Buying a house is exciting, but the home loan process sometimes can be a bit daunting. Here, realtor.com offers some expert mortgage advice that should work well in 2019.
1. Consider an adjustable-rate mortgage
You’ve probably always assumed you’d get a 30-year mortgage with a fixed interest rate, but if you’re not buying your forever home then the benefits of a 30-year mortgage aren’t necessarily there. For example, first-time homebuyers who are purchasing starter homes with plans to move on to something bigger and better after a few years might consider going with a five- or seven-year adjustable-rate mortgage (ARM) that could potentially save them a couple of hundred dollars off their monthly payment. It also could ease the monthly payment burden a bit, as they most likely will sell their home before the rates adjust.
2. Put down less than 20 percent
While 20 percent has traditionally been a benchmark for what is acceptable, this no longer holds true in the market. With FHA loans requiring around 3 percent, and other traditional loans offering 10 percent down options or lower, it makes sense to explore different products with your lender. In other words, don’t miss out on historically low-interest rates while trying to stash away cash.
3. Don’t wait for interest rates to drop
For 2019, we likely are at the end of the low-interest cycle, and interest rates are at their lowest. So, if interest rates are the determining factor today is the time to buy. You can always wait for them to go lower, but you might be sorry if you do.
4. Wait to pay off your mortgage
If you have a 30-year mortgage, chances are you have a dream to pay it off in at least 20. Not only will it give you an extra 10 years without a monthly payment, but it’ll save you tons of money in interest. Right? Not really. That’s not necessary anymore—and it probably won’t save you much money. Because interest rates are low, consider saving and investing with the money you would use to pay down your loan separately. You could always use the lump sum accumulated to pay it down or off any time you wish.