February 5, 2020
Shopping around, haggling over terms, and negotiating your home loan are not unusual practices, but some are not comfortable with trying them. Want an advantage in the home loan process?
Learn how to do some low-key bargaining as it can save you money and time over the long haul with your home loan. Negotiating with the seller, for example, could get you extra money (provided by the seller) toward closing costs; up to six percent of the sale price of the home!
But haggling isn’t the only factor that can affect the cost of your home loan.
The Wuhan virus, discussed in the news as a coronavirus or a “coronavirus outbreak”, affected mortgage loan interest rates and sent them to the lowest levels we’ve seen in some time.
The virus, and headlines about the Wuhan virus, did not directly affect rates any more than mere talking about rising interest rates could make them rise higher. But investor reaction to virus news? That definitely had an effect.
Investors tend to move toward “safe haven” investments when headlines generate concern; that move away from riskier transactions can affect mortgage loan rates.
Rates are adjusted daily, even hourly, so the fluctuations may be small, or dramatic. It all depends on the news, the reaction to it, and other variables.
In the first month of 2020, FHA loans hit a best-execution range with 3.125% at the low end. That is an impressively low rate. But as coronavirus fears subside with each passing day’s news of quarantines and aggressive response to the outbreak. And rates will rise again to their pre-Wuhan virus levels.
That means interest rate adjustments; things will get closer to normal and rates will go back up to pre-Wuhan outbreak levels.
If you are a house hunter (or if you want to build instead of buying a home with an FHA construction loan even as a first-time homebuyer) you should not worry about “missing out” on the low mortgage rates seen in January 2020.
If you aren’t ready for the loan yet, no interest rate can help. When you are ready, that’s when you should put more emphasis on the current going interest rate.
And you should also identify other issues that can add costs to your mortgage transaction. Do you want to pay the Up Front Mortgage Insurance Premium in cash at closing time?
If so, you’ll need to budget for that expense. But if you finance it, you will need to calculate how much that will add to your monthly mortgage payment and see if you can accept the increase.
Anticipating costs like that will help you be better prepared for the overall expense of your home loan whether that’s in the cash to close stage or the monthly mortgage payment stage.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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