How Lower Federal Interest Rates Affect Your Home-Buying Power

For months now, we’ve read the news covering the trade war between China and the U.S., particularly regarding the tariffs placed on China’s exports to the U.S. While people on one side of the aisle are saying, “It’s about time,” the other side says, “this is not going to end well.” 

Most recent in a series of economic strategic moves, the Federal Reserve bank announced cutting interest rates by a quarter of a percent. What that means, basically, is that banks and borrowers are going to pay a lower interest rate to borrow money from each other. Designed to bolster confidence in borrowing, and therefore spending and hiring, a federal interest rate cut intends to keep wind in the sails of the American economy as prices of some items rise and people dependent upon favorable U.S.-China trade relations struggle.

While a lower federal interest rate could impact you in some ways, it’s not directly linked to mortgage interest rates. It’s more of a domino effect where, as banks’ interest rates are lowered, interest rates in other industries follow suit. While no one grins at the prospect of an economic downturn and all that could come with it, if you’re considering purchasing a home in the near future, it could work out in your favor.

Broadly speaking, people and government entities who have some control over economic decisions lower interest rates in order to make it easier for people to keep spending their money because 

  • it’s easier for your to put money into a house if your mortgage interest rate isn’t sky-high
  • it’s easier to make renovations or furnish your home if your credit card company’s interest rates go lower, which could be another by-product of a lower federal interest rate.

So, what should you do?

If you’re considering buying a home and you have a steady, reliable source of income, this may be the time to make a move. Start doing the research and getting names of potential mortgage lenders, and find out what kind of rate you can get. If it’s four percent or lower, that’s pretty good.

Already own a home and a mortgage? This could be an opportunity to renegotiate your interest rate and refinance your home. If you’ve lived in the home for a year or longer, you may be eligible. Check with your current lender to find out what kind of rate you could get if you refinance, and what that process would look like. It could lower your monthly payment and the total that you pay for your home when it’s all said and done. If your income allows for a higher monthly payment, you can change the terms of your loan, turning a 30-year loan into a 15-year loan. You’ll speed up the rate at which you build equity in your home and get that much closer to being debt free. Your mortgage lender can guide you through your options and shed a lot of light on the outlook in the mortgage industry to know if now’s your best chance or if a better rate might be just around the corner.

But if experts are saying the economy is slowing down and may get worse…

We like that you’re thinking in that direction. It literally pays to be smart with your money. What would be great is if the U.S. and China could work out this trade war RIGHT after you secure that low mortgage rate. Recession crisis averted, jobs secure, and a collective sigh of relief rings out across the land.

Meanwhile, know that these industries are the ones currently most affected by the tariffs. If you’re employed in one of them, it might be a scary time to take on a new debt. As it was once said by a great king, everything exists in a delicate balance. Industries not directly affected by current economic policies may still feel some ripples. If you do take advantage of lower rates on your mortgage, your credit cards, or even student loans, it’s wise to still keep a level head. Increasing your budget and spending more than you originally had in mind is likely not in your best interest, but it may be the perfect time for you to make some reasonable investments for a better deal than you would have gotten in the past, and perhaps better than you’ll get if you wait longer.

To Renovate or Not: These Are the Questions

renovation – apartment during restoration

Whether you’ve lived in your house for 20 years or you’ve just purchased it, odds are, there’s something about it that you don’t love. Even homeowners who customized a build have regrets about their design choices. So…renovate or not? Consider it carefully.

Do I have the stomach for it?

As much as we love our starry-eyed TV-world visions of what it would be like to have design/contracting geniuses come to our house for a few weeks, the in-the-trenches experience of a house renovation are a bit different. Living out of suitcases in the in-laws’ spare bedrooms and adding a half hour to the daily commute. Drywall dust that seeped inside the cabinets and coated the pots and pans. The month long delay when the windows were the wrong size for the cutouts. They usually don’t show those parts.

It could be totally worth it. But we’re just saying. 

Do I know how to resolve my design angst?

