Stop Waiting for 5% Mortgage Rates — There May Be a Better Strategy
If you're waiting for mortgage rates to hit 5% before buying a home, you're not alone.
I've spoken with plenty of buyers who have essentially put their plans on hold because they believe a lower mortgage rate will automatically create a better buying opportunity.
Maybe rates will eventually reach 5%.
Maybe they won't.
But here's the bigger question:
What opportunities could you be giving up while you wait?
Instead of trying to perfectly predict mortgage rates, there may be a better strategy: use the leverage available in today's market to negotiate a transaction that works with today's numbers.
The Problem With Waiting for a Specific Rate
Nobody can tell you exactly when mortgage rates will reach a particular number.
Mortgage rates respond to numerous economic factors, including inflation expectations, the bond market, employment data, and broader economic conditions.
So saying, “I'll buy when rates hit 5%,” sounds like a plan, but it's really a prediction.
And while you're waiting for that prediction to come true, other parts of the housing market can change.
Home prices can move.
Inventory can change.
Seller motivation can change.
And perhaps most importantly, buyer competition can change.
What Happens If Rates Actually Reach 5%?
This is the part buyers sometimes overlook.
Imagine mortgage rates decline substantially.
You probably won't be the only buyer who notices.
People who have spent months or years waiting may start looking at homes again.
More buyers could mean:
- Increased competition
- More multiple-offer situations
- Less negotiating power
- Fewer seller concessions
- More pressure on desirable properties
So while you may get the lower interest rate you've been waiting for, you could potentially give up some of the leverage available in today's market.
A lower rate does not automatically equal a better overall deal.
Today's Seller Could Help You Lower Your Payment
Instead of waiting for the market to give you a lower rate, consider whether the seller can help you create one.
Depending on the transaction, loan program, and applicable contribution limits, seller concessions may potentially be used toward eligible closing costs or discount points.
For example, suppose a seller is willing to provide a $15,000 credit.
Rather than automatically asking for a $15,000 price reduction, we can compare what happens if eligible funds are used toward:
- Discount points
- Closing costs
- Prepaid expenses
- A temporary rate buydown
- Other allowable costs
Sometimes reducing the interest rate can have a greater effect on your monthly payment than reducing the purchase price by the same amount.
But you have to run the numbers.
Consider a Permanent Rate Buydown
A permanent rate buydown uses discount points paid at closing to obtain a lower mortgage interest rate.
The rate reduction available for a given cost varies with market pricing, loan characteristics, and the day the rate is locked.
But the concept is important.
Instead of asking:
“When will the market give me a lower rate?”
you can ask:
“Can we negotiate enough seller assistance to help me obtain a lower rate now?”
That puts the focus on something you may actually be able to negotiate.
A Temporary Buydown Could Be Another Option
Some buyers may also consider a temporary buydown when permitted by their loan program.
A common example is a 2-1 buydown.
With a typical 2-1 structure, the payment is calculated using an effective rate 2 percentage points below the note rate during the first year and 1 percentage point below during the second year. The borrower then makes the full payment based on the note rate.
This can reduce the initial payment, but there is an important rule:
You need to be comfortable with the full payment.
Never buy a home you cannot afford based on the assumption that rates will drop and you will refinance before the temporary buydown ends.
Don't Focus Only on the Interest Rate
Buyers can become so focused on rates that they overlook everything else affecting affordability.
Your total housing expense can include:
Principal + Interest + Property Taxes + Homeowners Insurance + Mortgage Insurance + HOA Dues
Then consider your down payment and closing costs.
Two homes with identical purchase prices can have very different total monthly costs.
And two buyers with the same mortgage rate can have very different financial outcomes depending on how their transactions are structured.
The interest rate matters.
But the complete transaction matters more.
More Negotiating Power Can Create Opportunity
When sellers have fewer buyers competing for their properties, negotiations can become more flexible.
Depending on the property and seller motivation, buyers may be able to negotiate:
- Price reductions
- Seller-paid closing costs
- Rate buydowns
- Repairs or credits
- More favorable terms
That leverage has real financial value.
The goal isn't simply to find the cheapest house.
It's to find the property you want and determine whether the seller, financing, and purchase terms can be structured into a deal that makes financial sense.
What If Rates Drop After You Buy?
This is another important part of the strategy.
If you purchase today and mortgage rates decline meaningfully in the future, refinancing may become an option.
