage rates in efforts to encourage homebuyers has only widened the gap between supply and demand.

Because of this, we find ourselves in a constant state of a seller’s market.

What is a Seller’s Market?

A seller’s market is when the number of buyers exceeds the number of homes available to purchase.

What Does This Mean for Buyers?

With homeowners choosing to stay in their homes for longer and mortgage rates becoming more affordable for a larger number of borrowers, appreciation of homes has only continued to increase.

This means that buyers must stand out while remaining diligent in their search, and buyers who are just entering the market should be prepared to bid over asking and waive certain contingencies if they hope to purchase a home soon.

What Does This Mean for Sellers?

Sellers, on the other hand, have the luxury of being picky. With the value of their home most likely continuing to increase, they can take their time when deciding on who they want to sell to and can expect a bid over asking.

For more on this, check out our post of Tips for Buyers in a Seller’s Market.

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Mortgage News Matters

Is the Lowest Rate the Best Rate?

Homebuyers who are new to the market may find themselves asking the common question, ‘Is the lowest rate the best rate?’ It’s a good question to ask because the answer can be somewhat complicated.

The short answer is no.

In some cases, even, a borrower might end up paying more for a lower rate. This is why understanding the difference between the lowest rate and the best rate is important. 

When determining the best rate, you will want to look at two major things: (1) the interest rate and (2) the APR.

What is the difference between Interest Rate and APR?

Interest rate is the rate a borrower pays on their home loan. This rate varies due to many factors, such as home price and loan amount, down payment, loan term, interest rate type – adjustable vs. fixed – loan type, and credit score, to name a few.

APR is the interest rate plus other fees and costs that go into buying a home. Which is, what a borrower will end up paying on top of the principal. These fees include the interest rate, origination fees, discount points, and closing costs – which include application and attorney fees, administrative or processing fees, insurance fees, property taxes, and expenses from the title company.

To determine the best rate, you will want to find the one that saves you the most money once you factor in fees, closing costs, and loan terms. You will want to look at the APR.

When looking at the APR you should pay attention to these major factors:

  1. Which fees are included? Sometimes fees, like appraisal fees, property taxes, and insurance costs are not included in the original APR quote. It can be helpful for borrowers to ask these questions upon receiving a quote from their lender, so they are not hit with unexpected costs later.
  2. Upfront costs? In some cases, lower APRs may have higher upfront costs, this is important for borrowers to acknowledge as well so they are not stuck paying unexpected upfront costs at closing.
  3. Take into consideration PMI, credit score, and down payment. Borrowers with less-than-perfect credit may qualify for a loan but will have a higher APR because of it. Likewise, those who put a smaller amount towards their down payment or who haven’t accounted for mortgage insurance may see an increase in their APR.
  4. Consider the length of the loan. The APR is calculated in relation to the length of the loan. This means, for a 30-year loan, the APR is determined assuming it will take 30 years for the loan to be paid off.

    However, many borrowers choose to pay their loans off earlier than the original term, which ultimately affects the APR. The best way to get the most accurate APR would be to keep the loan for the entire term. Or, if a borrower is anticipating paying it off early, they should be prepared for an increase in APR.

Understanding the difference between interest rate and APR is crucial when it comes to finding the best mortgage loan rate.

Moreover, understanding the costs that will affect your APR in the long run, is the only way to make sure you are getting the best rate possible.

Your best option is to sit down and talk with a Loan Originator who can help you break down the real, and sometimes hidden costs, that affect your APR to help you find the best deal for you! 

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Mortgage News Matters

How to Choose the Best Mortgage for You

Any homebuyer will tell you that choosing the perfect mortgage is just as important as choosing the perfect home. For many, buying a home with cash is not possible, which is why finding the right mortgage loan program is essential. When choosing the right mortgage for you, it is important to find one that works with your unique budget, as it is an expense that you will be paying off over the course of many years.

To better help you on your home buying journey, we’ve compiled a list of 5 guidelines to follow when choosing the right mortgage for you.

