Mortgage rates at all time lows
The 30-year fixed mortgage rate is currently 3.82%, down 13 basis points from 3.95% at this same time last month. After peaking at 4.1 percent, the 30-year fixed mortgage rated hovered between 4% and 3.95% for the rest of the month, before falling to the current rate.
The rate for a 15-year fixed home loan is currently 3.18%, while the rate for a 5-1 adjustable-rate mortgage (ARM) is 2.75%.
Two great reasons to buy a home
Make money with somebody else's money: The best part of buying a house is, what other investment enables you to use somebody else's money to make money? That's exactly what happens when your house appreciates in value and you sell it for a profit.
Even though you still owe money on your mortgage, the people at the mortgage company don't make you share the proceeds with them, now do they? What a deal. And to make this profit, you don't have to overhear a brilliant stock tip or try to comprehend bond rates. All you have to do is pay your mortgage.
Take in the tax benefits: Don't forget that home ownership comes with lucrative tax benefits. The first benefit starts the moment you move in. The IRS allows you to deduct the interest you pay on your mortgage from your federal income taxes.
It's the government's way of supporting home ownership. Here's another tax treat, courtesy of Uncle Sam. If you make money on a business or a bond, you have to pay capital gains taxes on the profit. But if you sell your house at a profit, the gain is tax free up to $250,000.Four steps to take before buying a new home
1. Find out how much home you can afford. Before you do anything else, find out how much home you can afford. To do this, look online for a quality mortgage calculator (Zillow has one that works well). Mortgage calculators show you how much home you can afford based on your income, an average interest rate, and the length of the loan.
You also need to calculate your debt-to-income ratio, which shows the amount of your income that goes toward paying your debts. The higher your ratio, the less likely you will qualify for a home loan. Find out if you can get a mortgage before you begin searching for your dream home. If your debt-to-income ratio is more than 36 percent, you should think about getting out of debt, or at least reducing your debt immediately.
Your credit score also plays a role in your loan eligibility. If you have a higher credit score, you will be eligible for better loan rates. If you have a low credit score, on the other hand, you should first learn how to improve your credit score before you get pre-approved for a loan.
2. Get pre-approved. Take the time to get pre-approved before you begin looking at homes. In fact, many real estate agents won''t work with you until you have received pre-approval for a mortgage. Regardless, you should look to get pre-approved anyway. You might find the perfect home, and then find out the bank denied your loan application. This heartbreaking scenario wastes your time and your agent's time, too. I have several mortgage brokers that I highly recommend and would happily refer.
3. Find a real estate agent. Once you've improved your credit score and you know how much home you can afford, you need to find a great real estate agent. Your agent acts as your representative, provides you with information about market prices, and helps you find a home. Because you are reading my blog I hope that you will send me an email or call me so that I can talk with you about your home buying needs.
4. Take stock of your financial situation, again. By the time you get ready to buy a home, you may be sick of thinking about money. After following each of these steps, look at your available income one more time, and review your short- and long-term financial goals.