But refinancing is never guaranteed.
You would still need to qualify, and the savings would need to justify the refinance costs.
So I don't recommend purchasing today solely because you believe you can refinance later.
The mortgage should work for you today.
If rates eventually fall enough that refinancing provides a meaningful financial benefit, then we evaluate that opportunity when it happens.
There Are Times When Waiting Makes Sense
Not everyone should buy right now.
Waiting may be the better decision if you need time to:
- Improve your credit
- Reduce debt
- Increase savings
- Build emergency reserves
- Stabilize employment or income
- Prepare for a major life change
Those are legitimate financial reasons to wait.
But waiting solely because you're targeting an arbitrary 5% mortgage rate is different.
Before making that decision, find out whether the numbers could already work.
Derek Parent: Mortgage Lending Since 1998
Derek Parent has been in mortgage lending since 1998, helping homebuyers navigate different housing markets and interest-rate cycles for more than 25 years.
Through The Parent Team, Derek works with first-time buyers, veterans, self-employed borrowers, investors, luxury buyers, and Las Vegas condo and high-rise purchasers.
Depending on borrower and property eligibility, financing options may include conventional, FHA, VA, jumbo, bank statement, DSCR, asset-based, and other specialized mortgage programs.
The objective isn't to convince someone to buy because rates might rise or fall.
It's to evaluate the transaction based on today's numbers and determine whether seller concessions, loan structure, down payment, and other strategies can create a payment that works.
Final Thoughts
You don't control where mortgage rates will be six months from now.
But you may have more control over today's transaction than you realize.
Instead of waiting indefinitely for 5% mortgage rates, find out what you can negotiate today.
Could the seller contribute toward your eligible closing costs?
Could seller concessions help buy down your rate?
Could a different loan structure improve your payment?
Could negotiating the financing provide more value than simply negotiating the purchase price?
Those are questions worth answering before you decide to spend another six months or year on the sidelines.
If you're considering buying a home in Las Vegas, contact Derek Parent and The Parent Team. Let's run the numbers and determine whether there's a better strategy than simply waiting.
How to Lower Your Monthly Mortgage Payment Without Waiting for Rates to Drop
A lot of homebuyers are sitting on the sidelines for one reason:
They are waiting for mortgage rates to drop.
It sounds logical. If rates fall, your monthly payment should be lower.
But there is a problem with building your entire homebuying strategy around something you cannot control.
You cannot control where mortgage rates will be three months, six months, or a year from now. What you can control is how you structure your financing and negotiate your purchase.
And depending on the transaction, there may be several ways to lower your monthly mortgage payment without waiting for rates to fall.
1. Negotiate a Seller-Paid Rate Buydown
In a more negotiable market, seller concessions can become one of a buyer's most valuable tools.
Instead of asking only for a lower purchase price, you may be able to negotiate seller credits that can be applied toward eligible closing costs or discount points, subject to your loan program's limits.
Discount points can be used to obtain a lower interest rate.
And depending on the numbers, using a seller credit toward the financing can sometimes have a greater immediate impact on your monthly payment than applying the same amount entirely toward a price reduction.
The key is running both scenarios before writing the offer.
2. Consider a Temporary Buydown
Another strategy is a temporary interest-rate buydown.
Programs such as a 2-1 buydown can temporarily reduce the effective interest rate used to calculate the borrower's payment during the first years of the mortgage.
For example, with a 2-1 structure, the payment is generally calculated at a rate 2 percentage points below the note rate during the first year and 1 percentage point below during the second year. After that, the borrower makes the full payment based on the actual note rate.
Temporary buydowns can be useful when allowed by the loan program and properly funded.
But buyers should always qualify based on the applicable underwriting requirements and be comfortable with the eventual full payment.
3. Put More Money Down—But Run the Numbers First
Increasing your down payment reduces the amount you need to finance, which can lower your monthly principal and interest payment.
But that does not automatically mean putting every available dollar into the house is the right strategy.
Keeping adequate reserves matters too.
Before increasing your down payment, compare what an additional $10,000, $20,000, or $50,000 actually does to your monthly payment.
Sometimes preserving liquidity is more important than achieving a relatively small payment reduction.
4. Look at Mortgage Insurance
If you are using conventional financing with less than 20% down, mortgage insurance can affect your monthly payment.
The cost can vary based on factors such as credit, down payment, and loan structure.
