Current Mortgage Rates: Richmond, VA
3.750% (3.751% APR) 30yrs
3.250% (3.282% APR) 15yrs
as of 10/16/19
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Mortgage Blog

Oct 13

Renovations That Can Add Value

Renovations That Can Add Value Web

These renovations can increase your home’s value and make refinancing easier.

Whether you’re selling a home, refinancing a current mortgage, or trying to increase your home’s value, renovations can increase the equity you own and add to your financial well-being. 

Renovations aren’t just good for your home, they’re good for your finances! Investing in certain projects around your home can help you to get a better price when you sell. Or, if you increase your home’s value with a renovation, that can immediately increase your equity and result in better rates if you’re looking to refinance. Read on to learn more about how high-value renovations can be a bargaining chip for your mortgage.

How to Start

Remodels can be costly for any homeowner, and if you are planning renovations, it may be helpful to know which ones can earn the highest return on your investment. Take into account the benefit that you will get from a refinance as the homeowner, the cost of the project, and the value that your home will gain. Many renovations will not add enough value to completely negate the cost of the project, but when you consider the personal benefit to you, a project will likely be worth completing.

Want to increase your equity in your home with less dust? Learn how!

Do Your Homework

Before you begin a renovation, it’s important to find out the amount of value that a renovation could add to your home. Typically, a contractor, realtor, or your mortgage officer can all be helpful during this conversation. You can also find a cost and value report from many sources, including your preferred realtor. This can help you to see the average cost of a renovation in your area and how individual projects adds to a home’s estimated value. 

Popular Renovations

Not every home project has to be based on equity gained—some may just be for the benefit and enjoyment of the homeowner. Typically, even personalized updates can gain some value for your home. But if you consider some of the more popular and equitable improvements, there may be some that are easily accomplished at the same time. The most popular areas of improvement are outdoor areas, such as decks, front porches, garages, front doors, and siding. Indoors, high-value renovations include bathrooms and kitchens, as well as lighting and fixtures.

Build your equity

Remodeling your home can help you to enjoy it more while you live there, and it can add value to your home as well. If you refinance your home, renovations will add to the property value when an appraiser assesses your home’s current market value. A higher home value means you’ll have more equity, creating a lower loan-to-value ratio because you own a percentage of a home that has more value. This can help you to get a better rate on a refinance.

The loan-to-value ratio is the amount of your mortgage (loan) over the value of your home. If your home’s value is appraised at $300,000, and your mortgage loan is for $250,000, your loan-to-value ratio is 83%. When you have a lower loan-to-value ratio, you may have a better chance of refinancing with a lower mortgage rate and/or eliminating mortgage insurance.

Do you have questions about refinancing? Get the details here.

Cash in on Your Remodel

It’s important to note that some projects will not return in a higher resale price, but will add to your home’s equity and create more enjoyment or practical use for you in your home. By adding value to your home, your equity will increase. Choosing to start a renovation is more than a labor project, it’s a financial one! Assess how much you will spend on a renovation and the value that it could add to your home. It is also likely that the value of your neighborhood is fluctuating over time as well which can add to your home’s value.

Are you ready to learn about your options for a refinance, new mortgage, or investment property? Contact RatePro Mortgage to learn more.

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Aug 2

How to Take Advantage of Low Mortgage Rates

How to Take Advantage of Low Interest Rates Web

Mortgage rates are LOW. Learn how you can take advantage.

We’ve discussed how interest rates can fluctuate in the past. Interest rates fluctuate based on the Federal Reserve Monetary Policy, market movements and inflation, and the state of the economy. Anything that ordinarily affects bank rates and stocks could affect current interest rates. Interest rates for 30-year fixed-rate mortgages started the year at 4.5%, and have fallen below 4% this July. This trend is expected to continue, with rates being projected as low as 3.5%!

If you’re shopping for a mortgage rate, you know that the difference of 1% in rates can be the difference between buying a home right now and not. So how can you capitalize on the low rate trend? Here are a few ways to make the most of it right now.

Learn more about why interest rates fluctuate.

