Keeping track of the mortgage market can be a full-time job when you’re preparing to upgrade.
New offers come onto the market all the time even though our interest rate is staying stubbornly high amid speculation the drift down will begin in the next few months.
As an experienced local real estate agent, I work with many clients who seek advice on the best approach for financing their purchase.
While it’s not my role to give financial guidance, I always suggest clients do their due diligence because mortgage products are tailored to personal circumstances. It’s not a “one size fits all” situation.
Recently, the financial ratings company Fitch produced a report saying the mortgage market was likely to consolidate around the largest non-bank firms.
It said the largest lenders in America would grow their market share at the expense of smaller players.
“Scaled lenders” are “better equipped to navigate rate hikes and maintain operational flexibility”, it said.
Fitch listed United Wholesale Mortgage (UWM) as the top mortgage originator last year followed by PennyMac Financial and Rocket Mortgage.
Below, I have listed some tips when considering your mortgage options. But make sure you speak to your personal financial advisor to find the right solution for your specific situation.
Your position – Understanding your financial situation is critical. Spend time assessing your income, savings, debt, and credit score. Work with your financial advisor or accountant if your situation is complex. Getting your math wrong can be expensive down the track.
The options – There is no shortage of options in the market. Explore various types of mortgages, such as fixed-rate mortgages, adjustable-rate mortgages (ARMs), FHA loans, VA loans, and USDA loans. Each one comes with their own set of rules. Shop around or find a mortgage broker who can provide you with options and explain the benefits of each one.
Repayments – Mortgage calculators will give you a great idea of how much money you can afford to borrow. The best ones will factor in property taxes, homeowners insurance, and private mortgage insurance (PMI), which is charged if you don’t have a deposit.
Reputation – You must be confident in the mortgage provider you select. Investigate their track record and reputation. Do not go with a lender because they offer the lowest interest rate. You want a competitive deal, but you’ll also need flexibility and good customer service.
Get ready – You have two approaches here. You can seek to be pre-qualified, which means you have an informal estimate of your borrowing limit from a lender, or you can seek pre-approval. This means you can make an offer with the confidence your lender will deliver the necessary finance.