How Long Does It Take To Buy A House?

How long does it take to buy a house? The answer is: it depends. You can buy a house in a matter of weeks or it can take you anywhere from 4 to 6 months. The question is how ready are you? It can take a long time, and that’s just learning about various mortgage options or improving your credit score.

So understanding the various factors involved in buying a house can give you an estimate of how long it will take you to buy the house

Check out now: 5 Signs You Are Not Ready To Buy A House

How long does it take to buy a house? A step-by-step guide.

It can take a homebuyer a few weeks to several months to complete the home buying process. But when determining how long it will take you to buy a house, you first have to find out if you will be pre-approved for a mortgage. There is no sense of shopping for a house to then realize you can’t afford it.

If you are interested in comparing the best mortgage rates through LendingTree click here. It’s completely free.

I. How long does it take to get a pre-approved mortgage letter in order to buy a house?

If you’re serious about buying a house, it’s important to get pre-approved for a mortgage. So when it’s time to make an offer, the seller will know you’re serious. If you don’t have one handy, the seller will likely move to the next buyer.

Getting pre-approved for a mortgage in order to buy a house can take longer. That is because you have to make sure your financial situation is in shape. For example, your income-to-debt ratio, your down payment, and your credit score must be good. That’s exactly what a mortgage lender will look at.

Even when these things are in order, shopping and comparing mortgage rates and fees can take several weeks.

Let’s take a look on how long it will take you to get these things in shape before buying a house.

Click here to compare mortgage rates through LendingTree. It’s completely FREE.

A. How good is your credit score?

A low credit score can make buying a house take longer, because it can take months to a year to improve a bad credit score.

A conventional loan will usually require a 640+ credit score.

In fact, your credit score is the number 1 item mortgage lenders look at to decide whether to offer you a mortgage. And if it is not where it’s supposed to be, you might get rejected.

Luckily for you there are other ways to get a loan with much lower credit score: FHA loans.

FHA loans only require a credit score of 580 with 3.5% down payment. You may get qualified with a 500 credit score, but you’ll have to come with a 10% down payment.

So before you get into the fun part of shopping for a mortgage or visiting homes, it’s best to know what your credit score is and take steps to improve it.

You can get a free credit score at Credit Sesame.

B. Fix errors on your credit report.

Fixing errors on your credit report in order to get pre-approved for a loan in order to buy a house can take 30 days.

According to Transunion, “most investigations are completed within 2 weeks, but some may take up 30 days.”

Again, we recommend you get a free credit report at Credit Sesame. A credit report will give you a detail analysis of your credit history, how much debt you owe, and how creditworthy you are, etc. If there are any errors or inaccuracies, fix them immediately so there’s no surprise when you’re actually applying for a mortgage.

The best way to do that is by filing a Transunion dispute or Equifax dispute.

C. Do you have a down payment for the house?

How long it will take you to buy a house will also depend on whether or not you already have money saved up for a down payment.

Unless you’re going to buy the house with outright cash, you’ll need a down payment. And saving for a down payment can take a long time. Depending on your income and expenses, saving for a down payment on a house can take years.

Assuming, for example, you want to buy a house that will cost you $450,000, and you’re using a conventional loan to finance the house. With a 20% down payment, you will need to come up with $90,000.

Let’s say again, because of other monthly expenses, you can only save $1500 a month for the down payment.

You see how long it will take you to save for a down payment to buy the house? 5 years. And that doesn’t even take into account other upfront costs of buying a house, such as closing cost.

While it’s possible to get a mortgage with a down payment as low as 3.5% of the home purchase price, it’s advisable to put at least 20% down. The reason is because you will avoid paying private mortgage insurance (PMI), which protects the lenders in case you default on your mortgage.

Home buyers with a down payment below 20% are usually charged with PMI.

Another reason for a larger down payment is that it reduces the cost of the mortgage, grows equity much faster, and saves you on interest over the life of the loan.

As you can see, it can take you as much as 5 years from the time you’re thinking about buying the house to the time you’re actually ready to start the process.

But once you have taken care the things above, buying a house can go a lot faster.

