Interest Rates Stay Low

Experts predict that by the end of the year, record low mortgage rates will be gone. This means if you’re thinking about a mortgage refinance or buying a home, now is the time to do it. It’s also a great time to take advantage of low interest rates on auto loans.

Sara Parker represents Utah Central, Heritage West and Southwest Community credit unions – all part of the Chartway Federal Credit Union’s family of credit unions – explains how we can take advantage of this.

Nothing lasts forever. Mortgage experts have been predicting since the end of last year that mortgage interest rates would start to rise in 2013 – beginning in the fall or winter and I believe they are right.

What’s driving the talk is the national economy and all the spending cuts that Congress is demanding. Coupled with higher taxes, the financial climate is starting to change and this means rates will rise.

Our credit unions are offering refinance rates ranging from 2.8% and 3.6% on 15 year and 30 year fixed mortgages so there are some good rates out there.

Our auto loan rates for most new and used cars are 2.74% and can go even lower depending on other variables% — also very favorable.

Make sure your credit score is golden. In the aftermath of the housing crisis, with all the foreclosures and homes under water, creditors and lenders have tightened their standards.
A credit score of at least 720 will help you get a decent rate and anything over 800 is best of all. Borrowers with a credit score of 680 or more can still get a good deal, but the lower your score, the harder it will be to get approved.

Many homebuyers opt for a Federal Housing Administration mortgage because it allows them to buy a home with as little as 3.5% down. But FHA fees – already costly — will increase again in 2013. As the costs of FHA mortgages rise, some buyers may consider saving a little extra for a conventional loan.

To get a conventional mortgage, buyers need at least 5% down depending on their credit. If you can afford the slightly higher down payment, get quotes for FHA and conventional loans, and compare the costs.

Regarding credit card balances, if you are using more than 30% of the available credit on your cards, you could be hurting your score. Don’t forget to check for credit errors and have them corrected before you apply for a loan.

Once you’ve submitted your mortgage application and locked a rate – the race has just begun. Try to submit any documents requested by your loan officer or mortgage broker within 24 hours, if possible. Any delays in responding to the lender or in letting the appraiser into your house will waste valuable time. It doesn’t take much more than lost paperwork or last-minute requests from your lender to delay your closing. If that happens, you may risk losing the locked rate. Follow up with your lender or mortgage broker at least once a week to ensure the process goes smoothly.

Some homeowners dream about being mortgage-free. In this low rate environment it’s a great time to think about turning a 30-year mortgage into a 15 or 20 year loan. One warning: make sure you can really afford the slightly higher payments on the shorter loan and that you have enough money saved over for emergencies.

Even homes that are “underwater” can benefit from this. The Home Affordable Refinance Program, or HARP was revamped to allow homeowners to refinance regardless of how deeply underwater they are. Despite the revisions, some borrowers are still finding obstacles when refinancing. But If one lender says you don’t qualify for a HARP refi, don’t take “no” for an answer, and try to find a lender willing to do it.

And if you are having trouble paying your mortgage, it’s critical to let your lender know. It’s important to work with your mortgage servicer. Borrowers who are struggling to keep up with their mortgage payments, will find new programs available — including leniency for those with FHA mortgages. Lenders have been more willing to work out delinquent loans through loan modifications and even short sales for homeowners who can’t afford to stay in their homes. It can be a frustrating process to deal with your lender, but communication is still your best tool.

If you would like to know more, visit any branch of Utah Central, Heritage West or Southwest Community Credit Union, or check out their facebook pages or websites.

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