  1. Determine how much you can afford. Your mortgage is made up of two main costs. These are (1) the loan principal and (2) the interest. The principal is the loan amount you are applying for. The interest is the additional amount tacked onto your monthly payments, as a fee for borrowing money from your lender. Your monthly payments are paid through an amortization schedule set by your lender. For more information on determining how much of a mortgage you can afford, take advantage of our free Mortgage Calculator offered on our website.
  2. Set a goal and start a savings plan. We’ve said it before and we’ll say it again, buying a home is one of the biggest financial decisions one can make in one’s lifetime. There are many costs to consider outside of the initial sale price listed on the For Sale sign. Costs like down payment, closing costs, and insurance to name a few. It is important to acknowledge each of these commonly overlooked costs before purchasing a home and setting a goal to achieve them. For a comprehensive list of these costs, refer to our post on Costs to Consider.

    In addition, you’ll want to start a savings plan that can act as a step-by-step guide to reaching your savings goals. For helpful tips on saving towards your home buying goal, refer to our blog on How to Start Saving for a Down Payment.
  3. Consider different types of mortgage loan programs. Since each homebuyer has needs and wants that are unique to them, there are a variety of mortgage loan programs to choose from. At VanDyk Mortgage, we specialize in 15- and 30-year Conventional loans, FHA loans, USDA, VA, and Adjustable Rate Mortgage loans.

    Each loan program has different requirements and qualifications that must be met by borrowers. For an extensive list of each loan program and its specific qualifications, refer to our Mortgage Loan Options on our website.
  4. Understand how much insurance you will be required to pay. The cost of mortgage insurance varies depending on which type of mortgage loan you end up choosing. For some loans, insurance is required, while for others, it comes in the form of an upfront funding fee.

    Your insurance premium is based on different factors, such as the amount of money you can put towards your down payment or your own unique credit score. For more information on mortgage insurance and how much it could cost you, refer to our post What is Mortgage Insurance?
  5. What type of loan do you qualify for? One of the most important questions you can ask yourself when choosing the right mortgage loan for you, is ‘What type of loan do I qualify for?’ You can be as determined as you’d like to save towards your goal for the perfect home, but if you don’t qualify, your efforts may be in vain.

    The best way to determine this is to talk with an experienced Loan Originator as soon as you are ready to start looking for your new home. They can go over all of your loan options, what types you qualify for and how to start saving towards your goal. To reach out to one of our experienced Loan Originators, contact us today!
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Mortgage News Matters

Zero Down and Low Down Payment Mortgage Options

For buyers currently looking to purchase a home – affordability is the name of the game. And finding a mortgage loan that requires zero – or low down payments, is essential to their home buying process. Fortunately, VanDyk Mortgage provides a variety of mortgage loan options with low or no down payments required for our cost-conscious buyers.

Low-Down Payment Mortgage Loan Options:

30-Year Conventional: With consistent interest rates and monthly mortgage payments, the traditional 30-Year Conventional Loan is one of the most popular mortgage loan options. Programs with down payments as low as 3%, the 30-Year Conventional Loan is a great option for those seeking to purchase a home, before they have the funds necessary to do so. Keep in mind, whenever you put a less than 20% down payment on a home, you may be required to pay Private Mortgage Insurance (PMI) until you own enough equity in your home.

FHA: The Federal Housing Association, or FHA loan, is an ideal option for first-time home buyers with less than perfect credit. With a down payment as low as 3.5% and lower than average interest rates, the FHA loan a great option for buyers who do not meet the requirements for a traditional 30-Year Conventional Loan.

Zero or No Down Payment Mortgage Loan Options:

VA: A VA, or Veteran Loan, is the best option for Veterans or active duty military members looking to purchase a home of their own. There is no down payment required and low interest rates. VA loans require no monthly mortgage insurance, making it possible for a buyer to purchase a home without paying out of pocket.

USDA: Backed by the US Department of Agriculture, a USDA, or Rural Housing Loan, is for buyers who are looking to purchase a home in a rural or suburban area with minimal investment. These loans require no down payment and provide flexible credit guidelines, as well as low monthly mortgage insurance costs.To learn more about low and zero down payment loan options offered at VanDyk Mortgage, visit our website Loan Options.