II. How long does it take to find a real estate agent?

Average time: 1 day to a month

Once you have been pre-approved for a mortgage, the next step is to find an experienced real estate agent. Finding a good real estate agent can take a day to a month. Websites such as Zillow and Redfin list real estate agents you can use.

III. Shopping for a home.

Average time: a few weeks to a few months

With the help of a real estate agent and your own due diligence, finding a home can can go faster or take longer depending on available homes, the season and your desired location.

But experts say on average it can take a minimum of three weeks to a few months.

IV. Making an offer, negotiation, and inspection.

Average time: 1 to 10 days

Once you have found the home of your dream, the next step is to make an offer. You and the seller can go back and forth negotiating the price.

Once your offer has been accepted, you and the seller sign something called a purchase agreement. Then, the next step is to hire a professional to inspect the home for defects. Depending on your state, a home inspection must be completed within 10 days. And if the inspection finds some defects in the house, that could delay the process.

V. How long does it take to close on a house?

Average time: 30 to 45 days.

Once the inspection is done, your lender will need to officially approve you for the loan. And depending on the lender, it can also affect how long it takes to buy a house. You may need to provide additional documents. But the lender will need to assess the home for its value. And depending on the program (whether it’s conventional loan or FHA loan) it can take anywhere from 30 to 45 days to close on a home.

Bottom line

When asking yourself this question: “how long does it take to buy a house?” The answer is : it depends. If you have your credit score, your down payment, your other finances under control, you can buy your house in two months or less. But if you have to save for a down payment, fix errors on your credit report, raise your credit score, the whole home buying process can take years.

Click here to compare mortgage rates through LendingTree. It’s completely FREE

Still wondering how long it takes to buy a house? Read the following articles:

  • 5 Signs You’re Not Ready To Buy A House
  • 10 First Time Home Buyer Mistakes To Avoid
  • 3 Signs You’re Not Ready to Refinance Your Mortgage
  • The Biggest Mistakes Millennials Make When Buying a House
  • 7 Signs You’re Ready To Buy A House

Work with the Right Financial Advisor

You can talk to a financial advisor who can review your finances and help you reach your goals (whether it is making more money, paying off debt, investing, buying a house, planning for retirement, saving, etc). So, find one who meets your needs with SmartAsset’s free financial advisor matching service. You answer a few questions and they match you with up to three financial advisors in your area. So, if you want help developing a plan to reach your financial goals, get started now.

The post How Long Does It Take To Buy A House? appeared first on GrowthRapidly.

Source: growthrapidly.com

Why Refinance Rates Are Higher Than Purchase Loan Rates

Mortgage interest rates dropped dramatically over the summer, to the point where home loans have never been cheaper in most of our adult lifetimes. With rates at historic lows, you might’ve considered taking advantage of them, either by purchasing a new home or refinancing your current mortgage.

Recent figures from Freddie Mac show that mortgage refinances surged in the first quarter of 2020, with nearly $400 billion first home loans refinanced. However, as it turns out, refinancing your mortgage might actually be more expensive than purchasing a new home. 

This surprised us, too — why would there be a difference at all? 

We investigated how refinancing rates and new purchase home loan rates are set, and found several reasons for this rate disparity. On top of the rate difference, mortgage refinancing is even more difficult to qualify for, given the current economy.

Before rushing to refinance your home, read on to gather the information you need to make the right financial decision for your situation.

Pandemic Effects on Home Lending

Just as mortgage rates have stumbled, banks and lenders have tightened the screws on borrowers due to COVID-19, requiring higher credit scores and down payment amounts. Chase, for example, raised its minimum FICO score requirements for home purchases and refinances to 700 with a down payment requirement of at least 20%. 

Low rates have also driven a massive move to mortgage refinances. According to the same Freddie Mac report, 42% of homeowners who refinanced did so at a higher loan amount so they could “cash out.”

Unfortunately, homeowners who want to refinance might face the same stringent loan requirements as those who are taking out a purchase loan. Mortgage refinance rates are also generally higher than home purchase rates for a handful of reasons, all of which can make refinancing considerably less appealing. 

