Get the best interest rate

Everyone wants to get the best interest rate on their loan.  But what is the "best rate"?  Is the "best rate" the same for everyone?  And what factors affect what rate you get? 

These are great questions to ask when getting pre-approved for a loan.

There isn't a "best rate" that is the same for everyone on a particular day.  Rates depend on many factors, some which a buyer can control and others that are fixed.  One of the biggest factors is your credit score.  While you can control this before you buy a house, it is going to be set once your lender pulls your credit report.  So always check your credit far in advance of buying to make sure that it looks good.  If it doesn't you'll have time to fix some things before you're ready to buy.

For most loans, if you have a credit score of a 740 or above will get you the quoted rates.  If you have a score lower then your rate would increase.  If the score is really low the rate may increase by as much as 1%.  Those with lower credit scores are also affected more by the amount of downpayment they put down. The best way to minimize this is to put down 5%, 10% or 25%.  You'd think 20% would also give you a better rate, but lenders don't require mortgage insurance at that downpayment level (which means more risk for them) so they charge a higher rate to you.

Now for some of the items that are set no matter what your score. Loans on condos are at higher rates, again because the lenders view them as higher risk.  And duplexes and fourplexes are higher for the same reasons.  For investors buying property the rates are very high, almost 1.5% higher than a primary residence.

So the optimal rate option is to be buying a house you'll be living in, with a 740+ credit and putting down 5,10 or 25%.  And worst goes to an investor buying a duplex or condo.

Buy first, then sell? Or sell first, then buy?

For anyone that currently owns a home and is looking to purchase another one, this is always a big question. Both options have their pros and cons.

Reasons to buy and then sell

1. You don't have to move twice.
2. You don't have to get temporary housing like an apartment.
3. You are not pushed to buy something by a certain date. As you are already in a house, you don't have a lease expiration date to worry about.
4. You can sell your house while you are not living there. This is much easier than living in the house and always keeping it "show ready".
5. You don't have to buy anything. If you don't find any new house that you like enough to buy, you don't have to buy one as you're already in a home.

Reasons to sell and then buy

1. You don't have to make two mortgage payments. If you bought a new house and your previous house didn't sell for a while you would end up paying for two houses at once.
2. You may be able to get a little more for your house as you won't be as rushed to sell it.
3. You may have to go this route to qualify for the new home loan. If your income isn't enough to qualify with both house payments, you wouldn't be able to buy first and then sell.
4. You may be able to afford a higher priced home if you sell first.
5. You may feel more comfortable during the buying process knowing that the other house is already sold.

Both are good options. Some people prefer the flexibility with risk over a little more work but more secure. Please let me know if you have any questions on which route is best for you. billconover@america-lending.com

Pending Sales Up!

Check out the pending sales in yellow on the graph. There is almost no reduction in number compared to the summer. Compare that to previous years.
The FTH Credit is definately at work.

September Market Stats

Here are the market stats for September. Click on one to see a larger version.