Unless you have a background in design or a natural talent for reimagining a space, you probably don’t know many options for getting the design you want. A cramped bathroom may require building on. But what if it doesn’t? Someone with the knack for design may be able to look at your problem from a new lens.. Maybe that huge guest bedroom could donate space to your bathroom. Aching for a second living room? What if you could transform your garage and and build on an attractive carport for vehicle storage?

The point is–look in the magazines, visit websites like HouzzHGTV, and Freshome (bathroom remodels, kitchen design), and spend some time talking with professionals to explore your options and get a feel for what the process would look like (including potential costs) in every scenario. Due diligence pays off.

What renovations am I allowed to make on my home?

It’s your house. You pay a mortgage, so you should have full creative rights…right? Not always. Before you get blueprints drawn up, check with your local governing bodies, namely your HOA, if applicable, and your town/city/county. They may have strict guidelines regarding boundaries, sightlines, and a host of other details you never thought they’d care about. Get all those permits handled before the renovation is underway. And factor the fees into your total costs.

About cost: should I go full speed ahead or seek a budget-friendly alternative?

If you’ve done your homework, you have some tools for cost comparisons. Now you have to decide whether to go big or go home. Here’s some food for thought.

  • If you’re going big, but you don’t have the cash, you can check into a home improvement loan.
  • If loan interest rates are high, but you have a credit card with a low balance, that’s another option for funding your renovation.
  • Depending on your reasons for renovating, you may want a conversation with your home insurance carrier first to see if they’ll cover anything.
  • If you purchased your home with a VA Loan/ are eligible for a VA Loan, the VA offers home Renovation and Rehab loans.
  • Some renovations are a sound investment. Here are some of the stats on renovations most likely to be financially worth it.

Once you’ve decided you’re going through with the project and have a quote, contact your home insurance provider. Depending on who’s doing the work–you and your hammer-wielding buddies or a pro contractor–you may need to amend your policy during the remodel. While we don’t think of our friends or family as being willing to sue us, the reality is, if one of them gets seriously injured working on your home project, they may expect you to cover their medical bills. Making changes in insurance may allow their medical provider to bill your insurance directly instead of things getting awkward or downright ugly.

Your insurance also needs to know about the changes to your home, as it should increase your home’s value. If you finish your basement and two months later, you get a 500 year flood that destroys it, you’ll be looking to your insurance company to help out, but if you never told them about the remodel, it may not go your way. Take “before,” “during,” and “after” pictures of the space. Keep receipts from contractors and for materials purchased. All of that will help you in the end.It’s a big task, but a home you love…priceless. Well, sort of.

2 Clutch Plays to Help You Get a VA Loan

Home buying and/or building can be a daunting process–exciting, but daunting. From making the decision to buy, assessing your assets and your credit score, choosing a geographic location, to securing financing and finally closing the deal, well…it’s a lot.

If you served in the military or were married to someone in the military and you’ve found out you meet basic eligibility requirements to apply for a Veterans Affairs (VA) Mortgage Loan, there’s at least the potential for a seriously lighter financial burden, and that’s something. A big something. Lower closing costs and interest rates, little to no down payment required, and relief from private mortgage insurance really does add up to a handsome benefit that you just won’t find in a conventional home loan.

But don’t go looking at paint samples just yet. Meeting the basic VA Loan eligibility requirements related to your military service does not automatically guarantee your loan application will be approved. The VA ​wants​ you to reap the rewards for your military commitment, but it’s not a sure thing; it has standards for its veterans homes and their safety. To increase your chances of closing an equitable deal and getting your new home financed through a VA Loan, start by following this playbook for your first VA Loan

Clutch Play #1: Pick Your Property Carefully

A VA Home Loan can only be used for a home, meaning the property has to be residential as opposed to a commercial property you’re planning to transform. Additionally, your property needs to meet some basic, but well-defined standards—starting with “the three S’s:” it should be Safe, Sanitary, and Structurally sound—for the VA to back it financially. If your dream is an old fixer-upper, the VA Loan may not be your best bet to finance that ventur