How Refinance Rates Are Priced

Although some lenders might not make it obvious that their refinance rates are higher, others make the higher prices for a home refinance clear. When you head to the mortgage section on the Wells Fargo website, for example, it lists rates for home purchases and refinances separately, with a .625 difference in rates for a thirty-year home loan. 

There are a few reasons why big banks might charge higher rates to refinance, including:

Added Refinance Fees

In August of 2020, Fannie Mae and Freddie Mac announced it was tacking on a .5% fee on refinance mortgages starting on September 1. This fee will be assessed on cash-out refinances and no cash-out refinances. According to Freddie Mac, the new fee was introduced “as a result of risk management and loss forecasting precipitated by COVID-19 related economic and market uncertainty.”

By making refinancing more costly, lenders can taper the number of refinance loans they have to process, giving them more time to focus on purchase loans and other business.

Lenders Restraining New Application Volume

Demand for mortgage refinancing has been so high that some lenders are unable to handle all requests. Reluctant to add more employees to handle a surge that won’t last forever, many lenders are simply limiting the number of refinance applications they process, or setting additional terms that limit the number of loans that might qualify.

Also note that some lenders are prioritizing new purchase loans over mortgage refinance applications since new home buyers have deadlines to meet. With the housing market also on an upswing in many parts of the country, many major banks and lenders simply can’t keep up.

Rate Locks Cost Money

Generally speaking, it costs lenders more to lock the rate for refinance loans when compared to purchase loans. This is leaving lenders disinterested in allocating resources on the recent surge in mortgage refinance applications.

This is especially true since many refinancers might lock in a rate with one provider but switch lenders and lock in a rate again if interest rates go down. Lenders exist to turn a profit, after all, and it makes sense they would spend their time on loans that provide the greatest return.

Tighter Requirements Due to COVID-19

According to the Brookings Institute, Fannie Mae and Freddie Mac have been asking lenders to make sure any disruption to a borrower’s employment or income due to COVID-19 won’t impact their ability to repay their loan. 

Many lenders are also increasing the minimum credit score borrowers must have while making other requirements harder to meet. As an example, U.S. Bank increased its minimum credit score requirement to 680 for mortgage customers, and it also implemented a maximum debt-to-income ratio of 50 percent.

This combination of factors can make it difficult to save as much money with a refinance, or to even find a lender that’s willing to process your application. With this in mind, run the math and to see if refinancing is right for your situation before contacting a mortgage lender.

How Mortgage Purchase Rates Are Priced

Mortgage purchase rates are priced using a similar method as refinance rates. When you apply for a home mortgage, the lender looks at factors like your credit score, your income, your down payment and your other debt to determine your eligibility.

The overall economy also plays a giant role in mortgage rates for home loans, including purchase loans and refinance loans. Mortgage rates tend to go up during periods of speedy economic growth, and they tend to drop during periods of slower economic growth. Meanwhile, inflation can also play a role. Low levels of inflation contribute to lower interest rates on mortgage loans and other financial products.

Mortgage lenders can also price their loans based on the amount of business they have coming in, and whether they have the capacity to process more loans. They might lower rates to drum up business or raise rates when they’re at or nearing capacity. This is part of the reason rates can vary among lenders, and why it always makes sense to shop around for a home loan.

Many people believe that the Federal Reserve sets mortgage rates, but this is not exactly true. The Federal Reserve sets the federal funds rate, which lenders use to ensure they meet mandated cash reserve requirements. When the Fed raises this rate, banks have to pay more to borrow from one another, and these costs are often passed on to consumers. Likewise, costs can go down when the Fed lowers the federal funds rate, which can mean lower costs and interest rates for borrowers.

The Bottom Line

Refinancing your existing mortgage can absolutely make sense in terms of interest savings, but don’t rule out buying a new home instead. Buying a new home could help you save money on interest and get the space and the features you really want. 

Remember, there are steps you can take to become a more attractive borrower whether you choose to refinance or invest in a new place. You can’t control the economy or the Federal Reserve, but you have control over your personal finances.

Improving your credit score right away, and paying down debt to lower your debt-to-income ratio are just a couple of strategies to start. And if you’re planning on buying a new home, make sure you save a hefty down payment amount. These steps help you improve your chances at getting the best rates and terms whether you choose to move or stick with the home you have. 