That means improving your credit profile or adjusting the down payment may change the mortgage insurance expense.
For homeowners who already have a mortgage, it may also be worth reviewing whether existing mortgage insurance can eventually be removed under the applicable loan rules.
The goal is to look at the complete housing payment, not just the interest rate.
5. Improve Your Credit Before You Buy
Your credit profile can have a major impact on mortgage pricing.
If you are close to a stronger qualifying credit tier, improving your score before applying or locking your rate could potentially improve your loan terms.
That might involve:
- Reducing credit card balances
- Correcting legitimate credit-report errors
- Avoiding new debt
- Keeping existing accounts current
- Reviewing credit before making major financial moves
Do not randomly pay accounts off simply because you think it will increase your score. Mortgage credit scoring can be complicated, so it is better to review the situation before moving money around.
6. Compare Loan Programs, Not Just Rates
The mortgage with the lowest advertised interest rate is not necessarily the mortgage with the best overall payment or financial structure.
Depending on eligibility, buyers may have access to:
- Conventional loans
- FHA loans
- VA loans
- Jumbo loans
- Down-payment assistance
- Bank statement programs
- Other specialized financing
Each program has different requirements involving down payment, mortgage insurance, fees, credit, and qualification.
A good mortgage strategy compares the entire transaction, not one number.
7. Pay Attention to Property Taxes, Insurance, and HOA Fees
Your mortgage payment is not just principal and interest.
For many homeowners, the complete monthly housing expense also includes:
Principal + Interest + Property Taxes + Homeowners Insurance + Mortgage Insurance + HOA Dues
This becomes particularly important in Las Vegas when comparing single-family homes, condos, and high-rise properties.
A less expensive condo with a substantial HOA payment could have a higher total monthly housing expense than a more expensive property with lower monthly fees.
So shop based on your total comfortable monthly payment, not simply the home's purchase price.
8. Use Seller Negotiations Strategically
Suppose a seller is willing to give you $10,000 of economic value in a negotiation.
Should you take a $10,000 price reduction?
Ask for allowable closing-cost assistance?
Use eligible credits toward a permanent rate buydown?
The answer depends on your situation.
That is why your lender and real estate agent should communicate before the offer is submitted.
When financing and negotiation strategy work together, buyers may be able to structure a transaction around what matters most to them: monthly payment, cash to close, or overall cost.
What Happens If Rates Eventually Drop?
This is important.
Buying today does not mean you are necessarily stuck with the same mortgage forever.
If rates decline enough in the future and refinancing provides a meaningful financial benefit, you can evaluate refinancing at that time.
But there is no guarantee that rates will fall enough to make refinancing worthwhile, and future qualification is never guaranteed.
So the home should make financial sense based on the financing available today.
Think of a future refinance as a potential opportunity—not the reason you buy a home you cannot comfortably afford now.
Derek Parent: More Than 25 Years of Mortgage Experience
Derek Parent has been in mortgage lending since 1998 and works with buyers throughout Las Vegas and multiple states.
Through The Parent Team, Derek helps first-time buyers, veterans, self-employed borrowers, investors, luxury buyers, and condo and high-rise purchasers evaluate financing strategies based on their individual financial situations.
The objective is not simply to quote an interest rate.
It is to look at the entire transaction—including the purchase price, seller concessions, loan program, credit, down payment, closing costs, and monthly payment—and determine how those pieces can work together.
Final Thoughts
You do not have to sit on the sidelines indefinitely waiting for the "perfect" mortgage rate.
There may already be ways to improve affordability through seller credits, rate buydowns, down-payment strategy, credit improvement, mortgage insurance planning, and choosing the right loan program.
The important thing is running the numbers.
If you're considering buying a home in Las Vegas, contact Derek Parent and The Parent Team. We can show you several financing scenarios and help you understand what actually moves your monthly payment.
Derek Parent
The Parent Team
Mortgage Lending Since 1998
Phone: 702-354-1400
Email:Derek@theparentteam.com
Website: The Derek Parent Team
Don't wait for the market to create the perfect payment. Find out whether you can structure a better payment today.
The September Homebuying Window Most Buyers Are Overlooking
Most buyers assume spring and early summer are the best times to buy a home. More homes hit the market, families are planning moves, and real estate activity tends to increase.
But there is another window buyers often overlook:
September.
By September, the market can start to feel different. Homes that did not sell during the summer may still be available, sellers may become more motivated, and some buyers step away from their search.
