Guest article by Amy Dunkley (NMLS #447530), President of People’s Intermountain Bank Mortgage, and Mike Livingston, AVP and Mortgage Secondary Market Servicing Officer
You may have heard that mortgage interest rates have been low for a few years, even historically low, but what does that really mean for you? Haven’t they been historically low for a while? Is there any rush to get a mortgage loan now?
Utah has a thriving economy with a robust job market and increasing wages. With growth in the job market, and perhaps especially in the technology industry, more people are looking to buy homes in Utah. Supply can’t keep up with the demand and housing prices have escalated rapidly over the last few years. This is what is considered a “seller’s market” because homes are selling for higher amounts than during other times. The cost of living is also increasing. While this shouldn’t induce panic, it might be a good time to move forward if you have been considering buying or refinancing.
You probably know that lower interest rates mean you might pay less over the life of your loan because the amount of interest you pay on the loan is lower than when rates are higher, but there’s more.
Here are some of the other reasons to consider obtaining a mortgage loan or refinancing your loan when rates are low.
Lower payments mean you may qualify for a bigger house. Bigger isn’t always better, but if you’re dreaming of a bigger home, now might be a good time for you to buy. When interest rates are lower, your monthly payments might be lower because you’re paying less interest, which means you can qualify for a bigger house.
Have you heard of cash-out refinances? Low interest rates may also make it possible for you to tap into your home’s equity. If you have put some money into your current home, you can refinance your mortgage loan to extract some of that equity. You can refinance with the lower interest rates for a new mortgage amount that is greater than the existing mortgage amount. A cash-out refinance could be an alternative to a home equity loan.
With a cash-out, you may be able to do some home improvements you have been saving up for without getting another loan. Perhaps you want to consolidate other debts by paying off higher interest rate debts like credit cards or auto loans. You may even want to have a little fun with the cash-out by buying something you have wanted or taking the trip your family has been itching to go on.
If you have more questions about cash-out refinances, ask your lender for more information.
If you’re considering a change, either as a buyer or a seller, here are some tips:
Start with the mortgage approval process. As soon as you have determined that you want to buy, make contact with a mortgage loan officer. You can discuss your budget for a new mortgage payment, talk about different loan options and learn how much cash you’ll need at closing. It’s important to know what you will qualify for and what your budget will be so you can narrow your search to homes within your price range.
Start collecting necessary information. You’re going to need W2’s, paystubs, tax returns and other financial documents.
Think about a realtor. Once you’re prequalified for a loan and have determined your price range, you can decide whether or not you want to include a realtor. Make sure you do some research, talk to friends you trust and figure out what will work best for you.
Buyers should be ready to act quickly. The current environment of high demand and low supply means that houses often have multiple offers on them quickly. An approval letter or prequalification may increase your chances of having your offer accepted.
Sellers also need to be prepared. Houses are going quickly in this market, so sellers should be ready to act fast. You may receive offers more quickly than you have in the past or more quickly than you anticipate. Are you ready to move out? Purchase a new home? You’ll be going through the same process we’ve been talking about so if you barely skimmed the tips above, consider going back to remind you of the process.
Utah has a robust economy with a lot to offer businesses and consumers alike, and considering how a mortgage loan might work for you right now is one way to take advantage of the current economic environment.