Category: Interest Rates (Page 1 of 27)

The Cost of Waiting Tool – Available Now!

March 31, 2025 / Tom Bonetto / 0 Comments

Attention real estate agents and investors…I have a new tool available for you to share with you or your clients who are waiting and trying to “time the market”.

So many consumers have been delaying a home purchase as they hold out for interest rates or home prices to drop.

My reporting tool helps demonstrate how delaying a purchase for even a year or two could cost buyers thousands in appreciation, amortization, equity and more.

The Report

For example, if a buyer opted to wait on a $800K purchase, thinking that mortgage rates would drop by nearly three-quarters of a percent (from 6.75% to 6.125%).

In fact, they would actually only save $74/month in their mortgage payment…but would miss out on over $35,000 in appreciation over that year.

Secondly, they could easily purchase now and refinance in a year – and still have a net benefit of buying now of over $30,000!

Here are the specifics:

This Cost of Waiting tool will help show you or your buyers how delaying their purchase could have more of an impact on their long-term wealth than they realize.

Reach Out to Me

I can provide this information to you at any time, so please reach out to me and find out more. You can schedule a time to go through this tool with me here…as it would be my pleasure to help you!

The blog postings on this site represent the positions, strategies or opinions of the author and do not necessarily represent the positions, strategies or opinions of Guild Mortgage Company or its affiliates. Each loan is subject to underwriter final approval. All information, loan programs, interest rates, terms and conditions are subject to change without notice. Always consult an accountant or tax advisor for full eligibility requirements on tax deductions.

Waiting to Purchase a Home Can Actually Be More Costly

March 17, 2025 / Tom Bonetto

Many prospective homebuyers wait to purchase a home in hopes of finding a better deal, saving for a larger down payment, or waiting for lower interest rates.

While these reasons might initially seem financially sensible, waiting to buy a home can often lead to higher costs in the long run.

Rising home prices, ever-changing mortgage rates, and missed opportunities for equity growth can actually make delaying a home purchase more expensive than acting sooner.

Rising Home Prices

One of the most significant reasons waiting to buy can be costly is the continuous rise in home prices.

Real estate markets tend to appreciate over time, meaning that a home that costs $300,000 today could be significantly more expensive in just a few years.

By postponing a purchase, buyers risk paying tens of thousands of dollars more for the same property in the future, making homeownership less affordable.

Missing Out on Equity Growth

Owning a home allows buyers to build equity as property values increase and mortgage balances decrease over time.

When buyers delay purchasing, they miss out on the opportunity to build wealth through home appreciation.

Homeownership acts as a forced savings plan, and the longer one owns a home, the more equity they accumulate. Waiting means missing years of potential financial growth.

Renting Costs Add Up

Many people choose to rent while waiting to buy, but rent payments do not build equity or provide long-term financial benefits.

Additionally, rental prices tend to rise over time, often making renting more expensive than a fixed mortgage payment.

The money spent on rent could be used to pay down a mortgage instead, helping buyers secure their financial future.

Limited Housing Inventory

As demand for homes increases, inventory often becomes more competitive, making it harder to find an affordable home.

If a buyer waits too long, they may find themselves in a market where fewer homes are available within their budget.

This competition can drive up prices even further, making it more challenging to purchase a home at a reasonable cost. Find out more on that here…

In Conclusion

While it may seem like waiting to buy a home provides financial advantages, the reality is that delaying can lead to higher costs due to rising home prices and lost equity opportunities.

Renting also provides no return on investment, while housing market competition can make future purchases more difficult.

For many buyers, acting sooner rather than later can be the most financially beneficial decision. Do reach out to me so we can put a plan together that will help you purchase a home in the very near future!

Now Is the Time to Apply for a Mortgage – Mid-March 2025

March 10, 2025 / Tom Bonetto

If you’ve been sitting on the sidelines waiting for the “perfect time” to buy a home, this might be the sign you’ve been looking for.

Mortgage applications just jumped 20% in a single week, according to the latest C NBC report, mostly due to falling interest rates.

two red balloons with percentage symbols on white background

What does that mean for today’s buyer? It means the window of opportunity is open—but it probably won’t stay open forever.

Mortgage demand is surging as rates drop. Don’t wait—now’s the time to apply and lock in your opportunity before competition heats up.

What’s Happening in the Market

After months of higher rates, interest rates have dropped, and homebuyers are wasting no time. More buyers are getting pre-approved, locking in rates, and hitting the market before competition picks up even more.