For prepared buyers, that can create opportunity.
If you are considering buying a home in Las Vegas, September may be a month worth paying attention to.
Why September Can Shift the Negotiating Dynamic
During the busiest parts of the homebuying season, sellers may feel comfortable waiting for another offer.
But as summer ends, that mindset can change.
A seller who listed earlier in the year may now be thinking about how long the property has been on the market. Others may want to sell before the holidays or simply be ready to move on.
That does not mean every seller is desperate or every property is negotiable.
But it does mean buyers should look beyond the asking price and find out where there may be room to structure a better deal.
Don't Just Negotiate the Price
This is one of the biggest opportunities buyers sometimes miss.
Getting $10,000 off the purchase price sounds great, but depending on the transaction, using that negotiating leverage toward closing costs or an interest-rate buydown could potentially have a greater impact on your immediate cash needs or monthly payment.
A buyer might negotiate for:
- Seller-paid closing costs
- A permanent rate buydown
- A temporary rate buydown
- Repairs or credits
- Home warranty coverage
- Other allowable concessions
The best strategy depends on the loan program, property, seller, and buyer's financial goals.
So instead of asking only, "How much can we get off the price?", ask:
"How can we structure this offer to create the most value?"
Higher Inventory Can Give Buyers More Choices
One of the biggest differences in today's Las Vegas market compared with the ultra-competitive years is that buyers can have more choices.
That matters.
When buyers have alternatives, they may not have to make the same compromises they made when inventory was extremely limited.
Instead of immediately jumping on the first acceptable property, buyers may be able to compare:
- Location
- Condition
- HOA costs
- Seller motivation
- Days on market
- Price reductions
- Available concessions
That can create a healthier buying environment, especially for someone who enters the market fully pre-approved.
Sellers With Older Listings Deserve a Second Look
Some buyers automatically assume there must be something wrong with a home that has been listed for an extended period.
Sometimes there is.
But sometimes the original price was simply too aggressive, the property was listed during a slower period, or earlier buyers could not put the transaction together.
Those listings can be worth revisiting.
If a seller has already reduced the price and the property remains available, there may be an opportunity to negotiate terms that were not realistic when the home first hit the market.
September Can Be Especially Interesting for New Construction
Resale properties are not the only place to look for opportunities.
Builders operate around sales goals, inventory levels, and business timelines. Depending on the community and available homes, buyers may find incentives on certain quick move-in properties.
Those incentives can potentially include financing assistance, closing-cost credits, upgrades, or other promotions.
But do not assume the builder's advertised financing is automatically the best deal.
Compare the complete transaction, including:
- Purchase price
- Interest rate
- Discount points
- Closing costs
- Incentives
- Monthly payment
- Cash required at closing
Sometimes the incentive is excellent. Other times, a different financing structure may make more sense.
What If You're Waiting for Mortgage Rates to Drop?
This is where many potential buyers get stuck.
They are not saying they never want to buy.
They are saying:
"I'll buy when rates come down."
But waiting for the perfect interest rate creates another risk.
If mortgage rates improve enough to bring a large number of buyers back into the market, today's negotiating leverage could shrink.
You might get a better rate later but face more competition, fewer seller concessions, or stronger prices.
And if you buy now and rates eventually improve enough to justify refinancing, refinancing may be an option later, subject to qualification and market conditions.
There is no guarantee that will happen, so the purchase should still make financial sense based on today's numbers.
Preparation Is What Makes the September Window Valuable
A market opportunity does not mean much if you are not ready to act.
Before shopping seriously, understand:
- Your maximum comfortable payment
- How much cash you want to use
- Your loan options
- Your credit profile
- Estimated closing costs
- Whether seller credits could help
- How different rates affect your payment
This is where a strong pre-approval becomes important.
A properly structured buyer can look at a property and quickly determine whether the numbers make sense instead of trying to figure out financing after making an offer.
Derek Parent: More Than 25 Years of Mortgage Experience
Derek Parent has been in mortgage lending since 1998 and has spent decades helping buyers navigate changing housing and mortgage markets.
Through The Parent Team, Derek works with first-time buyers, move-up buyers, veterans, self-employed borrowers, investors, luxury buyers, and clients purchasing Las Vegas condos and high-rise properties.
Financing options can include conventional, FHA, VA, jumbo, bank statement, DSCR, asset-based, and other mortgage programs depending on borrower eligibility.