Get Pre-approved

With interest rates being so low, it’s a good time to learn about your options. Speak with a local mortgage lender about your options for preapproval to see what amount you could be approved for. You may be surprised how much a lower rate can impact your approval, and the options may make this the best time for you to buy a home. But act now, because lower interest rates can mean a boost in shoppers looking to buy a home.

Learn why you should seek pre-approval.

Lock In a Low Rate

One of the major benefits of pre-approval is that you can sometimes lock in a low rate at the time of your application. When you lock in a rate, your mortgage lender has agreed to honor the interest rate that is available on the date of your pre-approval for the duration of your approval period. This is a great option for homebuyers that are just beginning their homebuying process, or for those who are just exploring their options.

Remember, being pre-approved doesn’t mean that your mortgage details are final. Your final mortgage will reflect your current credit score, down payment, house cost, and closing details.

Start Shopping

If you’ve been waiting for the right moment to start the homebuying process, now may be the best time! You won’t be alone, mortgage applications have been on the rise with reduced interest rates becoming available. Even better, home prices have not accelerated with the mortgage rate decline⁠—allowing more options than ever for homebuyers. It’s never too soon to start talking with a local mortgage lender to learn about your options.

If you want to know when you’re ready to start shopping, check out these tips.

Save When You Refinance

One of the biggest advantages of a low interest rate is for existing homeowners! When interest rates are low, it’s a great time to refinance your home. When you refinance, you can get a new mortgage based on accumulated equity in your home, current financial standing, and most recent credit score. You can take advantage of the reduced rates and save money over the life of your loan.

If you’re interested in refinancing, learn more here.

Start an Investment

If it’s your goal to purchase an investment property, now is a great time to look. Whether a second home, rental location, or vacation destination, lower interest rates can benefit you. Talk to a mortgage lender to learn about your options and get shopping.

Take Advantage

Whether you are a first-time homebuyer, looking to refinance, or planning on investing, now is a great time to take advantage of a reduced interest rate. If you purchase a home in the latter part of 2019, you could plan to save big: A 1% interest rate difference on a $300,000 is a savings of $3,000 on the life of a loan. Even more, because an interest rate can affect your mortgage insurance, closing costs, and other payments, there are both immediate and long term savings.

It’s never a bad time to start the homebuying process, and a great way to get started is by contacting RatePro Mortgage. We’re here for all of your questions. Contact us today!

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Jun 5

Why Should You Buy a Home?

Why should you buy a home Web

Buying a home is a goal for many individuals and families. But have you ever thought about how buying a home could benefit you? For many people who are currently renting, you may wonder how buying a home could be a good option for you.

Here are the benefits of homeownership:

Build Equity

When you own a home, each mortgage payment you make will build your equity in that home. These payments may also contribute to mortgage insurance or other fees, but you will still be investing in an asset that counts toward your overall wealth. You can accumulate equity in your home in other ways, as well. If your home becomes more valuable over time (and it most likely will) your property value will increase, meaning you can sell it at a higher price point in the future. Also, if you complete home improvement projects, such as updates or additions, that value will be reflected in the value of your home and builds your equity even further.

Learn more about ways you can build equity in your home. 

Save Your Money

It may seem like a home is a major purchase, and it may be the most expensive thing that you ever buy. But when you purchase a home with a mortgage loan, you are able to repay that amount in manageable, monthly payments. These payments are often lower than what a rent payment would cost. Also, as you make payments, you will be building equity in a home that you own, not paying money to someone else with no long term return.

Stay Consistent

Most things about owning a home are fairly consistent when compared to renting. Likely, your mortgage payment will not fluctuate over time unless you refinance or choose a mortgage option that could change over time. Your insurance costs, taxes, and other payments will remain fairly stable as well. However, rent prices may fluctuate annually or even more often. You may not always rent the same space, as well.

See Tax Benefits

Property taxes, interest paid on a mortgage loan, and origination fees may be deducted on your income taxes depending on your circumstances. Saving money on taxes will save you money over time. And remember, renting will require you to pay taxes as well, but you are not paying taxes on a property that you own, so you are not building equity. 

