Real Estate Conditions 8 - Mortgage & First Time Home Buyer Dec08 30 year Fixed FHA Financing
First Time Home Buyers use FHA Mortgage and Seller Paid Closing Costs to Buy Real Estate Now. Best Market Conditions for Foreclosures and Short Sales in Decades. Go To http://RealEstateMarketingThisWeek.com
Part 8 (Excerpt)
30 year fixed FHA mortgage is the best financing available for first time home buyers today.
So now the only question that I would have, Michael is you only lowered the guys interest rate by 1/8th of a percent, weren't there a whole lot of closing costs associated with that? Good question, in this particular case no. There were no closing costs.
Well then it definitely makes sense to lower your interest rate if it's not going to cost you anything and you can lower your monthly payment by 100 bucks a month you would be crazy not to do it.
His breakeven was one day, in that particular case.
It goes back to this Velocity of Money concept. If you're not sure if it makes sense or not, it's kind of a no-brainer, give the team at velocity financial a call. You will do the analysis for them to determine if it makes sense or not based, on their unique circumstance, and from there youll advise them on the appropriate type of loan.
You know it's funny that people over the years they get so hyper-focused on the interest rate of the loan. Interestingly enough I had a recent client whos focus was not on the interest rate, it was on the closing costs. The problem is there is a correlation between the cost of the money and rate, you have to pay it isn't free for anyone. No cost loans are not really no cost, youre paying a higher rate to get it, so where does it make the most sense for you and your family, how long are you going to use this mortgage? There are so many factors, there's an incredible amount of discovery that needs to be done.
If you walk into your local financial institution it doesn't necessarily have to be a bank and you ask what is the rate today? It's vanilla, it's not 31 flavors, its vanilla, this is what we have. Well we have a couple of other options, but that's not how it works at the bank.
One thing I wanted to point out Michael was it was back in 2003, we saw interest rates that were close to what they are now and a lot of people got into the same kind of loan that I got into at that, I got into a three year adjustable loan. And I'm really kicking myself because I wish I'd gotten into a 30 year fixed, and I would say with anyone, especially with as low as interest rates are, they definitely have to get into this market. jump in and get themselves into a 30 year fixed and just be happy with it forever.
That's a really good point, and it's safe. If you have a 3 year ARM or two year adjustable, or a 5 year adjustable and youre 1, 2, 3, 4 years into it, the 30 year is the safe way to go, more than likely the interest rate is going to be lower than what you have. In the case of the adjustable ARMs, adjustable-rate mortgages just dont make sense today. If you have a 30 year fixed, its the safe bet.
Dan if you and I are wrong and real estate values continue to tumble, you know what, you have a nice safe loan and you dont have to worry about it for a long time. On the other hand if you want to live there for 20 years, you dont have to mess with it. I think its the right thing to do for most people
Well I think that anyone who is out shopping for a home over this weekend, and what they're looking for is to not only ask the seller to pay as much of the closing costs as possible but first to get pre-qualified by calling you at velocity financial. They want to make sure that they get themselves a 30 year fixed, FHA is probably the best product out there right now because its such a low down payment, and if youre a first time home buyer and youre in the $60,000 a year range, you can go out there and buy up to that $250,000 house and have a place for your family to be in after the first of the year, and never have to you live in an apartment and have Christmas in an apartment again, you can have Christmas in your own home next year.
Absolutely, that is a really, really good point. We dont want to forget about the $7500 tax credit that goes along with having a home, if you havent owned real estate in the last three years.
The other thing that I want to mention before the show gets wrapped up today, there is interest rate risk here just like there is in the bond market. Interest rate risk is you the buyer looking at what you can use to increase the velocity of money, increase the efficiency in your existing mortgage, or move to a new mortgage because money is cheaper today than it's ever been...
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