Mortgage Lingo, 101 – Should you take out a Fixed Rate or Adjustable Rate?

Mortgage Lingo, 101 – Should you take out a Fixed Rate or Adjustable Rate?

 Unfortunately, we cannot all win the big lottery (1.4 Billion Powerball this week, that is crazy!). Most of us have to take out a Mortgage Loan in order to purchase our dream home. As a borrower, one of your first choices is whether you want a fixed-rate or an adjustable-rate mortgage loan. All loans fit into one of these two categories, or a combination “hybrid” category.

As the names states, a fixed rate loan never changes, so if you purchase a home with a 30-year fixed rate, your monthly payment will stay the same for the next 30-years. Jump into the market when the rates are low and you get to keep that low rate throughout the life of your loan.

If you take out an “Adjustable Rate Mortgage” (ARM) your loan rate will change or “adjust” from time to time, usually every year after an initial period of remaining fixed. Once that initial period is over the interest rate will adjust as housing market interest rates falls and rises.

As you might imagine, both have Pros and Cons, in a nutshell: The ARM loan starts off with a lower rate than the fixed type of loan, but it has the uncertainty of adjustments later on. With an adjustable mortgage product, the rate and monthly payments can rise over time. The primary benefit of a fixed loan is that the rate and monthly payments never change but you will pay for that stability through higher interest charges, when compared to the initial rate of an ARM. This are referred to “Hybrid” as it starts fixed but adjusts later. You may hear or see an advertisement soliciting the 5/1 ARM loan, which carries a fixed rate of interest for the first five years, after which it begins to adjust every one year, or annually.

Education is the key to making smart decisions, as a home buyer or mortgage shopper. Our goal is to share tid-bits of information that are helpful to prospective home buyers/sellers.  Tune in next week for a discussion on Government loans versus Conventional Loans.

If we can be any assistance please contact us:

Sunstate Realty LLC
Pensacola Area Realtor
850-435-7300
www.greaterpensacolahomes.com

 

Now Let’s Talk Mortgages – What Mortgage is Right for you?

Now Let’s Talk Mortgages – What Mortgage is Right for you?

 You have made the decision to buy a new home, know your going to take out a home loan but have no clue where to start. The first step is to shop around for a Real Estate Agent (One with SunState Realty LLC, preferably!) that your are comfortable with and trust. Once you start working with an agent you will need to identify a Mortgage Lender, typically your agent can refer you to reputable Mortgage Lenders. The lender will guide you in determining your credit rating, how much you are able to spend based on your financial situation, and will assist you with an affordable loan program to fit your specific needs.

There are three common types of Home Loans, 1) Conventional, 2) FHA and 3) VA. Quick summary of each:

Conventional Loans: Is a home loan, not insured or guaranteed by the federal government in any way. The big advantage of conventional loans is that they often do not come with the amount of stipulations that government loans do, the rules and regulations tend to be less strict with conventional loans. The drawback, because these loans are not insured or guaranteed by the government it may be much harder to qualify for a conventional loan.

Then you have you have your “government” loan programs, FHA and VA……

FHA Loans: The Federal Housing Administration (FHA) mortgage insurance programs is managed by the Department of Housing and Urban Development (HUD), which is a department of the federal government. With FHA loans, the government insures the lender against losses that might result from borrower default. Advantage: This program allows you to make a down payment as low as 3.5% of the purchase price. Disadvantage: You will have to pay for mortgage insurance, which will increase the size of your monthly payments.

VA Loan Program: The Veterans Administration offers service members, veterans and surviving spouses a highly desired home “guarantee” program that helps qualifying individuals become homeowners. VA Home Loans are provided by private lenders, such as banks and mortgage companies but the VA guarantees a portion of the loan, enabling the lender to provide terms that are more favorable to the buyer. The primary attraction of this program (and it’s a big one) is that borrowers can receive 100% financing for the purchase of a home. That means no down payment whatsoever.

Now you have the basics on Home Loans. When you are ready to jump into the market be sure to discuss your financing thoughts and plans with your Real Estate Agent, as there may be additional loan options available.

If we can be any assistance please contact us:

Sunstate Realty LLC
Pensacola Area Realtor
850-435-7300
www.greaterpensacolahomes.com

 

The 2016 Housing Market – Looking like the time to Buy

The 2016 Housing Market – Looking like the time to Buy

Happy New Year!! In the Greater Pensacola Region, as we move away from 2015 we move right into Pensacola’s favorite celebration, Mardi Gras. Mardi Gras will officially start on January 8th with a Pensacola Mardi Gras Kick off Celebration at Palafox and Government Streets downtown Pensacola and starts at 5:30 pm. So dust off your beads and get ready for the big parades!

If your interested buying a new home, you just might have more to celebrate in the 2016 Housing market…..

Historically low interest rates: Yes the interest rates have creeped up ever so slightly but they are still historically really low. A 30-year fixed interest rates are still running around 4% – that is awesome! Home buyers should strive to get before the rates continue to rise.

Rents are hard to find, driving rent prices up: I recently drove past a billboard in Pace Florida that said “We need rental properties” and rental searches on the MLS are bleak to say the least. A 2015 Rental Market Report indicated that 88% of property managers raised their rent in the last 12 months and on a national basis an 8% hike is predicated for 2016.

Tax Breaks: Tax laws still favor the homeowner. The most common tax break is the deduction of monthly interest on the loan. Additionally, homeowners are able to deduct certain home-related expenses and property taxes.

Inventory: The Real Estate market experienced a downtown that started in 2006 and home prices steadily declined. Home owners interested in selling choose to wait out the downturn. As real estate values are on the rise, homeowners are starting to get back into the market. Additionally custom home builders are back in action, adding new home inventory into the market.

If we can be any assistance please contact us:

Sunstate Realty LLC
Pensacola Area Realtor
850-435-7300
www.greaterpensacolahomes.com