David and Tim optimistically track interest rates into the second week of 2020, tell you how to secure a solid pre-approval rate to score the home you want, help you seamlessly sell your current house before committing to a new one, and remind you why you should maybe give your mom a call (at least when you’re in the market for a new home).
This week’s highlights:
- Interest rates are expected to remain favorable into 2020.
- Accunet can help lock in a pre-approval to make sure you’re ready to make an offer when you find the home you want.
- There are a few options to retain equity (and money!) selling your current home while simultaneously purchasing a new one.
- That “nest egg” from mom and dad is one of the greatest sources of financing.
- If you have a second mortgage and are facing financial changes, Accunet can help you prioritize repayment options.
What is a secondary offer, and when should you use it?
Interest rates remain favorable into the second week of the new year; homebuying season is here!
At this time in 2019, interest rates were a full percent higher, but have plummeted throughout the year. As of 1/10/20, Accunet can offer 3.875% on a 30-year fixed rate loan, with 3.9% APR at $495 total loan cost (which includes title, appraisals, insurance, closing costs, etc.)
Recent turmoil in the Middle East and the bad news of economic unrest rippling through the world is actually good news for interest rates, as money flows out of riskier aspects like stocks and flows into “safer” things like mortgage-backed securities and U.S. treasuries.
“Man, I Wasn’t Ready And Then That House Was Gone So Quick!”
Generally, people return from the holiday break rejuvenated and get serious about goals to purchase a home in the new year.
Tim recently consulted with a potential home buyer that was considering buying a duplex in Waukesha, but had another primary residence in Southeastern Wisconsin. The buyer began casually looking and found a duplex that he liked before he was preapproved for a loan. A mere two days later, there was already an accepted offer on the house!This is a classic example of a need to get a
This is a classic example of a need to get a Rock Solid Pre-Approval.
Accunet Mortgage offers this verification before you buy.
To save you time, all of the documentation required for this preapproval are things you would give a lender after an accepted offer, with a $2,000 guaranteed assurance. It’s that simple. And if Accunet Mortgage is unable to provide a final commitment letter that meets the terms of the Rock Solid Fully-Verified Pre-approval Letter we issue, Accunet will pay both the buyer and the seller $1,000 each. This way, you’ve done your homework, and time is on your side to find that perfect house that fits your requirements.
“Will I Sell My Current Home in Time as Try to Buy My Next House?”
David spoke with a couple who wanted to buy a new home without having to sell their current house first. David and Tim shed light on a tricky strategy called home sale contingency, wherein the new home purchase is dependent on the sale of the seller’s current property.
There are two key factors to selling your current home before buying a new one:
- Your qualifiable income must be high enough to support the cost of owning two incomes simultaneously to alleviate what-if scenarios– what if your buyers back out last minute? What if you lose your job or become ill?
- Equity for the down payment on your next house is tied up in your current home, so that needs to be leveraged so the payoff is quick once you sell your property.
Sellers may consider a shorter-term bridge loan, secured by the current property to pay off the mortgage and the rest can go towards fees on the new home, or opening a home equity line of credit at zero balance as a safety net to envelope both properties.
“The Bank of Mom and Dad”
In mortgage lending, the second-best source of financing for a home (behind your checking and savings account) is a monetary gift from relatives or in-laws. This is also a legitimate source of funds for a refinance.
Tim worked with a woman who wanted to gift her new homebuyer son by getting him down to 20% equity to avoid PMI. Cash is king in the mortgage world, and a cash offer is the best offer you can put in front of a seller. We suggest that a homebuyer (or mom or dad) record a mortgage on a new home as a lien against the property. Then refinance the mortgage – of mom – to help her get her money back, or let her help you out with a down payment.
“Spoiler Second Mortgage”
If you have a second mortgage and are looking to refinance, or if you need to file for bankruptcy to discharge your debts, this may create a future risk for you, even if that second mortgage is at zero balance.
If you hold out and wait for the day that your second lien comes due, and the lender tries to collect on the debt, the title company may come back saying you finally owe the money to your secondary lien holder. If you are unable to pay any of it back, you may have to foreclose, or, if you choose to refinance anyone else you owe may move to first priority.
Don’t forget to include all your liens when filing for bankruptcy, and let your mortgage company know how to help you pay off your second mortgage. Accunet Mortgage will consult with you to give all financing options.
Remember, Accunet Mortgage strives to be problem-solvers for your needs. Accunet will take any home buying buzzwords and will act as your translator to pinpoint the best options for you. Do you need a WHEDA loan, or a bridge loan? Accunet will offer suggestions for any or all of the above to get you into a new home, and will be there to guide you if things go sideways.