Start Customizing

When you own a home, you can make it everything you ever wanted. Whether that means cosmetic work, like painting or changing tiles, or completing renovations, you will have more options than what you have when renting. Whether a home is a short-term investment project or you want to customize your dream house, when you invest in your home you are building your wealth.

Benefits of Ownership

When you own a home, you know that you have an investment that matters. Whether your home ownership goals are financial or you are looking for a forever home, purchasing a home can be one of the most meaningful investments.

Sometimes, it may seem like renting is the best option. When you are planning to stay somewhere for a short time or are trying to save to buy a home, renting can be beneficial. But when you are ready to learn more about your options for a mortgage, contact RatePro Mortgage or view our mortgage blog to learn about the steps you can take.

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Apr 3

How to Know When You’re Mortgage Ready

Ready for a mortgage

If you are interested in buying a home, you’ve likely been planning to get approved for a mortgage either actively or passively. You may be monitoring credit scores, debt-to-income ratios, and savings for a down payment, as well as learning about the housing market. But how do you know when you’re really ready to apply for pre-approval? Use this guide to help you assess if you are ready to turn planning into purchasing.

Learn which mortgage is right for you

Your preparation for a mortgage loan will depend on the type of mortgage that you want. For homebuyers who have a smaller down payment, an FHA Loan may be the best option. However, if you have excellent credit and a considerable savings, you may want to look into conventional mortgage loans.

FHA Loans require:

• A down payment of 3.5%

• A credit score of 620+

Learn more about FHA loans.

Conventional Loans require:

• A down payment of 5-20% down (avoids mortgage insurance)

• A credit score of 640+ is desirable (a higher score will provide for  a lower interest rate)

Learn more about conventional loans.

As a part of your preparation, choose which type of mortgage loan fits your situation best. Remember that each mortgage lender may have unique requirements for different types of loans.

When is a down payment ready?

Determining how much you need for a down payment is dependent on a few factors–the type of loan, desired interest rate, preference with regard to mortgage insurance, and actual purchase price of the home.

For an FHA Loan, the down payment requirement is 3.5%, but you will have to pay mortgage insurance for the life of the loan. For a conventional loan, a down payment is typically 5-20%, but you can pay more to avoid mortgage insurance and to reduce your interest rate.

When you are preparing to buy a home, it’s important to focus savings into a down payment. If you have a smaller savings amount, you may want to choose an FHA Loan. Remember, regardless of which loan type you choose, you can pay a larger amount than required to avoid mortgage insurance (conventional loans), influence a lower interest rate, or to put more equity in your home.

Learn more about down payments.

Preparing your credit score

Your credit score has a large impact on the type of mortgage you can choose from. It will also impact your interest rate, monthly payments, and down payment amount.

For an FHA loan, a credit score of 620 or higher is desirable. If your credit score is significantly higher, you may be able to receive a lower interest rate and still benefit from the FHA Loan down payment requirement.

For a conventional mortgage, lenders will have flexibility with the credit score that they find desirable, but it is usually 640  or higher. A higher credit score can allow for lower interest rates.

The higher your credit score, the better interest rate you’ll get no matter the type of loan. You can improve your credit score by doing these things:

  • Pay off debt
  • Keep your credit usage lower than 50% of credit limit on each account
  • Avoid opening too many lines of credit
  • Pay credit bills on time

Learn your debt to income ratio

Your debt to income ratio is the amount of debt that you owe and make payments on in ratio to your earned income. Mortgage lenders will look at debt to income ratio based on a monthly cycle. You can understand your ratio by dividing your monthly debt expenses by your monthly income:

Total Monthly debt expenses ÷ monthly income = debt to income ratio

Most lenders will consider a borrower desirable if their debt to income ratio is less than 43%, thought an FHA lender may allow as high as 55%. You can improve your debt to income ratio by paying off credit, consolidating lines of credit, paying over the lowest payment required on debt, and, of course, increasing your income.

Getting ready for closing costs

Closing costs are fees associated with your home purchase that are paid at the closing of a real estate transaction. The amount can be between 2-5% of the price of your home. Closing costs can be a large expense for a borrower if they are not prepared for them. However, putting savings aside can help you to prepare for this payment. Closing costs may be paid by the buyer, seller, or the lender.

