Before a borrower applies for a home loan, many factors come into play that will affect everyone involved. From seller and real estate agent to the buyer, banker and broker handling the mortgage will effect your loan. Problems are reduced to just a few with a direct 30 year mortgage from the local bank, but they still exist. See how five other factors besides the current mortgage rates will affect your loan.
Let’s see how the economy, taxes, employment prospects, real estate values and family planning can affect your 30-year fixed mortgage rate.
First and foremost are the interest rates. They move up and down as fast as you can say Mississippi. When a prospective borrower learns of a rate, they immediately want to lock in the rate prior to the application process without knowing whether or not interest rates will go up, down or sideways. The broker or the loan officer will often ask if they want to lock in the rate. 99% of the time, the borrower agrees. The loan officer often uses this as a sales tool to make the borrower commit to their efforts.
The most influential aspect, and biggest problem, of course, is the economy. Although interest reflects the wishes of the Fed in their attempt to manipulate the markets to conform to their understanding of stability, the fact is that the overall economy, including unemployment, inventories, durable goods, consumer confidence along with a myriad of other indicators determine what is going to happen to interest rates and terms. Without taking all of this into consideration before you commit to a mortgage could spell disaster.
Taxes are always a consideration. If there is pending legislation to alter the code in any way that will either increase or decrease the desirability every loan, from a direct 30-year fixed mortgage to a 2 year adjustable rate mortgage. In other words, taxes affect all loans, particularly for home owners
Anticipating the outcome before it happens in any event, particularly sports, is most often futile. However, as an insider into your employment, you have more than a 50-50 chance at determining the stability of your current position and future employment prospects. If your occupation is always in demand then there is no worry, otherwise, anything can happen.
Although in the past everyone assumed that values were going up, very few anticipated the bubble bursting. Keeping an eye on the trends in the real estate market early on will give you more than your share of ammunition to decide the right timing to purchase a new home.
Anything can happen and always does when it’s least expected. Purchasing a new home for a family of four requires certain accommodations, a family of three, less. But what happens after the home is purchased and everyone moves in and suddenly the household is expecting a baby or two. How does that problem affect your current 30-day mortgage? Chances are it will force a sale of the property and the acquisition of another, which means another mortgage and with it the same problems that may occur on the new mortgage as well. If you are planning a larger or smaller family, anticipate how it will impact your housing situation first.
There are many other intricacies when buying a home and financing it with a mortgage. Learn about the house you are buying, but more importantly, learn all you can about the mortgage.