FINANCE
Mortgage do’s and don’ts for 2017
Top mortgage do’s and don’ts are especially im-
portant in 2017. Last December, the Federal Reserve
raised its key interest rate by 0.25 percent – marking
only the second rate increase in a decade.
While a rate hike doesn’t always lead to higher
mortgage rates, this particular hike comes at a time
when rates on 10-year U.S. Treasury notes are rising.
As the 10-year note yield and mortgage rates tend to
JEFF ROSEN be correlated, we can expect mortgage rates to rise.
Do check your credit report
By law, you are entitled to one free credit report every year
from Equifax, Experian and TransUnion. Take a close look at your
credit report to make sure it’s accurate; if there are mistakes, take
steps to fix them.
Do improve your credit score
In general, the higher your credit score, the better the mort-
gage you’ll get. To improve your credit score, pay down debt, set
up bill payment reminders, keep your credit card and revolving
credit balances low and reduce the amount of debt you owe.
Do lower your debt-to-income ratio
Lenders look at your debt-to-income ratio to measure your
ability to manage your monthly payments and determine how
much house you can afford. Lenders prefer lower debt ratios as
proof that you will have the ability to repay the mortgage without
becoming “house poor.” There are two ways to lower your debt-
to-income ratio (and neither is easy):
• Reduce your monthly recurring debt: Only spend money on
the most urgent purchases.
• Increase your gross monthly income: Get a second job, work
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extra hours, take on more responsibility to get a pay increase
or complete course work/licensing to increase your earning
potential.
Don’t take on too much house
Following the Great Recession, lenders are less likely to qual-
ify you for loans that exceed your ability to pay. Still, it’s worth
considering that just because you qualify for X amount, it doesn’t
mean that you have to spend that much on a home; you usually
know what is a comfortable housing payment for your specific
situation. And be sure you’re conscious of property taxes while
house hunting.
On refinancing
Low interest rates are still out there, and with rates expected
to rise in 2017, now is the time to review your specific situation
with your trusted lender to see how you can benefit. Consolidat-
ing debt into one loan, with the interest being tax deductible, is
still very smart, financially. Looking into a 20- or 15-year loan, if
you plan on retiring in your home, is another popular game plan.
The bottom line
Homebuyers can expect to see rising mortgage rates in 2017.
Even a small change in rates can make a big difference in month-
ly payments, the amount of interest paid and the size of the loan
(and house) for which you’ll qualify. Now is a good time to work
on improving your credit score, credit history and debt-to-in-
come ratio so you can qualify for the best rate available. d
Call me today at 908-415-6050. Don’t miss out before rate hikes hit!
Unlike other lending programs, the Lending to America’s Heroes
Program has no bank fees and no maintenance fees.