The objective is not simply to get someone pre-approved.
It is to structure the financing so the buyer understands the numbers before negotiating the property.
Final Thoughts
September does not magically make every home a great deal.
But it can create a window that prepared buyers should not ignore.
Summer listings may still be available. Sellers may be more willing to negotiate. Builders may have inventory they want to move. And buyers who have been sitting on the sidelines may still be waiting for the "perfect" market.
That combination can create opportunity.
If you have been thinking about buying in Las Vegas, this may be the right time to find out what the numbers actually look like.
Connect with The Parent Team to review your financing options and build a strategy before you start negotiating.
Don't wait for everyone else to decide it's a good time to buy. Find out whether it's a good time for you.
Las Vegas Market Update: The Loans Winning Right Now
The Las Vegas housing market is sending an important message right now: opportunities are still available, but buyers need the right strategy to succeed.
Southern Nevada single-family home prices are holding near record levels, with the median sales price at approximately $490,000. Sales activity has also increased compared to last year, while higher inventory is giving buyers more options and additional negotiating power.
This is not a dead market.
It is a strategy market.
The buyers who are winning today are properly qualified, correctly structured, and matched with the right mortgage program before they submit an offer.
The Growing Importance of Non-QM Lending
For years, most real estate professionals focused primarily on conventional, FHA, VA, and jumbo financing. Those programs remain important, but the mortgage market has changed.
Many financially strong buyers no longer fit perfectly within traditional agency lending guidelines.
That does not mean they are bad borrowers.
It means they may need a different loan product.
National mortgage lock data has shown Non-QM loans growing into a much larger portion of the mortgage market, recently accounting for more than 9% of total mortgage lock volume. Within the Non-QM category, bank statement loans and DSCR investor loans continue to be two of the strongest programs.
This is especially important in Las Vegas, where we have a significant number of:
- Self-employed buyers
- Business owners
- Real estate investors
- Doctors and medical professionals
- Consultants and contractors
- 1099 professionals
- High-net-worth borrowers
These buyers may earn substantial income, but their tax returns or W-2s do not always show the complete financial picture.
A Real Non-QM Success Story
We recently closed a loan for a self-employed doctor purchasing a $2.5 million property with a $1.9 million loan amount.
The borrower was a strong, high-income buyer. However, like many doctors in today’s market, he worked as a subcontractor through a hospital system.
More money was flowing through his business account than what he was paying himself through W-2 income. A traditional mortgage program did not accurately reflect the borrower’s true financial strength.
We structured the loan using a 12-month bank statement program and closed it at a 6.125% interest rate with no discount points.
That is exactly why Non-QM lending matters.
This was not a last-resort loan. It was a strong borrower, a strong transaction, and the correct loan product for the way the borrower actually earned his income.
Mortgage Programs Realtors Should Know About
12-Month Bank Statement Loans
Bank statement loans are designed for self-employed buyers, business owners, doctors, consultants, contractors, and borrowers whose tax returns do not accurately reflect their real cash flow.
Instead of relying exclusively on tax returns, the lender reviews deposits shown on the borrower’s personal or business bank statements.
DSCR Investor Loans
Debt Service Coverage Ratio loans can be an excellent option for real estate investors.
Qualification is based primarily on the rental income generated by the property compared to the proposed housing payment, rather than relying heavily on the investor’s personal income.
Asset-Based Loans
Asset-based lending can provide a strong solution for high-net-worth borrowers who have significant liquid assets but limited or difficult-to-document traditional income.
Jumbo and Non-QM Jumbo Loans
These programs are important for luxury buyers, high-income self-employed borrowers, and buyers requiring larger loan amounts.
Traditional underwriting does not always show the full financial strength of a sophisticated or self-employed borrower. A Non-QM jumbo loan may provide a more practical solution.
FHA and VA Loans
FHA and VA financing remain powerful options for primary residence buyers.
These programs can become even more attractive when combined with seller credits, temporary or permanent rate buydowns, and flexible underwriting guidelines.
Conventional Loans
Conventional financing continues to work well for borrowers with strong credit, stable W-2 income, sufficient assets, and standard property types.
The goal is not to replace traditional financing. The goal is to identify which program fits the borrower’s actual financial profile.
Do Not Assume a Buyer Is Unqualified
A buyer should not automatically be considered unqualified simply because they do not fit into one traditional lending category.