    Things to look at:
  • Look for relatively new, structurally sound houses. Anything built before 1978 has to be checked for lead paint, so if you set your filters for homes built in 1980 or more recently, you may be able to skip that step.
  • Electrical and plumbing systems should function well and have some life left in them.
  • Heating systems–safety and adequate heating are a must, and wood-burning stoves can’t stand alone as the heat source.
  • Water and sewer systems–clean water supply and adequate waste disposal are required.
  • Roofing–its condition and potential longevity will be closely inspected.
  • Functional and dry crawl space should be accessible and show solid foundation structure
  • Adequate grading must prevent pooling water on the lot/around the house Termites: they’re a no-no

This may seem like a long list, but actually, it’s not even ​the whole thing​ (see Ch. 12 of the Lender’s Handbook for the whole thing). What we’re saying is, if you have your heart set on the VA Loan, do your research ​before​ you start your house search. The last thing you want is to fall in love with a home/the loan only to find out that the two are not a compatible match.

Clutch Play #2: Choose an Experienced Lender

If you’ve ever purchased a home, you’re familiar with the maze, the money, the stack of paperwork and endless signatures. Yes, things are a little complicated. Home buying is kind of a big deal. But despair not. Even home buyers who have been around the block get a little stressed; what they hopefully learned the first time around, though, is that there are trustworthy, seasoned professionals that can make the experience considerably less stressful while getting the best deal around. That’s what a VA Approved mortgage lender can do for you. ​An approved lender with experience in VA Loans​ can help you navigate the eligibility requirements, the forms, the rates…​all​ the steps. VA Loans are a horse of a different color—not necessarily any more or less complicated and a conventional home loan, but they​ are​ different. Mortgage lenders who only deal with conventional loans may attempt to steer you away from them, or worse, cost or delay your loan approval if they misstep. That’s why it’s so very important to choose an approved mortgage lender with proven experience in VA Loans. If you’re a veteran or have ever been the spouse of a veteran, you know about clutch plays, and you know about the importance of a team you can trust. Home ownership? You’ve got this. We’ve got this.

VA Loans Make Post-Recession Home Ownership Doable

If you were awake and well in the U.S. in 2008, chances are, you remember the phrases “housing bubble” and “great recession” with something darker than the rose-colored glasses of nostalgia. While people who live outside the world of finance may never grasp how many fronts came together to amass that perfect storm, many of us at least know this: a bunch of people, many of whom didn’t have solid credit rates, if any at all, were taking out loans to buy houses. Interest-only loans were a thing. The Adjustable Rate Mortgage (aka ARM, aka balloon) enticed people with rates that were seductively low in the beginning, but impossibly high once the honeymoon was over. People defaulted on loans and things got bad. Examples were made, lessons learned, resulting in, for better or for worse, tighter restrictions and higher bars for those seeking to secure a home loan nowadays.

Scraping together the finances and establishing the credit history to build or purchase your very own home is not a task for the faint of heart. It is also a worthwhile task you should put on your, “Let’s do this,” list. Owning a home, building your equity and your credit rate…it’s all a part of the American Dream, right?

For individuals who served and sacrificed to help secure the existence of that ever-evolving and, let’s face it, sometimes elusive Dream, there are ways you can reach that home ownership (and even custom home building) goal earlier. A Veterans Affairs, or ​VA Loan​ is there—and has been since 1944—to make home ownership cost effective instead of cost prohibitive, ensuring that soldiers and their families aren’t financially penalized for a lack of credit history. If you served or have a spouse who served and are considering a home purchase, first things first: find out if you’re eligible for the loan.

You may be eligible for a VA Home Loan if you meet ​one or more​ of the following conditions:

● You have served 90 consecutive days of active service during wartime

● You have served 181 days of active service during peacetime

● You have more than 6 years of service in the National Guard or Reserves

● You are the spouse of a service member who has died in the line of duty or as a result of a service-related disability.

These are some of the most commonly met eligibility requirements, but if you haven’t met these, do not consider your options exhausted.

