Tips for Winter Garden Buyers to Tackle Mortgage Rates
Mortgage rates have come down recently but they are still hovering around 7% which is a 20-year high. This can make the purchase of a Winter Garden home more challenging. Luckily there are a few strategies buyers can use to get the best rates possible and help make a home purchase more affordable.
Using a Mortgage Rate Buy-down
Mortgage rate buy-down may be the easiest strategy to make a dent in financing costs. A buy-down works when someone makes an upfront payment to help lower the interest rate of the loan. Most often this is for the first few years of the mortgage loan.
There are several parties involved in a home sale that can put money into a mortgage rate buy down this can include the home buyer, a home builder if you are purchasing new construction, or a home seller. The most popular type of buy down is the 2/1 buy down. This means that there was a payment made to lower the interest rate by two percentage points for the first year of the mortgage loan and buy one percent for the second year. After the first two years, the mortgage interest rate would go back to the original offered rate.
Many homebuyers use buy-downs in hopes of utilizing a lower rate and refinancing the loan in the future before the interest goes back up to the original interest rate. They should be done with caution however because there is never a guarantee that after your rate buy-down ends interest rates will be lower than they are now or that you won't qualify for a refinance. Homebuyers want to make sure that they can still afford mortgage payments when the interest rate changes after the first two years.
The house hacking strategy
House hacking is the action of purchasing a home that could also be usable as an investment property. In other words, a home where a portion could be used as a rental. For example, instead of purchasing a single-family property, you might invest in a duplex or a home that has an accessory dwelling unit in the yard.
With the right property, some home buyers have been able to purchase a home and pay much less into their mortgage than they expected in their original home purchase. With this strategy, you need to make sure that you are shopping for a mortgage that will allow you to use the potential rental income as a consideration in your mortgage application. This could also come with a stricter list of requirements to be aware of and prepared for.
You want to make sure that you are knowledgeable in what it takes to be a landlord in the Winter Garden area and be up for living in closer quarters with a potential stranger.
There are many underutilized government programs that help out with down payment assistance and first-time buyer programs. There are almost 2000 programs across the country that offer financial help in purchasing a home. Some programs are only available to first-time buyers but there are also programs available to any buyer needing assistance. It is a good idea to ask your real estate professional about these programs and to check out the state's Housing finance agency.
There are even programs that some people may not be aware exist. Before agreeing to utilize any of these programs you want to make sure you know all of the benefits as well as any potential drawbacks and requirements that they have. It is always best to be well-versed in what the assistance offers as well as what it requires from the person asking for assistance.
If you are considering the purchase of a Winter Garden home I am here to help. Let's talk about your homebuying goals and your comfortable budget. I am here to answer all of your Winter Garden real estate questions and help you find a home you will love that you truly can afford.