Fixed or Adjustable: Which Mortgage Type Is Better?

January 8, 2021 by Cindy Steelman

Home Buying Tips in Roseville California

Choosing a mortgage can be extremely stressful and confusing, especially for a first timer. Should you go with a fixed-rate loan or one with an adjustable rate? This article aims to answer this question and help you make a decision.

However, if it is your first time to take out a mortgage, it is still best to talk to a mortgage loan specialist to ensure that you make the right decision as to which type of mortgage to get. Here is a quick summary of the types of mortgage loans available to help lay the groundwork before you talk to a mortgage specialist.

What is a fixed-rate mortgage loan?

As its name suggests, a fixed-rate mortgage is a loan that will have the same payment amount for the entire duration of the term. The amount of the monthly mortgage payments and the interest rate will not change. Usually, the loan term for fixed-rate mortgages ranges from 10 to 30 years.

The advantage of taking out a fixed-rate mortgage is that the interest rate stays the same throughout the whole term. This will enable a person to anticipate how much they will pay every time. It will allow the person to allocate a certain amount in their monthly budget for their mortgage, as it will be predictable every time.

What is an adjustable-rate mortgage?

Adjustable-rate mortgages, or ARM’s, come in varying interest rates. The unpredictable nature of adjustable-rate mortgages is caused by the interest rate. At the beginning of the loan term, the interest rate will usually be much lower than that of fixed-rate mortgages. This will usually be a way to entice borrowers to take this type of loan.

ARM’s usually have a fixed payment period of 1, 3, 5, 7, 10 years. After the fixed period the interest rate will begin to fluctuate with the market, usually the LIBOR. The ARM interest rate is tied to the LIBOR and will adjusts as the LIBOR adjusts. The adjustable period can be each month, every 6 months or once a year meaning your interest rate and your payment will change each time it is time to adjust which will be included in your Note that you sign when you take on the mortgage.

The advantage of this type of mortgage is that your interest rate can be lower but that depends on what is going on with rates at the time. Another advantage is to take a lower payment for a short amount of time know that you will sell or refinance the property during the lower interest rate and payment time. These loans usually have a balloon payment due at the end of the time period.

Making Your Choice

It is important to consider your financial situation before making your decision as to which type of loan to get. If you like to stick to a budget, the predictability of a fixed-rate mortgage will suit you. However, if you are ready to take a calculated risk for some of your monthly interest rates to be cheaper than others, you may want to consider an adjustable-rate mortgage.

However, choosing a mortgage should not only be dependent on the interest rate. This is why it is a good idea to consult with a mortgage specialist before making your decision.

Mortgage Loan Experts: Steelman Mortgages

Now that you have been armed with the knowledge about mortgage loans, you are better able to make informed decisions about which type of mortgage to get. It is unwise to make the decision based on what an acquaintance, friend, or family member did when they took out their own mortgage. Keep in mind that each person or family has different needs. It is vital to analyze your own needs first, as well as how you will be paying for your mortgage before you make a decision.

If you are still confused about which type of mortgage may benefit you the most, you have the option of contacting a mortgage loans company to get more information about these loans. The specialists who work at these companies will be happy to discuss the specifics of each type of loan with you and help you make the best choice.

Whether you are looking for more information on mortgage loans, or if you are ready to take one out, Steelman Mortgages can lend you a hand. Interested parties can call (916) 847-7263 to get help with their mortgage in Roseville today!

The Federal Reserve’s Decision to Cut Mortgage Rates

December 23, 2020 by Cindy Steelman

This year has caught many of us unprepared, resulting in unexpected circumstances in nearly every industry. The real estate industry is no exception. Even as the Federal Reserve cuts short-term rates and pumps money into the mortgage finance system to deal with this instability, there are still plenty of considerations you need to take into account when thinking about buying your dream home.

The Reason For The Rate Drop

In order to ensure the stability of the real estate market, the Federal Reserve decided to cut the rates on all existing mortgages subsidized or guaranteed by the government. Since then, the federal funds rate has remained near zero, with central banks promising not to raise mortgage rates again until they are confident that the economy has survived and recovered the current circumstances.

This was to lighten the load on the average person. Many people have already lost much during this year, and this was a way to help people to get lower mortgage payments by allowing homeowners to refinance into a lower monthly payment and to help people who are purchasing to receive a lower monthly payment.

Why is This Necessary?

In times of economic uncertainty, the market can behave in unpredictable ways. The US government did not want a complete financial disaster, so, by cutting the cost of money helped the housing market. Home sales are now at record highs.

These recent financial injections not only make it easier for people to retain ownership of their homes, it makes mortgages and other financing plans for buying a house more accessible to an aching market. This gives everyone who was suffering the weight of the these trying times a chance to buy a home even amidst economic uncertainty.