In today’s Las Vegas housing market, the deal is often won before the offer is written.
The right financing strategy can determine whether a buyer remains on the sidelines or successfully closes on a property.
Realtors should pay particular attention to buyers who:
- Are self-employed
- Own a business
- Invest in real estate
- Receive 1099 income
- Recently changed their income structure
- Take significant tax deductions
- Have substantial assets but limited traditional income
- Were previously denied by another lender
There may be more financing options available than they realize.
Structure the Financing Before Writing the Offer
Successful transactions begin with a detailed review of the borrower’s income, assets, credit, property type, and long-term goals.
When the loan is structured correctly from the beginning, the buyer can submit an offer with greater confidence and the real estate agent can better protect the transaction.
If you have a buyer who does not fit into a traditional mortgage box, send the file my way.
I am happy to review the borrower’s situation, structure the financing correctly, and help determine what is truly possible before you lose the deal.i
Gifting a Home
Are you planning on gifting a home to someone this holiday season? For most people, a gift this generous is probably out of the question. But maybe you had a good year financially, and a family member needs the help. Whatever the case is, here are some guidelines when it comes to giving the gift of real estate.
Buying a new home outright
Instead of buying a new home outright, it may be wise to gift the cash for the home, NOT the home itself. Everyone has their own preferences when it comes to what they want in a home, so allowing the recipient of your generous gift to choose their home is probably a much safer idea.
We highly recommend running this by your accountant, as you may also need to file a gift tax return.
Gifting the down payment
Gifting money for a down payment works in pretty much the same way—except when it comes to the mortgage. If there’s even the slightest hint that the money is a loan rather than a gift, it can hinder the recipient’s ability to get a mortgage.
You’ll want to work closely with the recipient’s lender to file the appropriate paperwork, which will include a verified gift letter certifying the funds are a gift, not a loan. The lender will also likely need to examine your finances to determine if you’re able to gift. And remember, most lenders won’t permit gifts from nonfamily members.
Gifting an existing home
Would your children love to own the home they grew up in? Unfortunately this is a poor option, especially if both parents are still living.
One of the tricky struggles with gifting a home you own is the differential between the cost basis (what you first paid for the house) and the current fair market value—which could be hundreds of thousands of dollars, depending on how long you’ve owned it and the appreciation in the area.
This might not matter if your children plan to live in the home forever: The gift will be subject to your gift tax limit, and they’ll only pay capital gains tax if they sell. But if (and, likely, when) they sell, they’ll be stuck paying taxes on the difference.
If you’re determined to gift someone a home this holiday season, remember to keep these guidelines in mind. It IS possible, but of course it’s extremely important to consult your accountant and/or financial advisors to ensure it’s done in the right way.
Why The Holidays are a Great Time to Refinance Your Mortgage
If you're a homeowner in Las Vegas and you want to lower your mortgage payment and/or consolidate your debt, then refinancing might be the right option for you!
So how does it Work?
Well, its not always that simple. There are many factors that determine if refinancing is right for you, such as interest rates and your current equity in your home. It also depends on what your current needs are. Do you want to lower your monthly payments and interest rate? Or do you want to cash out to consolidate your debt in time for the holiday season? There are different types of refinancing options to choose from.
The traditional refinance option allows you to get a new mortgage with a different interest rate and terms. This could help you lower your monthly payment and start saving! Interest rates fluctuate, meaning they go up and down. So, there's a chance that you can get a lower rate on your mortgage and start saving money every month! Note that when you refinance your mortgage you are starting from the beginning of the set terms. For example, if you are 5 years into a 30 year mortgage and you choose to refinance to get a lower rate or payment, you will start at the beginning of the term of the new loan. So, your total finance charges may be higher over the life of the loan.
The other option is a cash-out refinance - This is where you refinance your mortgage for more than you currently owe, then pocket the difference. Sounds great, right? Well, there are many factors that go into the process of cash-out refinancing. For example, you will need to apply and submit various documents, get an appraisal on your home, and have a good standing with your current mortgage for the past 12 months. However, if you qualify, cashing out is a great way to consolidate your debt and put more money in your pocket during the holiday season! Please note that when you do a cash out refinance, you are not eliminating your debt. You are consolidating it through your mortgage and will pay it off through your monthly loan payment.