The post Why Refinance Rates Are Higher Than Purchase Loan Rates appeared first on Good Financial Cents®.

Source: goodfinancialcents.com

Watch Out for Low Mortgage Rates You Have to Pay For

Mortgage rates keep on marching lower and lower, with new records broken seemingly every week. But with all the fervor surrounding mortgage rates, some lenders are playing the “how low can we appear to go” game. For example, mortgage lenders may be talking about their lowest rates (with multiple points required), as opposed to offering [&hellip

The post Watch Out for Low Mortgage Rates You Have to Pay For first appeared on The Truth About Mortgage.

Source: thetruthaboutmortgage.com

United Wholesale Mortgage Now Offering FHA Loans with Rates Below 2%

The leading wholesale mortgage lender in the nation has brought the heat once again, this time offering 30-year fixed mortgage rates below 2% on FHA loans. United Wholesale Mortgage announced that borrowers can now lock in interest rates as low as 1.99% on FHA-backed loans via its popular Conquest program. The new Conquest for FHA [&hellip

The post United Wholesale Mortgage Now Offering FHA Loans with Rates Below 2% first appeared on The Truth About Mortgage.

Source: thetruthaboutmortgage.com

The Top 15 Refinance Questions Answered

With mortgage rates at or near all-time record lows, you’ve likely pondered a refinance if you’re an existing homeowner. But you probably have a lot of questions too, especially if it’s your first time refinancing a home loan. Let’s clear up some of the confusion by tackling some of the most common refinance questions out [&hellip

The post The Top 15 Refinance Questions Answered first appeared on The Truth About Mortgage.

Source: thetruthaboutmortgage.com

2021 Mortgage and Housing Market Predictions

Welp, it’ll be nice to close out 2020 and look ahead to a brand-new year that hopefully features a lot less drama and much more good news. While the housing market actually absorbed both the COVID-19 pandemic and the presidential election surprisingly well, we can probably thank the record low mortgage rates for that. And [&hellip

The post 2021 Mortgage and Housing Market Predictions first appeared on The Truth About Mortgage.

Source: thetruthaboutmortgage.com

Buying a Home for the First Time? Avoid These Mistakes

Buying a home, especially if you’re a first-time home buyer, can be daunting and nerve racking.

But it does not have to be. LendingTree’s online loan marketplace has got you covered – at least when it comes to getting a mortgage.

A 2016 study by the Office of Research of the Bureau of Consumer Financial Protection reveals that prospective buyers who shop for a mortgage when buying a home for the first time report “increases consumers’ knowledge of the mortgage market and increases consumers’ self confidence in their ability to deal with mortgage related issues.”

The importance of shopping for a mortgage as a first-time home buyer is that it saves you money in the long term and “reduces the cost of consumers’ mortgages,” the study found.

The home-buying process can be intimidating. So being aware of these mistakes when buying a home for the first time can help you save thousands and thousands of dollars in the long term.

Tips for Buying a Home
To guide you through a major financial decision like the purchase of a home, you may want to talk to a financial advisor.

Luckily, SmartAsset’s advisor matching tool can help you find a suitable financial advisor in your area to work with.

Get started now.

10 Mistakes to avoid when buying a home for the first time.

1. Not knowing your credit score.

We are all aware that the higher your credit score, the better.
Yet, despite this fact, many people fail to check their credit score before
buying their first home.

And a low credit score can lead to a high interest mortgage loan, or even worse, a loan rejection. Given the fact that your credit score is the number 1 item mortgage lender looks at, it pays off to know where you stand.

Credit Sesame will let you know what your credit score is for free and monitor it for you. It will also offer tips on how to raise your credit score and reduce your debt.

Just sign up for a free account – it only takes 90 seconds.

2. Not shopping and comparing mortgage rates.

Mortgage rates and fees vary across lenders. In other words, two applicants with the identical credentials can get different mortgage rates. Despite this, however, many fist-time homebuyers fail to shop and compare mortgage rates before buying their first home.

The study reveals that 30 percent first time homebuyers do not
compare and shop for their mortgages, and more than 75 percent reported
applying for a mortgage with only one mortgage lender.

