Michelle Lapierre

The first step in any home purchase is determining where you stand for financing. When heading out with a realtor to find your new home, it makes sense to know that you are shopping with your wallet. This is true whether you are buying your first home or your fifth home. With an unusually hot market and increasing mortgage rates, it is more important than ever to be a prepared buyer. Pre-approvals or pre-qualifications can bedescribed by different names,and the process can look very different depending on where you go to get one.So how do you know your financing is sorted and you are ready to go shopping? In my opinion, there are three key parts to a pre-approval. If you are missing one or more of these, then it is time to look for a new mortgage lender. Rate Hold You can hold an interest rate for 120 days, or 4 months, while you are out shopping for a home. Fixed mortgage rates are low right now, but rates have started to increase in the last 3 weeks from historic lows over the winter. If rates continue to increase, it can save you a lot of money to secure a rate while you are searching for your home. Max Purchase -Qualifying Amount The pre-approval process should give you a good understanding of your maximum purchase amount so you are shopping in the right budget range and property type. You want to use a mortgage professional whoreviews your supporting documents up-front, when determining your maximum purchase amount. These documents may include tax and employment paperwork, proof of down payment, and documents related to other properties you own. This document review is a key step that not all lenders complete. If they rely only on the numbers you provide to them, then you can find yourself being declined later when you write an offer on a home and something in your documents changes your ability to be approved. Without providing supporting documents, the numbers you are given may not be accurate. There are also assumptions built into any max purchase calculation, such as property tax amount, condo fee amount, etc. You want to understand what those are. Education Going through a pre-approval is more than just being given a max purchase number. It is your opportunity to learn about your mortgage options, how the maximum purchase was calculated, closing costs, next steps in the buying process, and other considerations for your situation. Once you write an offer you will be working with a deadline, so the more information and questions you can sort out prior to your purchase, the smoother your experience will be. And if you are not able to be pre-approved, you should understandwhat your barriers are and the steps you will need to take to be able to change that. If you are planning to purchase a home, or know someone who is, contact me now to complete a pre-approval process and secure a rate!

If you have considered purchasing in the past but the rent vs. buy analysis did not justify purchasing, I encourage you to revisit the math. Lots has happened in the last year, including a big drop in mortgage rates. One year ago interest rates being offered for a mortgage with less than 20% down were around 3.69%. Today that has dropped to 1.69%. So what does that mean for thosecomparing renting vs. buying? These low rates have made home ownership far more attractive in two ways: Lower Payment = Lower Carrying Costs Of Home Ownership When interest rates drop, mortgage payments decrease. This can have a big impact on your overall carrying costs as a homeowner. Example:$300,000 mortgage amortized over 25 years in a 5-year term At 3.69% = $1,528/month At 1.69% = $1,226/month = $302/month drop in mortgage payments The interest rate drop equates to $300 less in monthly carrying costs. Less Interest = More Equity Faster When interest rates drop, more of your mortgage paymentgoes to paying off your principalversus paying off your interest costs. You pay off more of your mortgage and build equity faster. Example:$300,000 mortgage amortized over 25 years in a 5-year term At 3.69% = $51,417 interest paid; $40,266 in principal paid = $259,734 loan balance after 5 years At 1.69% = $23,206 interest paid; $50,349 in principal paid = $249,651 loan balance after 5 years = $10,083 more equity after 5 years The interest rate dropmeans you will pay off over $10,000 more of your mortgage loan in the first 5 years. If you want to look at how you can take advantage of this mortgage market to become a homeowner, give me a call!