Hey! So, you want to buy a home, huh? But you keep hearing that it is expensive and difficult, and you should wait. First, thank you for taking the time to read my article. I'm a Kissimmee real estate agent, and my goal is to help you own a home so you can enjoy a better life. In this article, I will focus on how to get a lower-than-average monthly payment when buying a home this year. If you grew up in a Hispanic household like me, you know it is instilled by our authority figures to look for the best deal. (Bueno, Bonito, y Barato).I saw homebuyers shy away from buying a home back in 2020 because "The market was going to crash because of Covid."
What happened? Well, You know the story. The lesson here is that there will not be a perfect time to buy. The stars will not align so you can buy your home-- no. It's important to work with what you have. Get creative, and make a little sacrifice to make your dreams a reality. Be your own hero. Before we start, I want to share something I talk about constantly. This is NOT going to help you lower your monthly. But it will give you a better idea of how much your monthly payment will be.
Know Your Estimated Monthly Payment
Ask your lender for the mortgage summary to find out your monthly payment. Your estimated monthly payment is an important factor when you are buying a home. You should not go house hunting without knowing your estimated monthly payment. How much money you will have to bring to closing, and if the home is in an HOA, how much higher your monthly payment will be?
If your loan officer refuses to give you the estimated monthly payments with your pre-approval letter, how can you know for sure you can afford the place? Ohh!Because the loan officer did their calculations, and you got approved for an x loan amount. But you have to live on bread and water for the next 30 years, and yes, that means no vacations...Ha Ha Ha, that is an exaggeration, but you get the point. The loan officers I work with send you a pre-approval letter and a mortgage summary, no questions asked. You can also request a personalized estimate for a home you like before you even step foot in the home.
Now, let's talk about how to lower your monthly mortgage payment.
The Lock and Shop Mortgage Program
This program was designed to help you secure your home without worrying about rising interest rates. It allows you to lock in a favorable rate for up to 180 days, giving you more time to shop for and close on your new home. Only some lenders have this available, so ask about this program before applying.
Down Payment Assistance
There are multiple Down Payment Assistance programs available for you here in Kissimmee.
DPA programs may cover most or all of your down payment. But you have to qualify, and in most cases, you have to take a 2+ hour class. If you are curious to know if you qualify, here is the Eligibility Form So, how does this help you lower your monthly payment? As a prepared homebuyer, you have savings for your downpayment and your closing fees. Combine your savings with your Down Payment Assistance, that way, you borrow less money and lower your monthly payments.
Interest Rate Buydown
Interest rate buydown is a financing option that allows you to lower the interest rate on your loan. It involves paying an extra fee upfront to lower the interest rate for the remainder of the loan term. By buying down the rate, you reduce your monthly payment. If you are using a Florida Bond to get Down Payment Assistance, you may not buy the interest rate down. Sorry! The Rate buydown requires you to pay an extra fee. What if you don't have the money? I'll talk about this later in this article, so keep reading. The Next couple of options can be done after you buy the home.
Mortgage Recasting
Pay a lower monthly payment without having to refinance.
Mortgage recasting is a way to pay off part of your mortgage with one large payment. You are reducing the amount you owe and making your monthly payments lower. With mortgage recasting, you can save money on interest and reduce your tax burden. Plus, it won't change the length of your loan or the interest rate! Mortgage recasting is like a discount for your loan. You will have to pay a few hundred dollars to do the recasting, but it's cheaper than refinancing your mortgage. Why would you do this instead of putting more money down from the beginning? Mortgage recasting is ideal for someone who got a chunk of money, like a settlement or an inheritance.
Here are 3 Questions to ask your loan officer to make sure this is an option for you:
· Does the lender allow a mortgage recasting?
· Is there a minimum amount of money you need for the mortgage recasting?
· Do you have to wait a certain amount of time to do it?
Loan Refinancing
Refinancing your home loan can help you lower your monthly payment in a few ways. Here are some ways that refinancing may help you reduce your monthly mortgage payment:
Adjust Your Interest Rate:
If you refinance your home loan, you can secure a lower interest rate than your current rate. This will depend on the market. It's a good idea to refinance if the interest rate is 1% + less than your current rate.
Longer Repayment Term:
Refinancing can help lower your monthly payments. If you have a 15-year mortgage and refinance to a loan with 5 years left, the amount of time you'll have to pay off your loan will increase. This will make each individual payment smaller than if you had the same loan for 15 years.
Change in Loan Type:
If you have an adjustable-rate mortgage(ARM), you could change it to a fixed-rate mortgage. This could provide more stability in your payments and could lower what you pay each month.
Eliminate Private Mortgage Insurance (PMI):
If you have less than 20% equity in your home, you may be paying private mortgage insurance (PMI). Refinancing may allow you to eliminate PMI, lowering your monthly payment. Refinancing your home loan costs you money in fees and closing costs. It's important to consider the cost and the benefit of doing this before making a decision. Now, please use your imagination for a moment. Make believe we are working together. You just got your pre-approval letter and are ready to find your new home. Before we go out to view homes, we'll have a home-buying consultation. During the consultation, we discuss important topics, like home inventory and market trends. Let's dig into each one.
The Home Inventory
The number of homes for sale vs. buyer demand will tell us what opportunities you have and if we can negotiate prices and terms. When there's a low inventory of homes and a high demand, the negotiating scales tilt in the seller's favor. And if there are a lot of homes for sale but only a few buyers, the opposite happens. To figure this out, we will look at the Kissimmee market trends.
The Housing Market Trends
Knowing the Kissimmee trends gives you an advantage over other homebuyers. You could get seller credits to buy down your interest rate or pay for closing costs. We will review this in more detail during our home-buying consultation.
Conclusion:
There you have it! These are the practical strategies to lower your monthly mortgage payments.
It's time to make your dream of owning a home come true! With my help, you can find the best way to make your mortgage payments work. The Lock and Shop Mortgage Program can offer you temporary payment relief. Down Payment Assistance is a great tool to reduce your loan amount. Interest Rate Buydown and Loan Refinancing can help lower your interest rate. Mortgage recasting allows you to put a lump sum down and apply it to the principal balance. Adjusting your interest rate is also an option – but only if you plan on staying in your home for a substantial amount of time. You could also try lengthening your repayment term or changing the type of loan altogether. Lastly, Eliminating Private Mortgage Insurance (PMI) is an excellent choice if eligible. Remember - every homebuyer has different needs - so choose what works best for YOU!
Book a consultation with me today, and let’s start making your dream of owning a home come true! 👇
Hire a Kissimmee REALTOR:
If you want to sell and buy your next home, fill out the form at the bottom of this article for a free consultation.
Thank you!
Thank you for visiting my blog. I hope you found a golden nugget of information. If you found this article helpful, share it with others.
My mission:
To guide, inform and inspire you to take the 1st step toward your best life. Buy or sell homes with confidence. -Jury Hernandez, Broker Associate