The study further reveals that “failing to comparison shop for a
mortgage costs the average homebuyer approximately $300 per year and many thousands
of dollars over the life of the loan.”

An easy way to shop and compare for a mortgage is with LendingTree. Their simple and straightforward platform can help you find and apply for the right loan all in one place.

3. Sticking with the first mortgage lender you meet.

While it’s tempting to work with your local mortgage lender who’s
only a few blocks away from your home, this decision requires more time. Take
time to meet with at least three mortgage lenders before picking the best match
for you.

Fortunately, LendingTree free online platform, allows you to quickly browse several mortgage rates with several mortgage lenders without visiting a dozen bank branches.

4. Not knowing what loans are available to you.

If you’re buying a home for the first time, one thing you need to address is what types of loans are available to me. Sometimes the answer to this can be quite simple: conventional loan. This is because most people know about this type of loan.

But conventional loan requires at least 20% down payment. And the credit score needs to be in the 700. *Note: You can put less than 20% down payment, but you will have to pay for a private insurance mortgage (PMI).

Sometimes it’s not feasible to come up with that type of money as a first time home buyer. So knowing if other loans are available to you is very important.

FHA loan

One type of loan that is popular among first time home buyers is FHA loan. It is so popular because it’s easier to get qualified for it. And the down payment is very little comparing to that of a conventional loan.

For example, FHA loans require a 580 credit score and a down payment as low as 3.5% of the home purchase price. This makes it easier to qualify for a home loan when you’re on a low income.

VA loans

VA loans are another great option for first-time homebuyers. However, you have to be a veteran. Unlike a FHA or a conventional loan, VA loans require no down payment and no mortgage insurance. This can save you thousands of dollars per year.

So if you’re in market for a loan to buy your first home, you need to educate yourself about the different available loans.


Not All Mortgage Lenders Are Created Equally

When it comes to getting a mortgage, rates and fees vary. LendingTree allows you to view and compare multiple mortgage rates from multiple mortgage lenders all in one place and at the same time, so you can choose the best rates for your needs. LendingTree makes getting a loan faster, simpler, and better. Get started today >>>


5. Not getting pre-approved for a mortgage

One of the first time home buying mistakes you should avoid making is not getting a pre-approval letter. You can simply contact a lender and request it. The mortgage lender will pull your credit report to make sure you have the minimum credit score requirement.

They will also need your bank statements, W2s, recent income tax returns, pay-stubs to verify your employment and ability to afford the loan.

Why this is important? A pre-approval letter means that you’re a serious buyer. It signals that you’re able to commit to the house once an offer has been accepted. It also makes you more desirable than the other potential buyers.

Get a Pre-Approval for a Mortgage Today

6. Not knowing how much you can afford

Buying a home is probably going to be the biggest expenses you’ve ever made. But buying a house you cannot afford can lead to financial trouble along the road. Paying an expensive mortgage for 15 to 30 years on a low income can be hard.

So it pays to know how much house you can afford before you start searching for your home.

The best way to know how much house you can afford is to look at your budget. Take into account your expenses and income and other costs associated with owning a home.

7. Not knowing other upfront costs

If you think that the only cost to buying a home is a down payment, then think again. There are several upfront costs associated with owning a house. These upfront costs include private mortgage insurance, inspection costs, loan application fees, repair costs, moving costs, appraisal costs, earnest money, home association dues.

As a first time home buyer, this may come to you as a surprise. So, be ready to have enough money to cover these costs.

8. Failure to inspect your home.

Although some banks would prefer you inspect your home before they offer you a loan, it’s not mandatory. But that does not mean you shouldn’t do it. Not inspecting your home can cost you a lot. Inspection discovers defects that you may not know about. Inspection costs can be anywhere from $300 to $700.

Don’t be stingy with these costs. It’s better to find out about any hidden defects , like a faulty wiring and plumbing, than finding about them later. To avoid regretting your decision or having to spend thousand of dollars on repairs down the road, consider an inspector.

