Three tips for finding the right mortgage
While dramatically low mortgage rates made it possible for many first-time homebuyers to purchase a home this year, rates have started to rise and experts expect they’ll increase further in 2022. Higher rates will increase monthly mortgage payments, tightening budgets for the 48 percent of Las Vegas homebuyers who have been saving for a new home for one to three years.
Amidst a still-competitive sellers market in Las Vegas, when does it make sense for a family to buy?
Understanding your mortgage options is the best place to start. Here are three tips for finding the right mortgage for your family:
1. Prioritize pre-approval for a mortgage
If you’re a serious homebuyer, the first step you should take is getting pre-approved for a mortgage. Pre-approvals require a few more steps, but they give buyers more confidence in their purchasing power and can help a buyer’s offer stand out from competing offers. This is especially valuable right now because it gives buyers the agility to move fast on properties they love.
2. Decide between adjustable-rate and fixed-rate mortgages
Which type of mortgage is best for you might depend on how long you plan to live in the home. If you think you’ll move in a few years, an adjustable-rate mortgage (ARM), rather than a fixed-rate mortgage, could result in more savings.
3. Monitor interest rates amidst shifting demand
Lower interest rates motivate more buyers to enter the market and current homeowners to refinance. However, even when interest rates are low, access to financing can be more difficult due to more stringent credit guidelines and additional documentation requirements. Many lenders, especially some of the larger banks, are requiring a credit score of at least 680 and a minimum of a 20 percent down payment to apply.
Pro tip: Use a mortgage calculator to evaluate how much money a 20 percent down payment can save you over time.
Nadia Aziz is the general manager of home loans at Opendoor.
