Does your New Year’s resolution involve home ownership? Is it time to purchase your first property or move to something bigger? Here are some quick facts on today’s lending options.
INTEREST RATE BUY DOWNS: Pay a fixed, one-time fee at closing to lower your interest rate. Loan size and target new rate will impact the size of the fee. The fee amount can also be negotiated into seller paid closing costs.
THREE: TWO: ONE: Sellers pay to buy the interest rate down 3% for the first year, 2% for the second year, 1% for the third year, and then on the fourth year the loan reverts to the rate it locked at during the original close date.
REFINANCE LATER: If you buy now and the interest rates improve you can often refinance your loan at a reduced rate. Many lenders now offer to waive processing and underwriting fees if you refinance within a few years of your original closing date.
THE COST OF WAITING: Lower interest rates often lead to higher house prices. Current market rates have slowed house appreciation, creating more opportunity to negotiate repairs and closing costs. Purchasing now can get you a better house price with the option to refinance later if rates improve.
Whether you are looking to buy soon, or not for a few months, chatting with your Realtor and lender now can help set you up for success. It’s never too early to start your planning.