9. Failure to check out the neighborhood.

Just because the street or the neighborhood your potential house is located is quiet or is not run down doesn’t mean crime is not a problem. So before buying your home, you should check out the neighborhood. Take a trip at night to get a feeling of the environment. Talk to residents. Most importantly, check with the local police station – they can be a great resource when it comes to crime rates in a particular location. This is simply one of the first time home buying tips you shouldn’t ignore.

10. Searching for a mortgage on your own.

There are several mortgage lenders available to you. But choosing one that is right for you can be tough.

The LendingTree online platform makes it easy and simple for you to find the right home loan for you. Now you can get matched up to several mortgage lenders all in one place and at the same time. And the whole process just takes a few minutes.

Follow these steps to get matched with the right mortgage:

  1. Go to www.lendingtree.com;
  2. Answer a few questions regarding the type pf loan yo need and you’ll use it. Within a few seconds, you’ll see multiple, competing offers from several lenders;
  3. You then shop and compare offers side by side.

Ready to get started? Find your best loan!

The bottom line is when it comes to buying a home for the first time, you should not take any shortcut. Doing so can cost a lot of money down the road. So before buying your first home, make sure you get the right mortgage loan, inspect the home, and have enough money to cover some of the upfront and ongoing costs associated with owning a house.

Speak with the Right Financial Advisor

Still looking for first time home buying tips? You can talk to a financial advisor who can review your finances and help you reach your goals (whether it is making more money, paying off debt, investing, buying a house, planning for retirement, saving, etc). Find one who meets your needs with SmartAsset’s free financial advisor matching service. You answer a few questions and they match you with up to three financial advisors in your area. So, if you want help developing a plan to reach your financial goals, get started now.

The post Buying a Home for the First Time? Avoid These Mistakes appeared first on GrowthRapidly.

Source: growthrapidly.com

8 Upfront Costs of Buying a House

Looking to buy a home soon? There will be upfront costs of buying a house.

You may have found a house that you like. You may have been approved for a mortgage loan, and have your down payment ready to make an offer. If you think that, at that point, all of the hard work is over, well think again.

In addition to the down payment, which can be significant depending on the price of the property, there are plenty of upfront costs of buying a home. As a first time home buyer, this may come to you as a surprise. So, be ready to have enough cash to cover these costs. In no particular order, here are 8 common upfront costs of buying a house.

If you are interested in comparing the best mortgage rates through LendingTree click here. It’s completely free.

What is an upfront cost?

An upfront cost, as the name suggests and in terms of buying a house, is out of pocket money that you pay after you have made an offer on a property. They are also referred to as closing costs and cover fees such as inspection fees, taxes, appraisal, mortgage lender fees, etc. As a home buyer, these upfront costs should not come to you as a surprise.

What are the upfront costs of buying a house?

Upfront cost # 1: Private mortgage insurance cost.

If your down payment is less than 20% of the home purchase price, then your mortgage lender will charge you a PMI (private mortgage insurance). A PMI is an extra fee to your monthly mortgage payment that really protects the lender in case you default on your loan. Again, depending on the size of the loan, a PMI can be significant. So if you know you won’t have 20% or more down payment, be ready pay an extra fee in addition to your monthly mortgage payments.


LendingTree: A Better Way to Find A Mortgage

LendingTree.com is making getting a mortgage loan simpler, faster, and more accessible. Compare the best mortgage rates from multiple mortgage lenders all in one place and at the same time. LEARN MORE ON LENDINGTREE.COM >>>


Upfront cost #2: inspection costs.

Before you finalize on a house, it’s always a good idea to inspect the house for defects. In fact, in some states, it is mandatory. Lenders will simply not offer you a mortgage loan unless they see an inspection report. Even if it is not mandatory in your state, it’s always a good idea to inspect the home. The inspection cost is well worth any potential defects or damages you might encounter.

Inspection fee can cost you anywhere from $300-$500. And it is usually paid during the inspection. So consider this upfront cost into your budget.

Upfront cost # 3: loan application fees.

Some lenders may charge you a fee for applying for/processing a loan. This fee typically covers things like credit check for your credit score or appraisal.

Upfront cost # 4: repair costs.

Unless the house is perfect from the very first time you occupy it, you will need to do some repair. Depending on the condition of the house, repair or renovating costs can be quite significant. So consider saving up some money to cover some of these costs.

