First Financial  
 

First Financial Mortgage Loans

Mortgage Rate Predictions for 2016

ff 2
U.S. Consumers Offer Their Mortgage Rate Predictions For 2016

Buy now? In four months? In a year?
Some of the stress can be taken out of the home buying decision when you realize that mortgage loans can always be re-financed, although with some fees and hassle. Keep in mind, too, the old saying,
“The best time to buy real estate is always 10 years ago.”
Ten years into the future, you won’t remember how you fretted over whether you should wait or buy right now. You’ll have 10 years of family memories in the home and neighborhood you’ve come to love.

All this said, when making this huge decision, it’s wise to research where mortgage interest rates are going in 2016. This past spring the most influential economists predicted that the Federal Reserve would raise the prime rate this fall in the August meeting. But then China became unstable, Greece revisited bankruptcy and American employment figures disappointed many. Interest rates stayed the same.

So, once again, now in the fall of 2015 pundits expect Janet Yellen and “the Fed” to hold off raising the prime rate (which in turn raises the mortgage rates) until the beginning of 2016, if then. Keep in mind, too, that America is facing a new challenge. The millennials, many of which are going into their home-buying 30s, seem to be holding off on buying homes. With their parents impacted by the recession, students themselves took out loans, many of which were as predatory as the balloon and interest only home loans that got their parents into trouble. Recent grads now shoulder an average of $30,000, and some have $100,000. They’re paying interest and principle on this big debt, eating into their home fund monies.

Particularly after seeing parents and friends lose homes, this huge generation (90+ million by most counts) seems fine with renting for the foreseeable future. In fact, it’s the renting millennials who’ve driven rental prices up in the past three years. Millennials aren’t exhibiting the home ownership drive their parents did. They’ve learned that Europeans rent families rent the same homes for generations, and don’t necessarily see home buying as the only signal of success. Finally, the tiny home and simplicity movements tell us that the millennials may not buy into the 3,000 square foot, brand new home. Therefore, home prices may not rise as they did in in the early 2000’s.

For now, housing prices may rise a bit over the next year, but most agree that they won’t skyrocket. Federal Reserve officials keep dropping that they’ll raise rates only when the data indicates the economy is heating up. With this month’s disappointing employment report, yet again, that doesn’t look like a possibility soon. Keep in mind that for the last three years, quarter after quarter, economists have been saying that THIS is the quarter the economy will rebound with a vengeance. Still, we’ve had at least 12 quarters of just tepid growth.

If unemployment takes a big dip and inflation looms on the horizon, Yellen will have to tighten. If that first rate hike doesn’t torpedo the stock market, she will continue throughout the year, but ever so gently.

The bottom line? Mortgage rates creeping up but very slowly in 2016. Watch the employment reports. The minute “employment leaps,” rate increases will heat up.

bigstock-Older-woman-with-a-laptop-76848398

First Financial’s Online, Mobile Mortgage Loans for Subprime Borrowers

First Financial’s lending partners can provide lower interest rates on mortgage loans because of their cost-saving, online structure. Apply for an affordable mortgage loan here, particularly if your credit rating is “fair,” “poor” or even “bad.” We specialize in getting families with subprime credit into homes. Fill out the application in minutes. Follow First Financial on Facebook to get smart budgeting and saving tips, too!

How do I prepare for a mortgage loan?

Comparing mortgage loans is one of the most important things you can do when you’re buying a home. The decisions you make will determine the size of your monthly payments, how much you pay upfront, and how much interest you’ll pay over the life of the loan.

You might find it simpler to compare loans if you ask each lender a series of questions, including:

  • What is the loan’s interest rate?
  • Will I be charged points?
  • What are the closing costs and all other fees?
  • What is the annual percentage rate, or APR – the rate you’ll pay per year for all the costs associated with the loan?
  • Is there a pre-payment penalty?
  • How is the loan amortized, meaning how quickly is the principal paid off?

