Article written by FCM CEO Keith Canter for NASDAQ
The calendar turning over is often a time for people to take a look at their lives and evaluate any changes they’d like to make. New Year’s Resolutions about exercise, saving money, weight management and more can be useful if carried out. For many, one resolution may be to buy a new home in 2022. If so, now what?
The home buying and financing process can be daunting. For one, you don’t just go the store and buy a house like you would a gallon of milk. Fortunately, lenders have increasingly made it easier to finance a home. Some lenders even provide prospective home buyers with added informational items like a book for first-time buyers, a roadmap for application documentation, and a checklist for homeownership and financing steps.
Other lenders provide a helpful mortgage calculator to see what your monthly payment may look like based on various loan amounts and estimated rates. Borrowers should know that loan amounts may change during the homebuying process, just as rates can change throughout the home financing journey.
A good mortgage calculator will give you a basic understanding of how monthly payments are calculated. Likewise, a great mortgage originator or loan officer should be ready and willing to gauge your knowledge level and help you clearly understand the process and choices.
Easier than you think
A good real estate agent will take the time to walk you through how that process works. An experienced, reputable mortgage banker will help you with your application and find options that suit you and your circumstances best. Every borrower, and every property, is different, and a good loan officer will stand by to answer your questions, tackle any changes or surprises, and bring you to the closing table as “cleanly” as possible.
A good loan officer also will pay attention to you as an individual. Are you married, or is there a co-borrower? A good explanation why a 15-year fixed-rate mortgage is better for you than an adjustable rate, or a 30-year fixed rate. How a Down Payment Assistance Program might benefit you. Why a pre-qualification letter is different than a pre-approval letter. The list goes on and on, and a loan officer will walk you through the process.
Anyone thinking about buying a home in 2022 should realize that most lenders can offer a variety of technological advances to help process your loan. But you also should know that the process has not changed much: an application is taken, the borrower’s credit is analyzed, the property appraised, a rate and program selected, and the loan “funds.” Those steps have been streamlined through the use of software that improves the speed and accuracy of data collection, which in turn helps the lender analyze whether you and the property are good risks.
Stable, consistent for now
As we wrap up 2021 and move into 2022, like many things, buying a home and financing the property are subject to global events. The pandemic, which has dominated world headlines for nearly two years, continues to influence the strength or weakness of economies, and therefore interest rates and specifically mortgage rates.
A good mortgage loan originator will discuss how strength in the U.S. economy can move your mortgage rate, making housing more affordable or helping determine whether it makes sense to refinance. And although the Fed does not determine mortgage rates specifically, its actions come about as a result of U.S. economic strength.
Rates, including those used to finance a home purchase in 2022, have indeed moved higher from where they were this summer. But the impact of that increase in mortgage rates must be kept in context. You may not have the same interest rate as your neighbor, but a loan officer will affirm that the impact of a small move-in rate could be negligible.
For example, on a $250,000 30-year, fixed rate loan the monthly payment at 2.75 percent is $1,021. At 3 percent it is $1,054; a difference of only $33 per month. A couple who buys coffee every day will, over a month, spend $240 a month. A lot of money can be saved over the months and years by, for instance, making coffee at home and using that money to help pay off their home loan.
Expertise, relationships, communication
Through all of this, it’s important to remember how important a personal connection is with a real estate agent and with a trained loan officer. Sure, many answers can be found on the internet, but it always helps a new home buyer to have someone on their side, ready to answer questions as you head into 2022 – and, possibly, into home ownership or a re-fi.
Read the original article here.