Conventional mortgage loans frequently require a 20% downpayment. If you qualify and apply for a VA Loan, your downpayment is significantly lower…somewhere in the ballpark of…oh…ZERO. Not even joking. Do the math; it’s tens of thousands of dollars, hundreds if you’re going big or if you live in an area with a higher cost of living. And the Private Mortgage Insurance (PMI) that is added to the total cost of your conventional home loan? Your VA Loan is backed by the U.S. Government, so the extra cost of PMI isn’t even a factor. Combine that with lower interest rates, and the savings is truly a game-changer. Think college funds and cars—​that​ kind of savings.

Not every mortgage lender in the market is able and approved to offer the VA Home Loan or VA Construction Loan, but we’re honored at Security America to be a lender with an established and continuing tradition of providing that very service. Our VA Mortgage and Construction Loans can provide an inroad to home ownership without leaving you “house poor,” but before you step into any type of loan process, know that it is indeed just that—a ​process​.

Take a look at our VA Loan Guide to learn more about

● The history of the VA Loan

● Benefits of a VA Loan

● Conventional loan rates vs. VA loan rates

● Securing a Certificate of Eligibility (COE)

● VA Loan Calculator

● VA Loan process

● All the other things

Acquiring a home is a milestone move. You should always be confident in your understanding of the bold AND fine print before signing any dotted lines. Sometimes talking with an actual, living person (yes, it can happen!) is the only way to feel secure in your knowledge. ​Give Security America a call​, and remember to stay informed about ​any and all of your benefits as a veteran or the family of a veteran.

“The ache for home lives in all of us, the safe place where we can go as we are and not be questioned.” ~Maya Angelou

6 Real-Estate Perks That War Veterans Have in the US

A lot of US military veterans don’t understand the benefits that they have or simply don’t know about them. These benefits include many different things, from healthcare, education, job positions, to property or real-estate perks. In this post, we are going to talk about the perks and benefits veterans have in regards to real-estate. Most benefits are provided by the US Department of Veteran Affairs, and there are different organizations that work under their regulation, in an effort to provide these benefits legally and transparently. In this post, we will present you six property-related benefits that military veterans have the right to in the US. When it comes to property loans, most of them come in the form of loans, and they are called VA loans. Here are some of them you can consider and other benefits you might not know about.

#1. Veteran Home Admission

Veteran Home Admission
Aging veterans who need a place to stay can apply for Veteran’s Homes provided by IDVA. These homes offer a comfortable environment with professional care, where veterans can spend the rest of their twilight years with other seniors. Veterans who have been in wars have admission precedence for this type of accommodation. Additionally, even veterans who haven’t served in any wars can be accepted with benefits, veteran spouses, and surviving spouses. However, it’s also important that they meet other requirements.

#2. Mortgage Assistance

If a veteran has a mortgage on their name and they are unable to pay it, they have the right to ask for help from the Department of Veterans Affairs. It doesn’t matter if the person had the mortgage before they joined the service or they’ve taken the loan after, they still have the right to this help. There are several ways the Department of Veterans Affairs can help, including:
  • Various loan modification programs
  • Loan forbearance
  • Special repayment plans

#3. Homeless Veterans

VA loans
All homeless veterans in the United States have the right to many kinds of different benefits, ranging from free accommodations, property loans, and construction loans. Most of these benefits are state-based, meaning that all states offer different kinds of benefits and help. They also offer various programs like residential rehabilitation programs, homeless grant programs, per diem programs, and domiciliary residential rehabilitation programs. The only things required for these benefits is proof of service and that there was no dishonorable discharge condition. In some cases, even dishonorably discharged veterans have the right to benefits.

#4. VA Property Purchase Loans

Even though VA loans are given by private lenders, they are all backed by the Department of Veterans Affairs. This is why these loans are some of the very few loan options that come with no required down payment. VA home loans also don’t have private mortgage insurance, meaning that they save the borrower hundreds of dollars each month. They also come at much better rates than conventional loans, further saving the borrower’s money. The lending policies are also more lenient, so even if you don’t qualify for conventional loans, you might be approved for VA loans. A VA loan application can be submitted online, via mail, or in person with an authorized lender.