What I Need To Know About Refinancing in 2021

Plenty of homeowners have decided to refinance, so many lenders are faced with heavy workloads and more complicated approval processes. As such, it would do you well to lighten the load by submitting a complete application with all the necessary documentation.

It also helps to understand what your refinancing goals are. Are you looking to get a lower monthly rate? Shorten your loan term? Replace your adjustable-rate mortgage with a fixed-rate loan? Are you seeking to borrow more than you own in a cash-out refinance? These are just some of the questions you need to ask so you and your lender can agree on mutually beneficial terms.

Buying A Home or Refinancing with Steelman Mortgages

2020 has brought plenty of uncertainty in nearly every aspect of life. Not only have we been forced to stay indoors to stave off the spread of this disease, but we have also been subject to an unstable market and rising prices. As such, it is important to keep abreast of all the important decisions of the federal government, as they can help you make the right choices about your future and prepare for what’s coming more easily.

If you’re looking to refinance, buy a home, and so on, give Steelman Mortgages a call at (916) 847-7263. We can provide you with all the best mortgage options. There’s nothing we love more than helping people achieve their desired lifestyles and obtain their dream home.

Budgeting for Your First Home Down Payment

November 26, 2020 by Cindy Steelman

Owning a home is one of the biggest milestones in adulthood that many people hope to achieve, but it can be difficult if you don’t have the right financial support to afford the downpayment. Therefore having the right budget plan in place can help you reach your homeownership in a reasonable amount of time. A better downpayment will mean lower monthly payments toward your mortgage and allow you more flexibility with housing prices when you search for your home. First time home buyers in Roseville should aim for a comprehensive budgeting process for a more successful home purchase.

How Much is Required to Buy a Home?

Although many people begin saving for their homes early on, most don’t know exactly how much will be required to buy it. Downpayments aren’t constant across the board since they will vary depending on the purchase price but putting more down initially will save you plenty in the long run. Figuring out from the very start how much is required will give you a much better idea of what you can and can’t afford, especially given the lifestyle you want to lead.

The question is, how do you know how much to budget for your downpayment? A good rule of thumb is to save up to 20% of the purchasing price. For instance, if your dream home is worth $300,000, then you should have at least $60,000 tucked away for the initial payment.

Don’t Forget Other Costs

While the down payment is no doubt one of the most important costs that come with purchasing a new home, it’s crucial to take into account other fees as well, such as mortgage costs, escrow and title fees, and home inspection fees. Allot two to three percent of your purchase price to these fees. If you are not able to save it yourself there are several other options to consider. 1) You can request the seller to help pay for them when you make your initial offer for their home (the seller has to agree); 2) At times, if the interest rates are right, you can take a higher interest rate and get a credit from the bank to cover some or all of them (Roseville mortgage broker can help you with this); or 3) You can accept a gift from a relative to help cover some or all of them.

Planning Your Budget for Your Home Purchase

Settling on a budget first requires you to decide on the purchase cost you’ll aim for and the amount you want to save. After that, you must decide when you want to purchase your home so that you can set a target amount to save up per month to reach your goal. Once you’ve figured out this amount, you can begin finding ways to achieve it.

Outlining Your Final Monthly Budget

The amount you need to save per month should be factored into your monthly income and expenses. When calculating your income per month, make sure to consider the net amount, meaning the income you make after you’ve deducted the non-negotiables; such as household expenses, retirement pay, insurance, and bills. Saving more money to reach your purchase goal may be challenging, but it’s not impossible.

On the other hand, expenses can be treated as an opportunity because you have more control over them. Cutting out extras like your daily coffee and eating lunch out will save you plenty in the long run and can add to your goals of saving up for your home. Even your fixed expenses like rent or loans (car, personal, or student) can have a workaround. For instance, you could choose to rent out a cheaper apartment or sell your car for a cheaper option with a lower monthly payment.

Lastly, consider making adjustments to your home purchase goals. Explore different options for home loans in Roseville and be a little bit more flexible with your decisions so that you can achieve your dream home sooner rather than later!

Buying a Home in Roseville with Steelman Mortgages

Knowing where to start with budgeting for your home’s down payment can be confusing. Yet, taking it to step by step and remembering to account for all income and expenses is one way to ensure that you plan your finances accordingly to reach this ultimate goal. With the help of the right mortgage company in Roseville, you can achieve your dream home in no time.

Here at Steelman Mortgages, you’ll find one of the best mortgage lenders in Roseville, CA. We provide a simple and enjoyable process to provide answers to all your mortgage questions. To apply for a fast and easy mortgage, contact us today at (916) 847-7263!