17
Sep
By Fred Gruber
Mortgage

How Borrowers Can Benefit from Inflation with the Right Mortgage

Inflation is a topic that impacts nearly every part of the economy, from the cost of groceries to long term financial planning. For homeowners and those considering a mortgage, inflation can feel intimidating. However, with the right perspective and strategies, borrowers can use inflation to their advantage and create lasting financial benefits.

Understanding the Relationship Between Mortgages and Inflation

Inflation reduces the purchasing power of money over time. While this can make everyday expenses higher, it also works in favor of borrowers with fixed rate mortgages. Since the mortgage payment stays the same each month, the real value of that payment decreases as wages and prices rise. In other words, the loan feels more affordable as time passes.

The Benefit of Fixed Rate Mortgages

One of the clearest ways to benefit from inflation is by choosing a fixed rate mortgage. Unlike adjustable-rate loans, fixed rate options lock in the interest rate for the entire term. As inflation increases, homeowners with fixed mortgages enjoy stable payments while renters often face rising rents. Over the years, this stability can free up more of the household budget for savings, education, or other investments.

Building Equity Faster

Inflation can also accelerate the growth of home equity. As home values rise along with inflation, homeowners often see their property appreciate. While the mortgage balance gradually decreases with each payment, the value of the asset typically grows, creating a stronger financial position. For families, this can mean greater security and more options for the future.

Protecting Long Term Wealth

Real estate has long been considered a hedge against inflation. By owning a home with a stable mortgage, borrowers can protect themselves from some of the challenges that rising costs bring. Monthly payments remain consistent, while the property itself may increase in value over time, helping homeowners preserve and even grow their wealth.

Inflation can create challenges in daily life, but it also presents an opportunity for homeowners. By securing a fixed rate mortgage and thinking long term, borrowers can position themselves to benefit as inflation reduces the real cost of their loan and increases the value of their property.

11
Sep
By Fred Gruber
Mortgage

5 Key Steps in the Mortgage Underwriting Process

Buying a home can be exciting, but it can also feel overwhelming. Understanding the mortgage underwriting process can make things a lot smoother! 

What is Underwriting?
Underwriting is when lenders review your financial information to determine if you qualify for a mortgage. They check your income, assets, credit history, and the property itself to assess risk.

The 5 Key Steps

  1. Submit Your Application
    Pre-approval starts here! This tells you and your lender how much you can afford and saves time while looking for a home.
  2. Verify Income and Assets
    Provide documents like pay stubs, tax returns, bank statements, and ID. Lenders check your debt-to-income ratio and credit history to make sure you can handle the mortgage.
  3. Property Appraisal
    A professional appraisal ensures the homeís value matches the price. Condition, features, and comparable sales are all considered.
  4. Title Search and Insurance
    A title company verifies that the home is free of legal issues and provides insurance to protect both you and the lender.
  5. Underwriter’s Decision
    Decisions can be:
    • Approved – You’re ready to close!
    • Suspended – More info or documents are needed.
    • Denied – Additional steps are required to improve your eligibility.

After Underwriting
Once approved, youíre on track for closing! The process can take a few days to a few weeks, depending on your file and the property.

Understanding underwriting helps reduce surprises and makes your homebuying experience smoother. Knowledge is power when it comes to your biggest investment! 

31
Jul
By Fred Gruber
Mortgage

Should You Get a Mortgage If You Plan to Move Soon?

Deciding to buy a home when you know you might move within a few years can be a challenging choice. Many people wonder if it makes financial sense to take on a mortgage if they will not live in the property long term. The answer depends on several factors, including your personal goals, market conditions, and your financial situation.

Consider Your Time Horizon
Mortgage loans often come with upfront costs such as closing fees, appraisal costs, and sometimes private mortgage insurance. If you plan to move within a year or two, these costs can outweigh the benefits of homeownership. However, if your timeline extends beyond three to five years, buying a home may make more sense financially than renting.

Building Equity vs. Transaction Costs
One of the main advantages of buying a home is building equity with each mortgage payment. Over time, this equity can become a valuable asset. However, buying and selling a home involves transaction costs such as agent commissions, closing fees, and potential repairs or improvements needed before selling. If you move too quickly, these costs may reduce or eliminate any potential financial gains.

Market Conditions Matter
The state of the housing market also affects this decision. In a rapidly appreciating market, you might build equity faster and see gains even if you move within a few years. In a slow or declining market, you risk losing money if you sell too soon. Research your local market and seek advice from real estate and mortgage professionals.

Renting vs. Buying Costs
Compare the cost of renting with the total cost of homeownership, including mortgage payments, taxes, insurance, maintenance, and utilities. If renting is significantly cheaper, it may be better to wait until you plan to stay longer before buying. Conversely, if mortgage payments are close to or less than rent, buying could be more financially sound.

Flexibility and Lifestyle
Homeownership offers stability but less flexibility. If your job or family situation requires frequent moves, renting might be a better fit. However, if you have confidence in your ability to sell quickly or rent out the home, buying could still be a good option.

Financing Options and Strategies
If you do decide to buy with plans to move, consider mortgage options with lower upfront costs or loans that offer portability, allowing you to transfer the mortgage to a new property. Consulting a mortgage professional can help you identify programs tailored to your situation.

Buying a home when planning to move soon is a personal decision that requires weighing financial and lifestyle factors. It is important to consider how long you expect to stay, the costs of buying and selling, and your local housing market. Working with experienced real estate and mortgage professionals can help you make an informed choice.

If you are thinking about purchasing a home but expect to move within a few years, reach out to a mortgage expert to discuss your options and find the best path forward.