At this time of year, especially, there is a strong competition among buyers in the Oakland and Piedmont housing markets to purchase homes. In fact, in some market areas, there have been multiple offers on available homes, often disappointing many buyers who felt that their ideal home slipped through their fingers.  

The best solution to this problem is to be ready to move ahead right away when you see the home you want. To do this, it is important that you have a pre-approved loan in place. This takes a bit of advanced planning.  You should know what it will take to have a lender consider you, and what elements are involved in setting your mortgage rates.  

Here are some of the major considerations that come into play:

1. Your Credit Score--While this may seem obvious, this score reflects how responsible you are about acquiring debt, and paying it back in a responsible and dependable manner.  A good credit score will go a long way towards receiving consideration of a desirable mortgage rate.  

2. How Much Money You Will Borrow--There are a number of factors that are considered by the bank that strongly affects how much you ultimately will have to pay for your mortgage.  Here are the top considerations:

a. Your Down Payment-In general, a higher down payment means a lower interest rate, since you are viewed as having a higher stake in your property.

b. Your Loan Term--The length of your loan term affects your rates.  Take the time to discover the types of loans that are available.  You need to find a workable balance between payment amounts and loan terms.  

c. Interest Rate Type--Interest rates come in two types-fixed and adjustable.  Fixed rates do not change over time, but adjustable rates do, and can go up or down based on the marketplace.  Choose carefully between these.

d. Your Type of Loan--There are many types of loans, and examples include Conventional. FHA, VA, etc. . Interest rates can vary significantly depending on the loan type that you select.  

e. Whether You Are Willing To Pay Points--A means to reduce your mortgage rate is to let the loan officer know that you are willing to "pay points".  This means that you are willing to pay more money upfront to get lower monthly rate.  One point is equal to 1% of the loan amount.

Contact me immediately when you are ready to move ahead in your plans to purchase a home, and I will help you get started on your financial path to buy one.

Posted by Bruce Wagg on


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