#5. VA Construction Loans

VA Property Purchase Loans
If a military veteran needs a loan for building a property, they can get the funding that covers all the construction expenses. These loans also require no down payment and have better rates than regular construction loans that only civilians can get. They also cover the mortgage phase of the loan. It’s important to know that not all lenders will provide VA construction loans for all types of property types. This is different with each lender, and that’s why it’s important to ask them specifically.

#6. VA Renovation Loans

VA renovation loans are limited to smaller amounts, but this means that they also come with smaller interest rates. However, the applicant will only be allowed an essential renovation of their property. Simply put, if you want to furnish your home with expensive furniture, the loan might not be approved.

Wrap Up

These are some of the many benefits that military veterans across the US have. Bear in mind that many states have added unique benefits that they offer, so make sure that you learn what additional rights you have in your state.

5 Tips To Help You With The Purchase Of High-End Real Estate

Buying high-end real estate is nothing to be taken lightly. Whether you wish to find a dream house for you and your family or want to buy and then lease the home, you should consider everything carefully, do your research, and go slowly.

Finding the perfect luxury real estate is a bit more difficult than it might seem. Listings are often private, so you’re not very likely to stumble upon the right home online. You also need to consider your preferred location, whether you’ll need a jumbo loan, and you should always keep in mind the potential resale value.

So, let’s take a look at some tips that’ll make the whole process of purchasing high-end real estate a bit easier.

Find a Reliable Real Estate Agent

It’s crucial to find a real estate agent who has experience in the luxury real estate market. Primarily, this is because the luxury market is in a league of its own, and requires some insider knowledge.

You won’t be able to find listings for high-end real estate online or in the papers, as most of them are the so-called “pocket listings”. This means that the listings aren’t advertised to the general public, and the seller’s real estate agent shares that information only with trusted sources.

Your agent will know about properties outside online listings and will help point you in the right direction, showing you other similar properties in the same area, and telling you about any price adjustments, etc.

Get Your Financial Information in Order

Most sellers of high-end real estate will want to see proof that you can afford to buy the property. Some might not enter negotiations or even allow viewings without an indication of your financial situation. This way, they ensure they’re only dealing with serious buyers.

Although it might be uncomfortable sharing your financial situation with strangers, it will make buying luxury real estate easier.

It would be wise to have your current bank statement with you. You can black out your account number and address in the copy you provide to the seller, but make sure your name and the details of the financial institution are clearly visible.

In case you’re taking out a jumbo loan, make sure to get pre-approved. The process of taking out a loan for a luxury home is often longer, and since the sellers are interested only in qualified buyers, having a loan pre-approval can help you immensely.

Consider a Jumbo Loan

Not many people can pay for a luxury home in cash, so if you’ve set your sights on a home that’s over half a million, chances are you’ll need to get a jumbo loan.

Fortunately, jumbo loans have loosened up on the down payment requirements. When it comes to the jumbo VA loan, for example, veterans are required to make a down payment of 25% on any amount over $417,000.

Interest rates on jumbo VA loans are these days on par with conventional mortgages, and sometimes even lower. Just make sure to do your research on any tax breaks that apply on jumbo loans in your area.

Of course, to qualify for a jumbo loan, you’ll need to ensure your credit score is great, typically about 700 and above.

Take Your Time

While you do want to hurry up and get your financial information in order and get pre-approved for a jumbo VA loan, you should take your time to do your research and consider everything before closing the deal. Such huge purchases should never be snap decisions.

Make sure to look into any future building plans in the area, especially if one of the biggest perks of the home you’re interested in is the view. Look into the neighborhood, and consider the possible future resale value.

Luxury homes are exclusive, and there’s less competition, which means you have more time to research other similar properties and more time to negotiate the best deal.

Get Proper Home Inspection

If you’ve found a high-end real estate that you’re seriously considering to buy, make sure you get a proper home inspection.