Closing costs can be unique to each home purchase, but they will likely include appraisal and attorney fees, title insurance and services, as well as local and state taxes and recording fees. You can ask your mortgage lender to provide you with a closing disclosure that will inform you of the amount to be paid in closing costs.

Learn more about closing costs.

Create a goal

It’s important to set a goal as you prepare to buy a home. Include a realistic purchase price, the interest rate you want, and the amount you are prepared to pay in down payment.

Set a personal goal as well. Include where you can save money, how you can help your credit, and what you can do to reduce debt.

When you start shopping for mortgages, know that you’ve prepared everything to the best of your ability, and find a mortgage lender that meets your needs. Bring all of your questions to your lender, and be prepared to share your goals and how you have planned to make your best home purchase. It will always pay off!

Find out more about your mortgage options by contacting RatePro Mortgage!

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Feb 2

Why Do Interest Rates Change?

Why do mortgage rates change web

If you are shopping for a mortgage you may notice that interest rates can change almost daily. Although mortgage rates are typically between 3.0% and 5.0%, they may fluctuate between these two figures daily.

Learning how and why interest rates are set can help you to choose the best time to start the homebuying process and help you to prepare for the costs of your mortgage loan. And if you already have a mortgage, watching interest rates could help you to find the best time to refinance your home.

Why do rates change?

Interest rates fluctuate based on the Federal Reserve Monetary Policy, market movements and inflation, and the state of the economy. Anything that ordinarily affects bank rates and stocks could affect current mortgage rates.

Changes to interest rates can affect our spending as consumers, and sometimes will be manipulated to help different marketplaces, including the house market. There are two trends that are affected by the change in interest rates:

  • When interest rates are low mortgage costs are reduced, meaning that more buyers will be active. This can increase the price of homes and help to stimulate the real estate market.
  • When interest rates are high, the cost of homes may be reduced and to compensate for the lack of active buyers. This can affect homebuyers and sellers, which hurts the real estate market.

What do rate changes mean for homebuyers?

When you are shopping for a home, it means that you’ve put in the time and effort the prepare for a major purchase. Likely, you’ve worked hard to save money over time, worked on your credit score, and made a plan for what kind of loan you would like to have.

There will always be information that you can’t anticipate, and one of those factors is the change in mortgage rates over time. Luckily, fluctuation will typically only affect your payments over time. This means that your timeline for buying a home can be maintained.

How will rates affect cost?

A fluctuation in interest rates will only affect the monthly payment of a mortgage and the amount paid over time in interest. Closing costs and down payments are not affected by interest rates. In some cases, a larger down payment may allow you to have a lower interest rate, and your mortgage lender will be able to discuss these options with you.

Should you shop around for lower rates?

Fluctuations in interest rates can occur at any time. If you are shopping for a mortgage lender in the same market, it is likely that rate fluctuation will not vary significantly if you are providing the same information. However, some lenders may have more options available than others, and can lock in better rates for their clients.

That being said, mortgage lenders may provide different rates based on your borrowing profile and risk. Your borrowing profile is made up by credit score, down payment, and debt to income ratio. A risk-based pricing model may be used to determine what interest rate a borrower would qualify for.

Should you refinance when rates are low?

When you refinance a mortgage, your rate will be based on your borrower profile, as well as current interest rates and the type of loan you choose. It’s important to understand what the difference in mortgage rates will be and how that could affect your refinance. Typically, the reasons for refinancing is to make a major purchase or to change your monthly payments, or adjust based on an increase in income or higher credit score. These factors will also affect your borrower profile. Make sure that the interest rate of your new mortgage will correspond with your refinancing goals and will allow you to complete payments.

Want to know more about refinancing? Learn more here!

Making your rate choice

When shopping for a mortgage, it’s important to consider how interest rates will affect your buying decision, monthly payments, and the lifetime cost of your home. Remember that some mortgage lenders will allow you to “lock in” an interest rate on some loans when you begin the pre-approval process, and that can take the pressure off of closing quickly. You can also bank on interest rates being lower on Mondays because there’s less news released on the stock market. If you’re interested in learning more about interest rates and your mortgage options, contact RatePro Mortgage today!

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