The good news is that the Las Vegas real estate market is booming! Interest rates are competitive, and home values are increasing. That means that the majority of home owners have equity in their homes. You could take advantage of the our refinance options and lower your monthly payments, in addition to "cashing out" the difference.
If you are a homeowner in Las Vegas and you would like to take advantage of our refinance opportunities this holiday season, give us a call at 702-331-8185!
Tips For First Time Home Buyers
There’s probably hundreds of articles on the internet that are full of useful tips for first-time home buyers. Since our team has been exposed to thousands of loan transactions, we want to give you our expertise and personal advice. The more prepared you are, the smoother the process will be. We love helping our clients achieve their dreams of homeownership!
Check Your Credit Not only does your credit score matter, but your credit history is just as important. It’s not impossible to purchase a home with less-than-perfect credit, but it will be more expensive. In most cases, the lower your credit score is, the higher your mortgage interest rate will be. You also want to be mindful of your debt-to-income ratio, which is your total monthly debts divided by your gross monthly income. If you have substantial credit card debt, your debt-to-income ratio will likely be too high to qualify for a mortgage. Try to keep your debt-to-income ratio equal to or less than 43%.
Apply Now Before House Hunting Many hopeful buyers skip out on this crucial step and find themselves disappointed that they can’t qualify for a home that they fell in love with. Not to mention, you may qualify for more house than you think. You may be shopping for a house in the mid $200Ks range, when you can qualify for a home in the upper $300Ks.
Save Your Money! This seems like an obvious tip, but becoming a homeowner can get expensive. Don’t be discouraged! Just be sure to budget yourself and set enough money aside for your down payment, closing costs, and of course, furnishing your new home. Down payment options start as low as 3.5%, so you no longer have to make a 20% down payment to buy a house.
What Happens if You Inherit a Mortgage?
Most homeowners have mortgages, and the sad reality is all homeowners die eventually. And, if a homeowner dies with an outstanding mortgage loan, the mortgage company still expects to be paid. Whether the balance owed will be due all at once or can be paid off over time depends on who inherits the home and the state where thedeceased’s estate is being administered.
What Happens When a Homeowner Passes Away?
If someone dies owing money on a conventional mortgage, the mortgage company must usually be formally notified of the death as part of the probate process. However, if the deceasedtransferred his or her home to a living trust, such notice may be optional. (Sometimes the loan documents require it.)
If the home is owned by spouses and one of them dies, the mortgage company may allow the surviving spouse to make payments without interference since the loan had been extended to both parties.
If, however, the property is inherited by someone else, such as the deceased’s children, or if the home was just in the name of the deceased, the mortgage company may require the new owner to refinance the mortgage or pay the entire loan balance owed within a fairly short period of time. If the new owner is unable to meet its demand, the lender can foreclose on the home. (If the home was ultimately lost to foreclosure, that should not affect the credit of the “heir” because the heir was never personally obligated to pay the mortgage.) Flexibility on the part of the mortgage company in these circumstances is difficult to predict.
What should I do if I can’t pay?
Sometimes, people do not notify the mortgage company of a mortgage holder’s death and simply continue paying the loan. This scenario might happen, for example, if the heir to the home has bad credit, cannot afford to refinance or, alternately, pay the entire balance due, and yet wants to hold on to the house.
This strategy, however, could blow-up in the heir’s face should the mortgage company discover the ruse because the mortgage documents themselves will allow a foreclosure if the company is not notified of the death within a specific period of time.
All 50 states have laws that regulate mortgages at death. The very best option is to consult with an experienced estate attorney in the state where the home is located. That way, you can learn what specific options you may have.
This article was written by Brad Wiewel and originally published on Credit.com.
Trick Your Brain into Saving a Down Payment
Follow these 5 strategies to ensure you meet your long-term goals.
Why is it so difficult to stick with a long-term savings plan even when we truly consider our future goals to be just as important as — if not more than — our current desires? Chalk it up to our hardwiring: The rational side of the brain is often drowned out by the emotional side. Good news: It’s possible to outsmart those (very persuasive) instincts that encourage us to spend even when we know we should be saving.
Here’s how to save money for a down payment — or any other long-term savings goal — without letting those instincts get in the way.
Make it hard to spend
If your money is hard to get to, those impulse buys won’t be as easy to make. Put up some roadblocks by moving your savings from your checking account into a separate account that doesn’t have a debit card attached. Better yet, if you’ve got a separate emergency fund and you’re comfortable with not being able to access it immediately, move it into a money market account or other account with a higher interest rate and forget about it (unless you’re adding to the bottom line, of course).
