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rates Archives - Home Buying In 30 Minutes

How Much House Can I Afford?

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Independent investor Ryan Scribner offers his personal tips for figuring out whether you can afford a house. (Note: Not affiliated with Home Buying In 30 Minutes or publisher i30 Media Corporation). The video takes just eight minutes to watch.

Disclaimer: This YouTube video is being posted for informational purposes only, using the embed code YouTube provides to members of the public. i30 Media Corporation and its publications are not associated with the creators of this YouTube video or any other person, service, or product mentioned in the YouTube video. i30 Media Corporation cannot be held liable for any direct, indirect, incidental, consequential, or special damages of any kind, or any damages whatsoever, arising out of or in connection with the use of this YouTube video. Copyright, trademarks, and other intellectual property rights belong to the original creator(s) of the video.

A Guide to Home Mortgages

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Real estate agent Teddy Smith explains the basics of mortgages. (Note: Not affiliated with Home Buying In 30 Minutes or publisher i30 Media Corporation). In less than 6 minutes find out what a mortgage is and how they work.

Disclaimer: This YouTube video is being posted for informational purposes only, using the embed code YouTube provides to members of the public. i30 Media Corporation and its publications are not associated with the creators of this YouTube video or any other person, service, or product mentioned in the YouTube video. i30 Media Corporation cannot be held liable for any direct, indirect, incidental, consequential, or special damages of any kind, or any damages whatsoever, arising out of or in connection with the use of this YouTube video. Copyright, trademarks, and other intellectual property rights belong to the original creator(s) of the video.

What to Ask Your Mortgage Lender

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Real estate consultant Andrew Finney offers his tips for exploring all of your home loan options. (Note: Not affiliated with Home Buying In 30 Minutes or publisher i30 Media Corporation). Find out in about 15 minutes what 9 questions you should put to your lender before buying a home.

Disclaimer: This YouTube video is being posted for informational purposes only, using the embed code YouTube provides to members of the public. i30 Media Corporation and its publications are not associated with the creators of this YouTube video or any other person, service, or product mentioned in the YouTube video. i30 Media Corporation cannot be held liable for any direct, indirect, incidental, consequential, or special damages of any kind, or any damages whatsoever, arising out of or in connection with the use of this YouTube video. Copyright, trademarks, and other intellectual property rights belong to the original creator(s) of the video.

Appraisals and Getting the Best Price

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Real estate agent Heather Wright lays out the appraisal process in buying a home, what can go wrong and how it can affect the final price. (Note: Not affiliated with Home Buying In 30 Minutes or publisher i30 Media Corporation).

Disclaimer: This YouTube video is being posted for informational purposes only, using the embed code YouTube provides to members of the public. i30 Media Corporation and its publications are not associated with the creators of this YouTube video or any other person, service, or product mentioned in the YouTube video. i30 Media Corporation cannot be held liable for any direct, indirect, incidental, consequential, or special damages of any kind, or any damages whatsoever, arising out of or in connection with the use of this YouTube video. Copyright, trademarks, and other intellectual property rights belong to the original creator(s) of the video.

Why mortgage rate locks are important

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Interest rates are constantly fluctuating, so when you first meet with a mortgage broker and she tells you she can get you a 6 percent interest rate on a 30-year mortgage, that rate is only good for today. If it takes you 6 months to find a property, rates could have risen or fallen significantly by then. You won’t know the actual rate you’ll be paying until you lock it in, which can be free or cost a few hundred dollars depending on how long you want to lock the rate for.

Typically, buyers will lock in an interest rate shortly after signing the P&S and a closing date has been agreed to. The rate should be locked at least until the closing date, because that’s when you officially take out your mortgage.

However, you don’t have to lock in your rate after signing the P&S. If you think rates will drop between the P&S and the closing, you could wait to see if rates go down. There’s a risk—rates might go up! If they go up significantly and you’re already stretching your finances, it could put your deal in jeopardy. For this reason, I suggest leaving interest rate predictions to professional investors, and lock in the mortgage after the P&S.

What is a 5/1 ARM (adjustable rate mortgage)?

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In Chapter 4 of Home Buying In 30 Minutes, I described how some buyers might want to get an adjustable-rate mortgage (ARM) — a loan product that offers low introductory rates that are later adjusted based on current interest rates. While ARM rates can adjust either up or down, since rates are currently near historic lows and are widely expected to rise, you can expect the payments on an ARM to increase over time. Below I will describe how ARMs work and what is a 5/1 ARM.

Most people’s incomes rise over time, too. If you think your income will increase enough to cover the cost of the higher payments in subsequent years, an ARM could work for you.

Median sales price of existing homes - impact on interest rates 5/1 ARM?

Home pries have been rising in the U.S., but so have interest rates, which means ARMs can adjust to much higher rates for people holding them. Source: NAR

On the other hand, payments in an ARM can rise substantially over the life of the loan. The lower initial payments are attractive to buyers, but they come with the risk of much higher payments later. This is especially true in a rising interest rate environment like the one we’re currently in.

ARMs can be a good choice for first-time buyers who don’t plan to own the property for more than a few years. Of course, if plans change and they wind up owning the property for longer than expected, they might be able to refinance into a fixed-rate mortgage before the ARM payments balloon.

A 5/1 ARM means the introductory interest rate remains constant for the first 5 years of the loan. After that, the interest rate changes (either up or down) no more than once per year. A 3/6 ARM means the rate is fixed for 3 years, and thereafter adjusts every 6 months. Typically, there is an annual cap (meaning the interest rate can’t go up or down more than a certain percent in any given year) and a lifetime cap (meaning the rate can never exceed a certain range, regardless of what the index does). There are also 7- and 10-year adjustable rate ARMs.