There are several reason why people should think about taking advantage of this credit.   If your family is expanding now, or in the near future and you need a bigger house now is a great time to buy.  People grow out of their homes all the time and now is as good of time as any to get that bigger house.  House prices are low, mortgage rates are extremely low and you get a tax credit!  In all the years I have been doing this I have not seen better time to buy.

I think the best way to go about taking advantage of this tax credit is by lowering your monthly payment.  Look around see if there are homes in your area, or in areas that you want to live that are going for less than what you owe on your home.  We have seen so many people lose their houses to foreclosure that it has become apparent that any one is at risk.  If you can sell your house, and get into a cheaper house you are helping mitigate the risk of foreclosure.  Maybe look at what your finances would be like if you had half the income.  Possibly look at what only one spouse can qualify for in the event that one of you loses your job.   Look at how the tax credit can help accelerate your amortization schedule?  There are endless ways to use this tax credit as the incentive that you need to lower your mortgage payment and put your self in a better financial position.  Everyone needs a raise, but the best way you can give your self a substantial raise would be to lower your monthly mortgage payment.

Here is a scenerio to illustrate exactly what I am talking about.   Bill has a loan for $225,000 but his house is still worth $280,000.  Bill is worried that his wife might lose her job in the future and wants to try and lower his bills.  The kids are moved out so Bill and his wife have no need for a big house any more.  Bill has been in his current loan for five years and currently has a 6% interest rate and pays $1,716 PITI per month.  He finds a house down the street, in a different neighborhood, that is selling for $200,000.  Bill puts his house up for sale and after real estate fees walks away with $43,ooo.  Bill puts $40k down and buys the new house.  Bills new mortgage payment has a rate of 4.75% and a monthly payment of $1,044.63.  Bill is now saving $671 per month and for the first time in years he is actually putting extra money towards retirement.   And on top of all this he is getting $6500 back from the government!  This seems like one of the very few win win scenarios in buying and selling a home.  This is a likely scenario and is something everyone should at least think about.

We are advising all of our home buyers to try and be under contract on a home by no later than October 15th.  Currently it is taking only three weeks for the banks to work through a loan and prepare for closing.  However, if everyone and their mom tries to get this tax credit at the last minute the banks are going to be over loaded in October and November.   At the beginning of the year when rates were ultra low we were seeing underwriting times take as long as 45 days.  The same situation could happen again.

There is always a way to get a loan done in less time.  However, if you want to give your self a chance at getting the best rates and best terms you are going to need to be under contract by the 15th of October.  Flexibility is always the key and giving your self enough time to close will ensure that you keep your options open.

A licensed mortgage broker in the State of Colorado has to have Errors and omissions insurance, have a bond, take 40 hours of mortgage related education and have passed a state and federal exam.   On top of this a back ground check is done to make sure no one with previous financially related crimes becomes a mortgage broker.

For the past two years all of the mortgage brokers here at American Capital Financial have remained licensed mortgage brokers in compliance with DORA and the state of Colorado.  We have gone above and beyond the requirements because of our belief that our borrowers deserve the most honest and professional service.  Call us any time if you have questions about the requirements or want to know what AMCAPFIN has done to champion this cause.

303-831-9636

D.J. Davenport- 303-830-2208

D.J. Davenport

303-830-2208

The question I always get is “when is the right time to lock in a rate?”.  The simple answer is;  you lock in the rate the minute a 30 year fixed rate can save you money.  People tend to forget these days that a 6%  interest rate on a 30 year fixed mortgage is historically fantastic.  Not that long ago my parents were buying their first home and happily paying 10% on their mortgage while needing to put 10% down on the purchase price.   Any time you can get a mortgage with a rate under 6% you are beating the bank.  If you are lucky enough to be buying or refinancing while rates are below 5% you have to do it.  It’s that simple

Each persons situation is different.  If a borrower has a 5% 30 year fixed mortgage already they can play the rate game all day.  We can target a specific rate and the minute it gets there we will lock the rate in and get your loan refinanced.  There is not much to lose when you are already in a great spot.   But a person in an adjustable rate mortgage at 8.99% needs to be very careful with how they play the rate game.   If the rate of the day is at 6% or lower I will always advise this kind of borrower to lock in the rate  immediately.  A 3% rate reduction is going to save that borrower a ton of money.  At that point there is no reason to get greedy.  If we wait it out for an even better rate and the rate goes up by .5% over night they are going to severely cut into their savings.  This mainly comes into play when we are working up against an adjustment.   Timing is everything because the payment will go up after the adjustment, but the amount it takes to pay off the loan will go up as well after the adjustment.  These people are in a tougher spot and because of that you take the rate that saves you a bunch of money and try and avoid any risky waiting games to try and do better.  Getting into an adjustable rate arm was extremely risky in the first place and taking more risk to fix the problem is not the right answer.    Rates are amazing across the board right now and if you take advantage of today’s rates you may never need to refinance again.  What a novel thought, getting a new mortgage and holding on to it for more than 3 years!

The bottom line to all of this is that each borrowers situation is uniquely different.  Some people can and should wait it out for the best possible rate. For some people it makes no sense to wait out the rate because of the huge risk involved.  This is exactly what we are here for.  If a borrower wants to wait out rate, even if we do not think they should, we will help asses the risk and put a game plan in place to try and get them exactly what they want.  This is your mortgage and your decision, we are simply here to educate you along the way.  We don’t sell mortgages, or sell rate, we educate borrowers to make sure you know exactly what you are getting into and know exactly how we can go about getting you into it.

(speaking of rate volatility, the rates went up again while I was writing this post)

Call me or e-mail me any time if you want more info on this topic or any other mortgage, credit, or personal finance issue.

Chris Coates

303-831-9636

ccoates@amcapfin.com

I enjoy closing days so much because it is the day that we prove we are who we advertise our selves to be. We strive to make the entire refinance process transparent as well as educational and closing day validates all of our claims. Today’s closing that I have is much like most closings I have in that the deal just got better and better as we got closer to closing. My borrower will come to the closing table today to sign a loan that has a lower loan amount, lower fees, and more cash out than what we had originally agreed on. The financial benefits as well as the personal benefits for my borrower are such that I am positive she is getting the absolute best deal for her financial situation.

After today I continue to work with my current borrowers and continue to look for more who want honest, friendly and educational service. If you are reading this and have never had a loan closing go the way I described above please give me a call and we can chat about what makes me different from the rest.

303-831-9636
Chris Coates