Automate your savings
Take the task of saving out of your control and set up an automated account that diverts a certain amount of your income each month into a savings account. Because it removes the rationalization factor (“Should I save this month or skip it?”), it also removes the emotional act of negotiating with yourself.
Create specific goals and set reminders
Avoid settling for immediate gratification by forcing yourself to acknowledge your long-term goal regularly. Try posting a picture of your dream home in a highly visible area, pinning some money-saving quotes on your Pinterest board, or creating a clear savings timeline with specific number-based savings goals and saving it to your desktop to update with your daily progress.
Match impulse buys with an equal amount into your savings
Computers and smartphones make spending an ever-present option. Spending shouldn’t be forbidden. Instead, skew the act of spending to your favor. So you really want those new boots? Match that spending with an equal contribution to your down payment.
Sometimes the pain of doubling a cost is enough to deter a purchase. In the case you still choose to spend, the matched contribution ensures that at the very least you’re still taking measures to save.
Put away any unexpected savings
Can’t turn down a great sale? To piggyback a good habit onto any impulse purchase, take the sum that was discounted on your sale item and add it to your down payment savings account.
5 Financial Perks of Being a First Time Homebuyer
A number of tax benefits come with being a homeowner — but you’ve got some work to do if you want to take full advantage.
All of those forms you filled out to buy your house were just the beginning. First-time homeowners have years of mortgage and insurance paperwork to look forward to, and, of course, taxes.
To sort through that pile of paperwork and make sure you’re saving as much money as possible, here are six tax benefits for new homeowners.
1. You can deduct the interest you pay on your mortgage
The home mortgage interest deduction is probably the best-known tax benefit for homeowners. It lets you deduct all the interest you pay toward your home mortgage with a few exceptions, including these big ones:
Your mortgage can’t be more than $1 million.
Your mortgage must be secured by your home (unsecured loans don’t count).
Your mortgage must be on a qualified home, meaning your main or second home (vacation homes count too).
Don’t assume that if you are married and file a joint tax return, you have to own your home together to claim the interest: For purposes of the deduction, the home can be owned by you, your spouse, or jointly. The deduction counts the same either way.
And don’t worry about keeping track of how much you’re paying in interest versus principal each month. At the end of the year, your lender should issue you a form 1098, which reports the amount of interest you’ve paid during the year.
Warning: Since, as a first-time homeowner, you pay more interest than principal in the first few years, that number can be fairly sobering.
2. You may be able to deduct points
Points are essentially prepaid interest that you offer upfront at closing to improve the rate on your mortgage. The more points you pay, the better deal you get.
You can deduct points in the year you pay them if you meet certain criteria. Included in the list (and it’s a long one): Points must be paid on a loan secured by your main home, and that loan must be to purchase or build your main home.
3. For 2015, you can deduct PMI
Private mortgage insurance, or PMI, protects the bank in the event you default. PMI may be required as a condition of a mortgage for first-time homebuyers, especially if they can’t afford a large down payment.
For most years, PMI is not generally deductible. However, for 2015, qualifying homeowners who itemize may claim a tax deduction for the cost of PMI for both their primary home and any vacation homes.
4. Real estate taxes are deductible
Real estate taxes are imposed by state or local governments on the value of your property. Most banks or other mortgage lenders will factor the cost of your real estate taxes into your mortgage and put those amounts into an escrow account.
You can’t deduct the amounts paid into the escrow, but you can deduct the amounts paid out of it to cover the taxes (you’ll see this amount on a form 1098 issued by your lender at the end of the year).
If you don’t escrow for real estate taxes, you’ll deduct what you pay out of pocket directly to the tax authority.
And don’t forget about those taxes you paid at settlement. If you reimburse the seller for taxes already paid for the year, you get to deduct those too.
5. You’ll get capital gains tax relief down the road
Resale value is something you considered when you chose your home. And different from other investments for which you’re taxed on the full value of any gain, you can exclude some of the gain attributable to your home when you sell.
Under current law, you can avoid paying tax on up to $250,000 of gain ($500,000 for married filing jointly) so long as you have owned and lived in the property for two of the last five years (those years of owning and inhabiting don’t have to be consecutive).
Gain over that amount is taxed at capital gains rates, which are generally more favorable than ordinary income tax rates.