It could prove to be a bit more costly, but if you avoid this, you’re risking buying a beautiful home with some serious problems that might end up costing you a lot more.

When selecting a home inspector, make sure they specialize in luxury homes, since they often have sophisticated electronic systems, and other amenities that might require great expertise.

Whether you have the cash to spare, or you need to rely on a jumbo VA loan to purchase high-end real estate, never take this decision lightly. Your new luxury home will probably serve you and your family for years to come, so take the time to research your options before you close the deal.

How to Get a Loan to Buy a House Without Putting Your Finance at Risk?

Buying a new house, especially for the first time, is as exciting as it is daunting. Finding the right home for you and your family is often just a small part of the whole process. However, most people have to think about their home loan as well.

Getting these loans takes a lot of careful consideration, calculation, and research, as it often carries some financial risks with it.

So, to ensure that your loan is as safe and as advantageous as possible, you should take a look at the following tips that’ll help you get your dream house in no time.

Get a Housing Loan or Home Loan Easily: Tips to Follow

1. Pay Attention to Your Credit Score

A credit score is one of the most important pieces of information that lenders require. While the number isn’t set in stone, and it’s known to change depending on many factors, a score of about 660 can help you qualify for a home loan.

With a bad credit score, the worst that could happen is that you won’t be approved for a loan. However, even if you do get approved, your interest rates would be higher.

So, it’s in your best interest to check your credit score before you apply for a loan, and take steps to improve the score if necessary.

2. Avoid Applying for New Credit

Now that you know how important good credit score is don’t ruin it in the middle of the process. Lenders will not only check your credit score when you apply for a home loan, but they will also often do so before closing the deal.

Cosigning someone else’s loan, getting credit for a new car, or purchasing home appliances with your credit card should be avoided at all costs. All of these will cause your score to initially drop, and this can be a red flag to most lenders.

As a rule, you should try to pay down debt before closing a deal. This way, your debt-to-income ratio will be lower, and you’ll be able to get a better mortgage rate.

3. Start Saving up

To get a home loan, you first need to be prepared to spend some money, since most lenders will ask for a down payment.

A down payment is a portion of the total price of the home that you give to the seller, and lenders often have varying criteria for it, and the amount depends on many factors, one of which is, of course, your credit score.

If possible, try to go for a higher down payment. The more money you spend out of your own pocket, the lower your loan rates will be.

You should also be ready to pay for the home inspection, closing costs, credit report fees, and others, so start saving up as soon as possible.

4. Decide on the Type of Loan Product

There are a few different loan products you can choose from, and you should decide which one works best for you. If you’ve served the military, for example, you could benefit from low VA loan rates, families in rural areas might opt for a USDA loan, etc.

Types of Loan Products:

So, let’s check out the most common types of loan product.

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1. Adjustable Vs Fixed Rate

Adjustable rates are typically lower in the first few years, but afterwards, they’re “adjusted” once a year to correspond to the current interest rates. If the interest rates are lower, your monthly payments will be lower, and if they go up, so will your monthly payments. Loans with adjustable rates could be right for those with lower credit scores.

The fixed rate is the more common type. The rate won’t be changed at all during the life of the loan, and this is a better option for those who plan to stay in their new home as long as possible.

If you’re thinking about pre-paying your home loan with a fixed rate, it’s better to do it during the early stages of the loan so that you can save on interest rates.

2. Government Vs. Conventional

There are a few different types of government-insured home loans; the most common ones are FHA and VA loans.

FHA loans require a bit lower down payment, about 3.5%. They’re good for buyers who can’t afford a higher down payment, but they do require you to get mortgage insurance, and they’re limited and with fixed rates.

If you’ve served the US military, a VA loan can get you a nice home without mortgage insurance requirements, and without a down payment. VA loan rates are very low, typically going from 0.25% to 1%, but it’s a requirement that the home you buy is your primary residence.

Getting a Loan: The Bottom Line

Getting a loan seems like a big deal, but as long as you’ve done your research and know what to expect, there shouldn’t be any unpleasant surprises down the road.