We’re already seeing the shift. The number of mortgage applications surged, and with spring homebuying season just around the corner, this is just the beginning.

When demand for homes pick up, so will the price of buying that home. You can find out more on that here…

Why Do a Mortgage Application Now?

Here’s what’s happening in the marketplace today:

Rates dropped – and we don’t know how long they’ll stay this on this downward trend.
Competition is rising – as more buyers jump back into the market, the best homes will go fast…and the rest will become more expensive.
Waiting could cost you – not just in rate increases, but also in bidding wars as demand grows.

What This Means for Would-Be Buyers

If you’re serious about buying this year, you have a couple of choices:

Take advantage of today’s rates and get pre-approved before the rush.
Wait, hope rates stay low, and risk higher prices and more competition.

The Bottom Line

There’s a lot in this housing and mortgage market you can’t control. But getting ahead of rising competition and securing a better rate is something buyers can do right now!

If you’ve been thinking about buying, do reach out to me here.

We can take a look at your options, answer any questions, and help you get prepared to take full advantage of this moment.

How FHA Loans Work | The Pros and Cons

February 24, 2025 / Tom Bonetto

One of the more popular financing options for buyers are FHA loans. These mortgages are backed by the Federal Housing Administration (FHA) and can be a great fit for many would-be buyers.

These loans are designed to make homeownership more accessible by offering flexible qualification requirements compared to conventional mortgages.

At the same time, FHA loans also come with specific costs, such as mortgage insurance premiums (MIP), which borrowers should carefully consider.

Let’s dive in on the specifics…

What Is an FHA Loan?

An FHA loan is a government-backed mortgage insured by the FHA but issued by approved private lenders, such as mortgage firms, banks, or credit unions.

The FHA does not lend money directly; instead, it provides insurance to lenders, reducing their risk and encouraging them to offer loans to borrowers who might not qualify for conventional financing. FHA loans are particularly appealing to first-time homebuyers and those with some financial constraints.

An FHA loan can only be utilized to purchase a primary residence, not a 2n home or investment property.

Eligibility Requirements

To qualify for an FHA loan, borrowers must meet specific requirements set by the FHA. The minimum credit score for an FHA loan is typically 580 for a 3.5% down payment, but borrowers with scores between 500 and 579 may still qualify with a 10% down payment.

Other requirements include a steady income and proof of employment. Additionally, the home being purchased must meet FHA property standards to ensure safety and livability.

Benefits of FHA Loans

Low credit score requirements: Borrowers may qualify for an FHA loan with a credit score as low as 500. However, most lenders require a minimum score of 580, which is still lower than the conventional loan minimum of 620. The higher your credit score, the more favorable your loan terms will likely be.

Low down payment requirements: FHA loans are available with down payments as low as 3.5% of the purchase price.

Competitive interest rates: Interest rates on FHA loans are comparable to conventional loans, but rates are sometimes lower for FHA loans because the government backing makes FHA loans lower risk to lenders. But the interest rate you’re offered is based on your full financial profile and mortgage insurance.

No prepayment penalty: FHA loans can be paid off at any time, including for reasons like refinancing and selling the home.

Down payment assistance: There are a wide range of down payment assistance programs that can be applied to FHA loans. Gifts from relatives can also be utilized for the down payment and closing costs.

Disadvantages of FHA Loans

Mortgage insurance premiums (MIP): All FHA loans require homeowners to carry mortgage insurance in case of loan default. This includes both an upfront, one-time premium at closing, as well as ongoing monthly premiums paid alongside your monthly mortgage payment.

Limited loan amounts: There are limits to how much you can borrow with an FHA loan. The amount varies by location, based on the cost of living in that location, and is updated yearly. You can reach out to me to find out what the FHA loan limits are in your specific county.

Property requirements: The Federal Housing Administration wants to ensure the home being purchased is safe to live in, so there are certain criteria the home must meet. Homes in need of significant repair, including issues like damaged foundations, exposed electrical systems, lead paint, and inadequate ventilation won’t qualify for an FHA loan.

Mortgage Insurance Premium (MIP)

FHA loans require Mortgage Insurance Premium (MIP). This insurance protects the lender in case the borrower defaults. It isn’t optional and is mandatory on all FHA loans.

FHA loans require both an upfront MIP (UFMIP), which is 1.75% of the loan amount, and an monthly MIP that ranges from 0.45% to 1.05% of the loan balance, depending on the loan term and down payment.

