I recently had a chance to catch up with Charles Donovan of Trident Mortgage to discuss what’s happening with residential mortgages and interest rates lately. Here is what Charles had to say. You can always contact him directly by visiting his website: charlesdonovan.tridentmortgage.com.
Q. What are interest rates looking like today and what do you expect them to do over the next six months?
Charles: Mortgage interest rates have been holding steady in a range between 4.125% and 4.625% on conforming loans (single mortgage loan amount not greater than $417,000 in our lending area (PA/NJ/DE). Jumbo rates (single mortgage loan amount(s) in excess of $417,000) have been very steady trading for the past 45+ days at the 4.125% to 4.375% range – still historically low! Data as well as the Federal Reserve decreasing their stimulus bond purchases each month will inevitably put upward pressure on interest rates – I think conforming rates will approach the 4.50% to 5.00% range heading into the 4th quarter of 2014.Q. Do you have any unique loan options you offer your customers?Charles: YES….I have a wonderful portfolio of mortgage products that are geared towards borrower’s specific needs – the key here is asking the client the pertinent probing questions in order to place them with a particular loan program. For example, USDA Financing (US Department of Agriculture) has targeted areas that they will lend in – USDA offers fixed rate 100% financing with greatly reduced monthly mortgage insurance. I also have conforming loan products available with as little as 5% cash down plus applicable closing costs and no MI (Monthly Mortgage Insurance). Just a couple of the unique products that we have available to our valued clients and borrowers.Q. What should people be doing right now to prepare to get the best interest rate if they plan to buy in a year?Charles: PAY ALL your debt obligations ON TIME….And DO NOT take on any additional liabilities (i.e. Auto Loan/Lease/Department Store Credit Card, etc.) AND DO NOT co-sign any loan for anyone - this debt will be fully counted against your DTI (Debt to Income Ratio) during the mortgage approval process. It is also very important to “clean up” any outstanding debt, liens, etc. The less debt the borrower is carrying and the borrower’s credit scores are SO important to being able to obtain potential new home financing and also just importantly being able to obtain the best rates and terms for a potential new home purchase loan. And don’t switch jobs – underwriters love to see job/employment stability and longevity.Q. Many people concentrate on getting the lowest interest rate as possible, but what are the other things they should be considering when choosing a mortgage professional?Charles: Lender fees – a borrower can obtain just about any rate that he or she desires, but, the “devil is in the details”. Fees related to a particular mortgage product and or rate should be scrutinized very closely especially if a lender determines that you are a “rate shopper”. At times rates can be reduced slightly, but lender fees can also increase exponentially in order to cover the cost of this below par rate. Work with a mortgage banker that knows their business, is local and accessible and available to answer all your questions and concerns through the process. Communication and knowledge are much more important than a slightly lower rate or reduced fees when a buyer is buying the Single Most Expensive Purchase of their LIFE….a new home.
