New Orleans homeowners who had been bracing themselves for
sharp rises in mortgage interest rates must now be scratching their heads. As
the online Mortgage News Daily put it
last week, “…rates have been extraordinarily
sideways, and right in line with the lowest
levels in 11 months.”
Since historical averages are still significantly higher,
it’s no wonder that most observers still believe the greater likelihood is for
rate increases. But recent Fed happenings show a crack in their avowed determination
to let that happen by tapering off purchases of mortgage-backed securities. The
hemming and hawing is notable. It’s all pretty much up in the air.
In any case, one thing I can guarantee is that New Orleans mortgage
holders will benefit if they take advantage of savings opportunities when they
present themselves. Among current possibilities—
1.
Refinance Your Mortgage
New Orleans mortgage holders who haven’t already
refinanced should at least consider doing so. Refinancing means taking
advantage of the still historically low New Orleans interest rates—often the most
meaningful step in reducing your monthly mortgage payments. Before deciding to
refinance, make sure that the mortgage costs involved will be less than the
resulting savings. If you agree with the prevailing wisdom that it’s unlikely
we will see a significant drop in interest rates in the near future, today’s
levels still look inviting.
2. Cancel
Private Mortgage Insurance (PMI)
According to the National Association of Realtors®, mortgage down
payments have fallen over the past decade. Their figures show that the average
mortgage down payment in 2013 was 10% – compared with 16% just ten years earlier.
Homeowners who put down less than a 20% deposit are typically required to take
out Private Mortgage Insurance. But once the Loan-to-value (LTV) ratio falls
below 80%, homeowners can ask for the PMI insurance to be removed—and they
should, because the lender isn’t responsible for keeping track of that for them.
If you are close to the 20% threshold, it may be worthwhile to make a one-time payment
that will reduce the principal below 80%.
3. Extend
the Length of the Mortgage
Many homeowners have made significant reductions in their
principal by opting for shorter-term mortgages. But should rising New Orleans interest rates make a property you are trying to
buy unaffordable, extending the length of the mortgage can reduce monthly
payments to a more comfortable level. Although over the long term this will end
up costing significantly more in interest, moving from a 15-year mortgage to a
30-year can sometimes be the right move—especially when the property at stake
represents one of the terrific values currently out there.
While interest rates in New Orleans may rise or fall or,
as we’ve seen lately, hold surprisingly steady, sudden leaps or plummets are
unlikely…and with a little preparation, unpleasant future surprises in interest
rates are avoidable. Thinking of buying a home in New Orleans this summer?
Call me today to start laying the groundwork!
Terez Harris NOLA Real Estate Group
(504)297-2619
Harris.Terez@gmail.com
Keller Williams Realty New Orleans 8601 Leake Ave. New Orleans, LA 70118 504-862-0100
Each office independently owned and operated. All brokers licensed in the state of Louisiana.
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