Unlike private mortgage insurance (PMI) on conventional loans, FHA MIP often lasts for the life of the loan unless the borrower refinances into a conventional mortgage.

FHA Loan Limits

FHA loans have borrowing limits that vary by location and are adjusted annually based on home prices in different areas.

These limits ensure that FHA loans are used for modestly priced homes rather than luxury properties. Borrowers purchasing homes in high-cost areas may find these limits restrictive, making conventional loans a better option in some cases.

Please reach out to me to find out what the FHA loan limits are in your specific county.

FHA Loan Closing Costs

Closing costs are the out-of-pocket expenses borrowers must pay in order to finalize their loan.

They include things like lender fees, appraisal, title services and documentation costs. Buyer closing costs are usually between 2% and 4% of the home’s purchase price and must be paid at closing.

FHA guidelines also allow sellers to cover some of the buyer’s closing costs, up to 6% of the purchase price (effectively all closing costs). Of course, this would have to be part of your negotiations with the seller when you make your offer.

How to Apply for an FHA Loan

The process of getting an FHA loan is similar to getting a conventional loan.

Borrowers will need to go through the formal application process and provide information and documentation about their income, employment, and credit history. Once the application is complete, your mortgage lender will review it and determine if you meet the requirements for an FHA loan.

Refinancing Options

FHA borrowers have access to refinancing options, including the FHA Streamline Refinance program, which allows homeowners to refinance with minimal paperwork and no new appraisal.

This can help borrowers reduce their interest rate and monthly payments. However, refinancing into a conventional loan may be necessary to eliminate MIP, which can become costly over time.

Conclusion

FHA loans provide a valuable path to homeownership for those who might struggle to qualify for conventional financing.

With lower down payments and flexible credit requirements, they open the door for many buyers. However, the added cost of MIP and property restrictions can be significant drawbacks.

Understanding the full scope of FHA loans helps borrowers make informed financial decisions and determine whether this type of mortgage is the best fit for their needs. Reach out to me to discuss if this loan option is right for you!

Why a Cash-Out Refinance Might Actually SAVE You Money…Even Though Your Current Mortgage Rate is Under 4%

February 7, 2025 / Tom Bonetto

Believe it or not, refinances still make up almost one third of all mortgage transactions, even though mortgage rates are higher than in previous years. You may be wondering why this might be…

First of all, most homeowners have record levels of equity in their homes. The Federal Reserve data reveals that the total value of owner-occupied real estate registered at an eye-popping $48.2 trillion!

On the other hand, many consumers have amassed a large amount of debt, paying much higher rates of interest, thanks (in part) to the Fed’s mismanagement of inflation.

a black piggy bank in the middle of coins

Do you know what your overall, blended interest rate is when considering your mortgage, car payments, HELOC, and credit card payments?

Interestingly, most out there are only making the minimum payments, with no path to paying off their debt.

Today’s homeowners are benefiting from a type of refinance where they pull that equity out of the home to pay off those debts, saving money on the overall monthly payments.

There are several compelling reasons why a cash-out refinance can be a beneficial move.

Debt Consolidation

crop anonymous person calculating profit on smartphone calculator near banknotes

By consolidating high-interest debt into a lower-interest mortgage, homeowners can potentially save money in the long run.

I have a Debt-Consolidation calculator and a Blended Interest Rate calculator available to analyze all client situations, as well.

For instance, paying off credit card debts, HELOCs, car loans, or personal loans with a cash-out refinance can reduce overall interest payments, saving money on monthly payments and providing more financial breathing room.

Immediate Funds Available

Accessing the equity built up in a home through a cash-out refinance can provide funds for a wide variety of uses.

Whether it’s home improvements, debt consolidation, paying for education, or other significant expenses, this approach allows homeowners to tap into the equity they’ve accumulated.

The interest rates for mortgages are often lower than rates for personal loans or credit cards, making a cash-out refinance a potentially more cost-effective way to access funds.

Adding Flexibility

A cash-out refinance provides flexibility for homeowners to manage their finances according to their needs and goals.

Whether it’s securing funds for an investment opportunity, addressing unforeseen expenses, or improving the home’s value and livability, this financial tool offers a versatile way to leverage the equity in one’s home for various purposes.

Additionally, there are ways to gain equity at an accelerated pace and significantly shorten the length of your mortgage, by applying those savings as an additional payment each month.

Call me today to review your current debt situation and see if I can help!