Default risk is up for conventional loans! What on earth does this mean? Unfortunately it means that more people are not paying their mortgages. That’s a bummer! It’s not up much, 0.4% since December and 0.8% since January 2014. However, it’s the fifth month in a row that there’s been an increase, so that’s concerning. But, why the uptick? Inquiring minds want to know…
I wish I had the answer, but I’m afraid there’s more research to be done to find out, such as the LTV of these loans, where they are, credit profile-- and that information usually doesn’t get sorted out for a while.
So, why should you care?
The most important thing when purchasing a home is to make sure you get the best mortgage for you. Yes, for you. Not for your parents, not for your neighbor, or co-worker; for you. People talk with each other about getting the lowest rate, but don’t always realize that there’s much more to consider. Getting the best mortgage for you helps you feel confident that you can comfortably make the monthly payment and know your purchasing power. There are many nuances to the mortgage world; the rules and regulations change quickly, and in some cases, often. For example, if you are just shopping for interest rate and don’t have 20% for a down payment, your loan will require mortgage insurance which will increase your monthly payment substantially compared to a payment that a basic mortgage calculator might show you after only calculating an interest rate. Also, different loans have different mortgage insurance rates. Hmm, see how this gets complicated? Also, you may have the option of two loans-- a first and second lien instead of one loan with mortgage insurance.
What does this mean to you?
Shop for the best licensed lender, not the best rate. The best licensed loan officer will take a full loan application from you and let you know all your options. There are many loan programs available, especially for first time homebuyers. Review loan programs in detail and ask questions about each so that you are comfortable and understand each of your options. It’s extremely important to understand all the different pieces of the monthly payment, what can change, when, and, why. Just because you have a fixed-rate mortgage, it doesn’t mean your monthly payment will stay the same over the life of the loan. Your mortgage insurance, property taxes, and homeowners insurance can change and affect your monthly payment.
Please email me directly at email@example.com for questions and loan program options.