When obtaining a home loan, you’ll receive two important documents from your lender: a loan estimate and a closing disclosure. On the surface, these documents are very similar, but they both serve different purposes. Here’s what you need to know about the differences between these two forms and what each means for you:
Why You Should Buy a Home Now Before It’s Too Late
If you are looking to buy a home, 2015 is the year to do so. What makes this year so special? Well, unlike in the years after the 2008 economic crisis, confidence in the housing market is rising amongst Americans.
Even though it is admittedly more difficult to buy a home now than it was in the past, the state of the current housing market implies that now is a good time to buy a home. However before you jump in, please talk to your real estate agent and loan officer to discuss the best options for you when purchasing a home.
Lower Mortgage Interest Rates
Since 2014, mortgage interest rates have been on the decline. Generally, interest rates are lowered by the Federal Open Market Committee to help stimulate economic growth and encourage investing. Lower interest rates help with home financing, thus helping home buyers save money. When interest rates lower, real estate prices tend to increase because they affect the flow of supply and demand.
Rising Home Values
According to Zillow.com, “home values have gone up 3.0% over the past year.” Rising home prices means that your home will build equity. Home equity is found by subtracting the mortgage balance with the property value. So if your home is worth $100,000 and you have $30,000 left to repay, you have a home equity of $70,000. Home equity is also an important part of your net worth.
However, rising home prices can have a downside. While rising home values are good for sellers and homeowners who want to sell at a profit, it does mean that some potential homeowners will be unable to afford buying a home.
Lower Down Payments
In the past, home buyers were often required to put down a hefty down payment on the home when they purchased it. Now, lenders are once again offering lower down payments for borrowers. Just remember that lower down payments can affect your Kansas City mortgage rates, leading to larger monthly mortgage payments.