Upfront cost # 5: moving costs.

Depending on how far you’re moving and/or how much stuff you have, you may be up for some moving costs. Moving costs may include utilities connections, cleaning, moving

Upfront cost # 6: Appraisal costs.

Appraisal costs can be anywhere from $300-$500. Again that range depends on the location and price of the house. You usually pay that upfront cost after the inspection or before closing.

Upfront cost # 7: Earnest Money Costs

After you reach a mutual acceptance for the home, in some states, you may be required to pay an earnest money deposit. This upfront costs is usually 1% to 3% of the home purchase price. The amount you pay in earnest money, however, will be subtracted from your closing costs.

Upfront cost # 8: Home Associations Dues

If you’re buying a condo, you may have to pay homeowners association dues. Homeowners association dues cover operation and maintenance fees. And you will pay one month’s dues upfront at closing.

In conclusion, when it comes to buying a house, there are several upfront costs you will need to consider. Above are some of the most common upfront costs of buying a house.

Click here to compare mortgage rates through LendingTree. It’s completely FREE.

MORE ARTICLES ON BUYING A HOUSE:

10 First Time Home Buyer Mistakes to Avoid

How Much House Can I afford

5 Signs You’re Better Off Renting

7 Signs You’re Ready to Buy a House

How to Save for a House


Not All Mortgage Lenders Are Created Equally

When it comes to getting a mortgage, rates and fees vary. LendingTree allows you to view and compare multiple mortgage rates from multiple mortgage lenders all in one place and at the same time, so you can choose the best rates for your needs. LendingTree makes getting a loan faster, simpler, and better. Get started today >>>

The post 8 Upfront Costs of Buying a House appeared first on GrowthRapidly.

Source: growthrapidly.com

Does Refinancing Hurt Your Credit?

Before you make any big financial decision, it’s crucial to learn how it may affect your credit score. If you’re looking to refinance, it’s natural to wonder if it might hurt your credit.

Typically, your credit health will not be strongly affected by refinancing, but the answer isn’t always black and white. Whether you’re still considering your options or already made your choice, we’ve outlined what you need to know about refinancing below.

What Is Refinancing?

Refinancing is defined by taking on a new loan to pay off the balance of your existing loan balance. How you approach a refinancing decision depends on whether it’s for a home, car, student loan, or personal loan. Since refinancing is essentially replacing an existing debt obligation with another debt obligation under different terms, it’s not a decision to take lightly.

If you’re worried about how refinancing will affect your credit health, remember that there are multiple factors that play into whether or not it hurts your credit score, but the top three factors are:

1) Having a Solid Credit Score

You won’t be in a strong position to negotiate refinancing terms without decent credit.

2) Earning Sufficient Income

If you can’t prove that you can keep up with loan payments after refinancing, it won’t be possible.

3) Proving Sufficient Equity

You’ll also need to provide assurance that the payments will still be made if your income can’t cover the cost. It’s recommended that you should have at least a 20 percent equity in a property when refinancing a home.

 

criteria-for-being-able-to-refinance-successfully

 

How Does Refinancing Hurt Your Credit?

Refinancing might seem like a good option, but exactly how does refinancing hurt your credit? In short, refinancing may temporarily lower your credit score. As a reminder, the main loan-related factors that affect credit scores are credit inquiries and changes to loan balances and terms.

Credit Inquiries

Whenever you refinance, lenders run a hard credit inquiry to verify your credit score. Hard credit inquiries typically lower your credit scores by a few points. Try to avoid incurring several new inquiries by using smart rate shopping tactics. It also helps to get all your applications in during a 14–45 day window.

Keep in mind that credit inquiries made during a 14–45 day period could count as one inquiry when your scores are calculated, depending on the type of loan and its scoring model. Regardless, your credit won’t be permanently damaged because the impact of a hard inquiry on your credit decreases over time anyway.

Changes to Loan Balances and Terms

How much your credit score is impacted by changes to loan balances and terms depends on whether your refinanced loan is reported to the credit bureaus. Lenders may report it as the same loan with changes or as an entirely new loan with a new open date.

