Are you still wondering what’s going on with the housing market right now? It’s a hot topic, and mortgage banker Michael Woodard with Atlantic Bay Mortgage Company has an inside view of the business when it comes to answering your questions about both the environment and how to secure your own loan.
At Atlantic Bay, getting the loan closed is the focus. There is no other line of business, so all of the effort is making sure each client is getting the right mortgage.
We had the chance to talk with Michael, and he shared a lot of insight for both buyers and sellers in regard to the latest interest rates, the overall process of securing a mortgage, and why it might not be as intimidating as it seems.
Many misconceptions make purchasing a home and applying for a mortgage confusing. Michael helps us debunk some of these common myths:
Do you need to have perfect credit to qualify for a mortgage?
Absolutely not – you need a 640 credit score (in some cases as low as 580) to qualify. We can take a look at your credit and give you ideas of how to improve your score.
Will applying for a mortgage hurt your credit?
One lone inquiry will have little to no impact on a strong credit score. Where inquiries can be detrimental to a credit score is when multiple different types (i.e. – car dealership, mortgage, credit card, rooms-to-go) of credit lenders are all pulling credit in a short amount of time. When someone has multiple inquiries from lots of types of credit lenders are signs someone is looking for credit wherever they can get it and are red flags of being over-extended
Is renting cheaper than buying a home right now?
If you can save up for a 3% down payment and closing costs, buying is a much smarter fiscal decision vs. renting. Renting gets you nowhere.
Do you have to put 20% down to buy a home?
First time homebuyers can put as little as 3% down on their first home. Repeat buyers can put as little as 5% down.
If you have any debt, is it still possible to obtain approval for a home?
Absolutely! Having debt isn’t a bad thing – have unmanaged debt is. We calculate a buyers ability to buy based off of their debt-to-income ratio (think how much is committed each month vs. how much you bring in). Having a car loan, or student loan isn’t a bad thing as long as you can still afford to carry a mortgage payment.
There are a lot of misconceptions relating to the Fed’s action vs. what actually happens to mortgage rates. Can you tell us more about this recent action?
There are lots of misconceptions concerning the Fed’s actions. When the Fed raises interest rates (called the Federal Funds Rate), that directly impacts short-term lending (think credit cards, home equity lines and car loans). All of those rates are based off of the federal funds rate. Mortgage rates are based on the long-term bond market. For mortgage rates, we must wait and see the reason WHY the Fed took the action they did. In the last few recent meetings, the Fed raised the federal funds rate as a tool to bring inflation down. Inflation is the archenemy of the bond market, so in this case, the Fed raising interest rates is helping mortgage rates come DOWN. As the market believes that inflation will slowly come down, so can the yield bonds will require to continue to attract investment. As the yields come down, mortgage rates can come down as well.
In today’s environment, why are people coming to you most with rising interest rates?
You marry the house; you date your interest rate. In this rising rate environment, purchasing a home is still an excellent tool for building wealth and a great hedge against inflation (another hot topic). I believe most of the loans I’m writing today will likely be refinanced in 1-3 years. Interest on rent is still 100% – and rates are still well below historic average. We’ve been wearing rose colored glasses the last two years and got spoiled with historic low’s.
What’s the first thing you recommend people doing before they even contact you if they are needing assistance?
Pick up the phone and call. The first step to home ownership is planting your flag in the sand and identifying your starting point. Even if you don’t feel you’re ready to purchase yet, let’s see where you are and establish a course to navigate towards home ownership. We can help you plan for saving, give guidance on building/fixing credit and creating a plan to break the cycle of renting.
Do you feel like now is still a good time to buy a home based on where you see the market going?
The best time to buy a house was 10 years ago, the 2nd best time is right now. We have a massive imbalance between the number of people trying to buy a home vs the number of homes available to be bought. It will take builders 3-5 years to catch up to the supply. In addition to the thousands of people migrating to our area annually will only make homes here more desirable. Buying here is a wise decision, in my opinion.
Still have questions? Contact Michael Woodard and his Atlantic Bay team about securing your own home loan.