Neuswanger: Buying a home may be a viable option for those seeking a rental (column)
As the nation’s economy simmers, at best, with sluggish wage growth and demand for consumer goods and mortgages, moneylenders are finding business quiet at best this fall. With few homeowners needing a refinance and home sales remaining flat, the law of supply and demand for mortgage money is playing out in keeping the lid on long-term mortgage rates.
Although higher than last year, most 30-year fixed rates are below 4 percent, and rates for many adjustable loan programs that feature a fixed rate for five to seven years are in the mid-3 percent range.
This is keeping home ownership at affordable levels for millions of potential homebuyers and can’t be the culprit for flat home sales in many parts of the country. A $400,000 home mortgage loan at 3.875 percent has a monthly principal and interest payment of $1,881, which, if you can find an affordable home for sale and make a down payment happen, is cheaper than renting in most cases. A seven-year mortgage fixed at 3.625 percent would save you $57 a month more, but of course your rate could jump after seven years.
Of course, the culprit ruining such a plan is often the lack of affordable inventory in Eagle County, although there do seem to be several choices available at the moment in the $350,000 to $450,000 range. Check with a local Realtor to get the lay of the land. Not every single property is advertised, and the “good deals” often go immediately and are never advertised.
The second challenge facing many homebuyers is a down payment, but if one qualifies otherwise, there are down payment grant and loan programs available to ease the pain for the down payment challenged. In some cases, there is 100 percent financing available, although getting it is tricky.
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Borrowers must also show a documented income history and have at least decent credit. If you recently moved to town and are starting a new line of work, then you’re most likely not going to qualify. For some, having a parent or family member who will co-sign the loan can be a solution, but there are limits to this approach and it works miracles for some but not for others.
Of course, being a proud homeowner means you are also responsible for property taxes, condo fees, homeowners insurance and maintenance. When something breaks or the roof leaks, you had best have a few bucks stashed away to deal with it. You can’t live very long in a house without heat in the middle of winter.
To see if you are a candidate for home ownership, then first talk to a lender and lay out your financial situation in great detail. Your job history, current employment and income and credit history and current debts are all areas that you must discuss in depth with a mortgage lender.
Chris Neuswanger is a mortgage loan originator with Macro Financial Group in Avon and may be reached at 970-748-0342. He welcomes mortgage-related questions from readers. His website and blog can be found at http://www.mtnmortgageguy.com.