If your loan from refinancing is reported as a new loan, your credit score could be more prominently affected. This is because a new or recent open date usually means that it is a new credit obligation, therefore influencing the score more than if the terms of the existing loan are simply changed.

How Do Common Types of Refinancing Affect Your Credit?

Refinancing could help you pay off your loans quicker, which could actually improve your credit. However, there are multiple factors to keep in mind when refinancing different types of loans.

 

main-types-of-refinancing-that-can-affect-your-credit

 

Refinancing a Mortgage

Refinancing a mortgage has the biggest potential impact on your credit health, and it can definitely affect your FICO score. How can you prevent refinancing from hurting your credit too much? Try concentrating your credit inquiries when you shop mortgage rates to a 14–45 day window — this will help prevent multiple hard inquiries. Also, you can work with your lenders to avoid having them all run your credit, which could risk lowering your credit score.

If you’re unsure about when to refinance your mortgage, do your research to capitalize on the best timing. For example, refinancing your mortgage while rates are low could be a viable option for you — but it depends on your situation. Keep in mind that losing your record of paying an old mortgage on time could be harmful to your credit score. A cash-out refinance could be detrimental, too.

Refinancing an Auto Loan

As you figure out if refinancing your auto loan is worth it, be sure to do your due diligence. When refinancing an auto loan, you’re taking out a second loan to pay off your existing car debt. In some cases, refinancing a car loan could be a wise move that could reduce your interest rate or monthly payments. For example, if you’re dealing with an upside-down auto loan, you might consider refinancing.

However, there are many factors to consider before making an auto loan refinancing decision. If the loan with a lower monthly payment has a longer term agreement, will you be comfortable with that? After all, the longer it takes to pay off your car, the more likely it is to depreciate in value.

Refinancing Student Loans

When it comes to student loan refinancing, a lower interest rate could lead to major savings. Whether you’ve built up your own strong credit history or benefit from a cosigner, refinancing can be rewarding.

Usually, you can refinance both your federal and private student loans. Generally speaking, refinancing your student loans shouldn’t be detrimental in the grand scheme of your financial future. However, be aware that refinancing from a federal loan to a private loan will have an impact on the repayment options available to you. Since federal loans can offer significantly better repayment options than private loans, keep that in mind before making your decision.

Pros Cons
If the cost of borrowing is low, securing a lower interest rate is possible Credit scores can drop due to credit checks from lenders
If your credit score greatly improved, you can refinance to get a better rate Credit history can be negatively affected by closing a previous loan to refinance
Refinancing a loan can help you lower expenses in both the short term and long term Refinancing can involve fees, so be sure to do a cost-benefit analysis

How to Prevent Refinancing from Hurting Your Credit

By planning ahead, you can put yourself in a position to not let refinancing negatively affect your credit and overall financial health.

Try to prepare by reading your credit reports closely, making sure there are no errors that could keep your credit application from being approved at the best possible rate. Stay one step ahead of any errors so you still have time to dispute them. As long as you take preventative measures in the refinancing process to save yourself time and money, you shouldn’t find yourself struggling with the refinancing.

If refinancing makes sense for your situation, you shouldn’t be concerned about it hurting your credit. It might not be the most ideal situation, but it’s extremely common and typically relatively easy for your credit score to bounce back.

If you notice that your new loan from refinancing causes alarming changes when you check your credit score, be sure to reach out to your creditor or consider filing a dispute. As long as you’re prioritizing your overall financial health through smart decision making and budgeting, refinancing shouldn’t adversely hurt your credit in the long run.

 

 

 

The post Does Refinancing Hurt Your Credit? appeared first on MintLife Blog.

Source: mint.intuit.com

Mortgage Rates vs. the Stock Market

Mortgage match-ups: “Mortgage rates vs. the stock market.” With all the recent stock market volatility, you may be wondering what effect such events have on mortgage rates. Do mortgage rates go up if stocks go down and vice versa? Or do they move in relative lockstep? Let’s find out! Stocks and Mortgage Rates Follow the [&hellip

The post Mortgage Rates vs. the Stock Market first appeared on The Truth About Mortgage.

Source: thetruthaboutmortgage.com