Find out the answers to these questions no matter what type of loan you’re considering. Each can affect the overall cost of your loan. If you are considering an adjustable-rate mortgage, or ARM, you can compare loans by asking:

  • When does the rate adjust?
  • How often does the rate adjust?
  • Is there a cap limiting the amount by which the rate can adjust? What would my monthly payments be if my interest rate hit that cap?
  • What is the index and margin that will determine my rate? How has the index changed over time?

ARMs are inherently more risky than fixed-rate mortgages because you’re gambling on whether interest rates will go up or go down before your rate adjusts. Understanding the best- and worst-case scenarios can help you weigh the pros and cons as you compare loans. But there’s one other big question to consider before you get an ARM:

  • How does the discount introductory rate compare with rates for 30-year fixed-rate loans?

If there’s not much difference when you compare the two, the fixed-rate loan might be a safer bet. You won’t save much in the short-term, and could save a lot over the long term. Plus, you reduce your risk if interest rates shoot up and you can’t refinance before the rate adjustment. Finally, to truly compare loans, you have to ask yourself some questions:

  • How long do I expect to stay in my home?
  • Are my job and income secure over the long term?
  • Will I be able to afford higher payments in the future?
  • How comfortable am I with risk?

In the end, the best loan is the one that works for your needs.

First time mortgage loan assistance?

Shopping for a mortgage can be intimidating. It’s natural to feel anxious about doing something new for the first time, and getting your first mortgage is no exception.

Fortunately, there are a few simple things you can do to make sure you’re being well-prepared before you start looking for your first home loan. Here are five tips to help first-time mortgage borrowers.:

1. Lock Your Interest Rate. Interest rates on mortgages can increase or decrease from day to day or even hour to hour. Discuss the interest rate outlook with your loan officer and try to learn as much as you can about how ups and downs in interest rate quotes might affect your mortgage payment and your ability to qualify for that loan. To protect yourself from interest rate rises, ask about a rate lock, which can reserve a specific interest rate for you for a set time period. If you decide to lock your rate, make sure your lock period won’t expire before your closing date. (Read more about locking your interest rate.)

2. Consider FHA. If you’re a first-time home buyer, you might want to shop for an “FHA loan,” which is a mortgage that’s insured by the Federal Housing Administration (FHA). FHA loans offer competitive interest rates, allow smaller down payments and have easier qualification guidelines compared with other types of loans. The minimum down payment for an FHA loan is just 3.5 percent of the purchase price of the home, although FHA loans do require that you pay mortgage insurance.

3. Take the Tax Credit. If you haven’t owned a home in the past three years, you may be able to qualify for the federal First-Time Home Buyer Tax Credit, which is worth up to $8,000. The credit is refundable, which means you’ll even get a rebate of sorts from the federal government if the income tax that you owe is less than the full amount of the credit. The credit is subject to income limitations and you’ll have to act fast since it’s set to expire after Nov. 30, 2009. Some lenders may allow you to use the credit as a down payment, to pay settlement fees or other closing costs or to pay discount points to reduce the interest rate on your loan.

4. Educate Yourself. A plain-vanilla 30-year or 15-year fixed-rate mortgage is fairly easy to understand. But other types of loans can be more complicated. If you want to consider an adjustable-rate mortgage (ARM) or other less common type of loan product, do your homework and make sure you fully understand how your loan works before you sign the loan documents.

5. Shop Around. Interest rates, loan products and loan terms vary among lenders. That means all borrowers, whether novice or not, should shop around for loan offers. Ask about the benefits and risks of each loan and be sure to compare the quoted points and estimated closing costs as well as the interest rates on different loans before you decide which would best fit your personal


First Financial

First Financial ® Corporate Headquarters 2850 Womble Road Suite 100-604 San Diego, CA 92106

Client Service Center: Main: 1-800-315-7791 Fax: 1-800-215-0217 (Monday–Friday 5:00am–6:00pm Pacific or 8:00am–9:00pm Eastern)

Merchant Services / High Risk Merchant Accounts: 1-800-950-0212 Fax: 1-800-215-0217

 

First Financial® is a Federally Registered Trademark

©1994-2017 First Financial®, All Rights Reserved. All other products and company names are trademarks of their respective companies.