View the Video version of this episode at: https://www.jenniferobrienhomes.com/2022/11/15/how-to-pay-a-lower-interest-rate/
You don’t have to pay 7% for your mortgage interstate rate. Here are 3 ways to get a lower rate.
If you have been looking to buy a home, you’ve seen the interest rates rise from about 3% in January to 7%. That’s a BIG difference in your monthly mortgage payment. But there are lenders and programs available to help get you a lower rate.
1) Lock into a 5-year Adjustable Rate Mortgage
If your purchase price is $640,000 or higher, you are applying for a jumbo mortgage. There are lending programs offering 5.3% locked in for 5 years for a jumbo loan. If the rates lower within those 5 years, you can refinance for the lower rate. If they haven’t lowered, then the rate is capped at an increase of 2 points each year. So after 5 years, your rate would increase to 7.3%. If you aren’t applying for a jumbo loan you can lock into a 6.3% rate for 5 years.
2) Buy Down your Interest Rate
I would recommend this in certain situations - mostly buying new construction. To buy down your interest rate you pay a higher fee at closing. Let’s say this locks you in around 5% for the 1st year, in the 2nd year it will increase to 6% and then 7% for the 3rd year. I recommend this for new construction, because we can ask the builder to pay this for you! This means no additional money out of your pocket AND you get the benefit of the lower interest rate.
3) First-time homebuyer programs can help with costs
If you’re a first-time homebuyer with limited means, you may be able to qualify for one of the federal programs available that help you buy a house with a lower down payment and reduced closing costs.
Overall, it’s vital to talk to your lender! As you have seen, the market changes quickly. Your lender is at the forefront of the changes and has various programs to fit your circumstances. If you don’t have a lender please let me know. I have 3 great lenders that I work with and have worked miracles for my clients.
Jennifer O’Brien
(610) 283-0867
www.jenniferobrienhomes.com
jobrien@dunesproperties.com
