The new year opened with mortgage rates climbing up for the first time in a couple of months, and experts have said that this might be as a result of the appreciating long-term bond yields.
This is important to real estate, especially to those who want to get a home by obtaining a mortgage. So, before you take the next action on your plans to get a house, you should first go through this expert opinion on home ownership in 2021.
For this session, Jacques Poujade will share his expert views on home ownership in 2021 and how this mortgage rate is beneficial to anyone willing to go into the market.
In case you do not know, Jacques Poujade has 30 years of experience in this field and is a managing partner at LendPlus, a real estate financing firm committed to helping homeowners achieve their goals in property investments.
Nice meeting you Poujade. Before we begin, what will you say to borrowers about Housing in 2021?
This year, the 10-year treasury yields which mostly moves alongside mortgage rates have been significantly rising. At this point, I will say that borrowers that are smart should take advantage of these low rates now and reap its benefits.
You say smart borrowers should take advantage of these low rates. What do you really mean?
The real estate trends for the year 2020 looked bleak. In fact, In December last year, the number of homes put on sale in the United States was really low. There were about 700,000 houses on sale as the demand for constructions glided down. The coronavirus on the other hand brought down the desire of homeowners to sell their homes.
This year, construction is however expected to rise, and it will surely help settle the difficulties homebuyers face when it comes to finding the perfect home. I mean it will level the field where there are as many homes as the homebuyers.
What Exactly do these mortgage rates mean?
As a matter of fact, according to a market survey by Freddie Mac, a mortgage market survey site, the current average mortgage rate for the standard 30-year fixed rate has the interest rate of 2.79%. This means that if your mortgage is $300,000 for a 30-year fixed rate, the current interest rate will allow you to pay the amount of $1,231 dollars per month minus taxes and fees.
Thank you. What should borrowers take note of?
Those who are interested in acquiring the lowest rate must make certain that they have a credit score of at least 760. Most lenders reserve their extremely low rates for borrowers with strong credit profiles because they present a lower risk of debt and late payment.
It is also important to note that some lenders may charge borrowers with lower credit scores far more percentage points than others with high credit scores. So to qualify for lower charges, be sure to take the necessary steps in order to improve your credit score.
Thank you for your time. Apart from credit scores, what else must borrowers have to acquire the lowest rate?
Good Question. Lenders also look at your debit-to-income ratio, also known as DTI. They compare your income to how much you own and the lower the DTI, the better the chances of getting a lower interest rate.
You should know that if lenders positively offer a rate that seems higher than you expect at the time, be sure to know the reason so you can prepare to pass the necessary areas of qualification. In other words, ask questions.