The Consumer Financial Protection Bureau has enacted some new rules this year requiring lenders to be more proactive in guaranteeing a borrower’s ability to repay a mortgage obligation as well as making the lenders more legally liable for discrepancies. Because of the changes that are being implemented it may be a little tougher for some potential homebuyers to qualify for a loan. We’ve out together some things that you need to do in order to be better prepared so that you don’t run into any snags when you apply for a loan to purchase your dream home in Myrtle Beach.
This year you are going to have to focus on getting your finances and credit in order since the tighter requirements mean that banks must go by more stringent guidelines when approving loans in order to protect themselves from being exposed to possible legal action. Consumers who have the best credit ratings and low debt ratios are going to be much more likely to receive approval for a new mortgage at the lowest rates. If you want to invest in Myrtle Beach real estate this year, make sure that you have your outstanding financial obligations paid down so that your debt ratio is in order, most limits are 36% of gross income. You also need to be prepared for the possibility that a larger down payment may be required than in the past, and regardless of whether you're refinancing or buying your first home, be sure to check with your lender about what paperwork is required for your loan.
Mortgage rates are lower now than last March when the interest rate for a 30 year fixed rate mortgage averaged 3.88%, as of this writing the average APR is 3.63% for a fixed rate 30 year loan. These interest rate reductions can be a huge savings over the term of the loan, the difference in last year and this year could save you nearly $14,000 on a $200,000 loan over the life of the mortgage.
While rates are at near record lows it is unlikely that they will remain that way for long, your effective buying power will never be stronger in regards to interest rate and loan qualification. If interest rates were at the long term average of 8.6% your payments would be around $1940 per month but at current rates you would pay only $1136 per month. Obviously this is a huge difference in what you are able to afford, it is unlikely that you will ever be able to get as much for your dollar as you can in today’s market, particularly with Myrtle Beach real estate for sale in many areas at all-time lows as well.
You should also consider the option of a shorter loan with rates as low as they are now, many homeowners are refinancing long term 30 year mortgages and opting for shorter terms of 10-15 years to take advantage of the ability to repay much more quickly. The low interest rates are likely to make ten year mortgages even more desirable and more financial institutions are making them available as an option for both refinancing and new home loans. A 10 year mortgage on $200k at current rates would save you nearly $100k versus a 30 year term.
Give us a call and we will help you through the entire process, we have a great relationship with lenders and mortgage brokers all over the Grand Strand region and we have the experience to make your home buying experience as pain free as possible.
