Jersey Shore Mortgage Loans: Which One Works Best for You?

You want to purchase a Jersey Shore home.  Smart Buyers get their financing together before they even start looking for a property.  After all, you’re going to want an approval letter ready to go when you make an offer.  FHA.  VA.  Conventional.  Adjustable rate.  Fixed rate.  How do you know which Jersey Shore mortgage loans work best for you?  I’ve provided a bit of a primer below to help you navigate these terms and narrow down your choice.

Adjustable rate, fixed rate. FHA, VA or conventional. When it comes to Jersey Shore mortgage loans, which one works best for you?

Jersey Shore Mortgage Loans

Government-Backed Loans

Search homes for sale at the Jersey ShoreDon’t have a large down payment?  Is your FICO score only “so-so”?  Did you previously serve or are you currently serving your country in the armed forces?  Are you a first-time Buyer (haven’t owned a home in the last three years)?  The Jersey Shore mortgage loans you might want to consider are FHA or VA loans.  FHA loans tend to be popular with first-time home buyers.  You can purchase a home with as little as 3.5% down as long as your credit score is at least 580.  If it’s a little lower, you may have to put 10% of the purchase price down.  The down side of not putting 20% down is that you still have to pay mortgage insurance (PMI).

VA loans serve those who served/are serving our country.  Whether you served in the military in the past, actively do so today or are a military family, you may qualify for a VA loan.  Qualifying applicants forgo any down payment and never pay mortgage insurance.  You’ve definitely earned it.  If you fit the criteria, this is your best bet.  Several restrictions on the type of home you can buy come into play with a VA loan.  So, talk with your mortgage broker to find out what they are before you start looking at Jersey Shore homes.

Conventional Loans

Unlike FHA or VA loans, conventional loans are not backed by the government.  Most Buyers choose these Jersey Shore mortgage loans because they offer better interest rates and terms.  This translates into a lower payment.  To qualify, you must have good credit (at least 620 FICO).  Also, you need to show a stable income.  This includes a stable work history (at least two years at your current job is preferable) as well as lower debt-to-income ratio.  When it comes to your mortgage payment, it should not exceed 28% of your gross monthly household income.  That includes taxes and interest.  Your overall debt (new mortgage payment, taxes, insurance, auto loans, credit cards, student loans, etc.) should not exceed 36% of your gross monthly household income to be considered desirable as a conventional loan applicant by the mortgage company.

Adjustable Rate (ARM) vs Fixed Rate Mortgages

When it comes to the rates for Jersey Shore mortgage loans, there are two choices: adjustable and fixed rate.  With fixed rate loans, your interest rate stays the same for the life of the loan.  It doesn’t matter whether you have a 10, 15 or 30 year mortgage, the rate remains the same throughout.  Adjustable rate loans fluctuate.  Initially, an ARM tends to be lower than fixed rate loans.  That can help make the transition into home ownership a little easier for some.  However, it can change from year to year, depending on which ARM you choose.  Talk to your mortgage broker or financial adviser to determine which works best for you.

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How to Lower Your Mortgage Payment

Do you own a Jersey Shore home? Are you having trouble keeping up with your monthly payment? Learn how to lower your mortgage payment here.Do you own a Jersey Shore home?  When you purchased it, what was your main concern?  How much the total price was or how much the monthly mortgage payment would be?  For many Jersey Shore Buyers, it is the latter.  That’s how you get locked into a 30 year adjustable mortgage.  It sounds awesome at first because your payment is lower.  But then, over time, that monthly payment begins to creep up.  Then you will be wondering how to lower your mortgage payment.  I’ve got a few ideas you may want to ponder.

Lowering or Eliminating Your PMI

How much money did you put down on your Jersey Shore home?  If it was less than 20% of the purchase price then you, my friend, are paying extra for PMI (Private Mortgage Insurance).  This is a fee that every Buyer pays in addition to their loan payments, taxes and interest each month when they are unable to come up with at least 20% of the purchase price at the time they sign their loan.  This is a mandatory insurance that covers the loan company in case you default on your loan.

Search homes for sale at the Jersey ShoreHow long have you lived in your home?  Has it been at least two years?  Have property values gone up since you moved in?  Once your balance on your loan is less than 80% of your home’s value and your payments are up to date, you may be able to drop your PMI altogether.  This can save you almost $1200 per year for every $100,000 of your loan.  Talk to your mortgage company to see if you qualify.

If you haven’t lived in it that long or you are unsure of your home’s value, you still might be able to reduce your PMI.  That is because the government announced earlier this year that PMI rates were being lowered for anyone taking out an FHA loan.  This will only help if you are a new home buyer.  Again, speak with your mortgage company to see if you qualify for a lower rate.

Refinance

Mortgage rates are at historic lows.  According to Bankrate.com, the current rate for a 30 year fixed rate mortgage is 3.93% as of the writing of this post.  A 15 year fixed rate mortgage is at 3.16%.  If you purchased your Jersey Shore home at a higher rate, you may want to consider refinancing.  You may also want to consider converting your 15 year loan into a 30 year loan to help reduce your monthly payment.  Of course, this means that the length of your loan will be much longer and you will end up paying much more in interest during the life of the loan.  But, if you need an immediate relief on your monthly payments, making this switch in terms could be the way to go.

Become a Landlord

Do you have a spare bedroom that isn’t in use right now?  Consider renting it out to someone.  This is a quick way to get some extra cash flowing into your household.  Be careful, though.  Pay the money to do a background check before you let a stranger into your home.  It will be worth it.

As you can see, you have several options on how to lower your mortgage payment.  Be smart.  Talk to your lender if you plan on eliminating or reducing your PMI or if you think that refinancing is your best option.  Background and credit checks are smart tools to utilize when you consider renting out part of your home, especially when it is someone you don’t know.

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Sherri Lilienfeld, Helping You Live Your Jersey Shore Dream

Jersey Shore Interest Rate Update

Interest rates remain low but demand for Jersey Shore homes is on the rise. If you're going to buy a home at the Jersey Shore, you need to take advantage of prime investments now.Some homeowners along the Jersey Shore are still trying to get their houses in order after Hurricane Sandy However, many people have been able to pick up the pieces and are getting back to life “as usual”.  Part of that life includes buying and selling homes.  Jersey Shore is still a phenomenal place to live, whether that is year-round, a summer get-away or a vacation home any time of year.  If you’re interested in purchasing a property, you may want to know what interest rate you are looking at for your Jersey Shore home.

According to Trident Mortgage Company, interest rates for a home mortgage loan on a Jersey Shore property are as follows:

Jersey Shore Interest Rates as of 5-23-13 - Click here for a larger view

If you aren’t familiar with “points”, here is a quick primer.  Points are a kind of pre-paid interest.  A Home Buyer may not like the interest rate they have been approved for.  The Buyer can pay extra up front to reduce this interest rate, in turn, lowering the monthly payment for their new Jersey Shore homeEach “point” a Buyer purchases usually reduces the interest rate by 0.125%).  For example, if a Buyer purchases their Jersey Shore home with a 30 year Fixed Rate Mortgage and qualifies for the 3.75% interest rate, they could purchase a point and reduce their interest rate to 3.625%.

If you’re interested in purchasing a Jersey Shore home, please contact me.  Interest rates remain at amazingly low levels.  But, they won’t stay there for long.  Home prices are beginning to increase again and demand is getting higher.  You need to take advantage of the market now.

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