You may have heard the term rate lock before. Rate locks can save you thousands of dollars over the time you hold the mortgage loan, but what exactly are they and how do they work?

Mortgage interest rates are constantly moving up and down throughout the day and daily. During the underwriting and process stages of a mortgage, rates can fluctuate. Getting a mortgage rate lock is a way to keep your interest rate from moving higher before closing day.

What is a mortgage rate lock?

A rate lock, also known as rate protection, keeps your interest rate from rising between the time you apply for a mortgage and the time you close on your new loan.

A mortgage lender will set aside the necessary funds and “lock” loan terms and interest rates. In essence, think of a lock as your “RSVP”; the mortgage lender sets aside necessary funds for your transaction, and they will assume the risk of rates rising during the lock period.

Locking a rate allows clients to get the best mortgage rate possible while going through the refinancing or purchasing process. For example, if Greenway Mortgage locks in your rate at 3.5 percent for 45 days and rates jump to 4.5 percent within that period, you’ll get your loan at a lesser rate.

How long does the rate lock last?

The moment a loan is locked, the clock starts ticking! Lock periods typically last from 30 to 60 days, though in markets where the loan approval process is slow, the lock period can last as long as 90 days. The shorter the period that the lender locks a rate, the more beneficial to you in terms of the overall cost.

How does the length of a rate lock affect your cost?

In mortgage lending, almost every cost factor comes down to one variable—risk. You will generally find that the more risk a client is willing to assume, the better rates and terms a lender is willing to offer. Conversely, when a lender assumes more risk, they tend to counter that risk with higher costs. In this case, the longer a lender guarantees an interest rate, the larger a buffer they will require to offset that risk.

How much does a rate lock cost?

It depends as every mortgage lender is different. It also comes down to the amount and term of the loan. Some lenders do charge for a rate lock, though others offer one for free. But not everything is free. The fee may be included in the rate you were offered. Speak with your lender for more information.

Is a mortgage rate lock worth it?

The benefits of a rate lock outweigh the risk. If you want to protect your homebuying power, it may be worth it. The rate lock is about preventing your mortgage payment from going up due to possible rate hikes before closing. Not locking a rate can mean having to come up with a higher down payment if rates did go up. Given where mortgage rates are at today and the possibility of them going higher, getting a rate lock can pay off!

What happens if you commit to locking a loan and you do not close in that period?

Sometimes, conditions arise that delay the process, and loan locks "expire" before a lender can close the transaction. In this case, the lender will typically grant an extension on the lock period but at an additional cost. An expiring loan lock does not typically jeopardize the overall likelihood of the loan's closing.

Bottom Line

If you have a good mortgage rate, lock it. Mortgage rate locks may protect you from rising rates and give you peace of mind. Speak with Greenway Mortgage for more information. The security of protecting yourself from rate spikes is worth it.

When it comes to homebuying, knowing what you can afford should always be step number one. In today’s housing market, a real estate agent or seller is going to want to know if you’ve been pre-approved by a mortgage lender.

But what does pre-approval really mean, and why is it so important?

With rising home prices and high buyer competition, a pre-approval letter is crucial prior to making an offer. This year especially, being intentional and competitive are musts when it comes to buying a home.

Benefits of a Pre-Approval Letter

• A pre-approval letter is the only way to know your true price range and how much money you’re able to borrow for your loan.

• It shows that you’re a qualified buyer, which gives you a huge advantage in an ultra-competitive market.

• You may be able to negotiate a better deal as the pre-approval removes a lot of uncertainty for the seller.

• Winning an offer on a property that has multiple bids as the pre-approval makes you a stronger buyer.

• Confidence and peace of mind.

2022’s Competitive Housing Market is Real – Be Prepared

If you’ve been house hunting you know that there is limited housing inventory which means there are more buyers active in the market than there are sellers. In turn, this creates some serious competition. If you’ve been searching for your dream home, we know it’s frustrating, but don’t give up!

According to the National Association of Realtors (NAR), homes today are receiving an average of 3.8 offers for sellers to consider. As a result, bidding wars are still common. Pre-approval gives you an advantage if you get into a multiple-offer scenario, and these days, it’s likely you will. When a seller knows you’re qualified to buy the home, you’re in a better position to potentially win the bidding war.

Freddie Mac explains:

“By having a pre-approval letter from your lender, you’re telling the seller that you’re a serious buyer, and you’ve been pre-approved for a mortgage by your lender for a specific dollar amount. In a true bidding war, your offer will likely get dropped if you don’t already have one.”

How Can You Gain an Advantage As a Home Buyer In Today’s Hot Housing Market?

Greenway Mortgage has expedited the approval process with its truly digital experience. With an easy online application and third-party verifications, Greenway Mortgage has significantly reduced the time and paperwork for the approval process.

So, remember what we said before? Pre-approval should be step number one when it comes to the home buying process. Before you head out to search for your dream home, click here to fill out our online pre-approval application!

In a competitive market with low inventory, a pre-approval letter is a game-changing piece of the homebuying process. Not only does being pre-approved bring clarity to your homebuying budget, but it shows sellers how serious you are about purchasing a home.

Our licensed mortgage experts are available 7 days a week to answer all your questions.

Since the pandemic, the meaning of home has certainly changed for many Americans.

For renters, the feelings of security and stability have become more important. The financial benefits that come with rising home equity when owning your own home have become clearer.  

Many homeowners have decided that their home no longer meets some of their needs as finding spaces for a home office or a home gym has become an obstacle. The need for a home with more space inside and out is now significant as our homes have been operating 24/7.

There are still two main obstacles some homebuyers face when it comes to buying a new home and which include: the ability to save for a down payment and the ability to qualify for a mortgage at the current lending standards. However, there’s good news for borrowers in 2022 as the FHFA announced that they will be raising its conforming loan limits for prospective purchasers in 2022.

THE FHFA Increases its Conforming Loan Limits for 2022

The FHFA has significantly increased its Conforming Loan Limits for 2022. Sandra L. Thompson, FHFA Acting Director, explains in the press release that:

“Compared to previous years, the 2022 Conforming Loan Limits represent a significant increase due to the historic house price appreciation over the last year. While 95 percent of U.S. countie​s will be subject to the new baseline limit of $647,200, approximately 100 counties will have conforming loan limits approaching $1 million.”

What does this mean for borrowers?

This means that more homes qualify for a conforming loan with lower down payment requirements and easier lending standards – the two major challenges that hold many buyers back from buying a home.

This is great news for buyers and owners alike:

1. Buyers may be able to borrow more money through a conventional, typically lower-rate loan.

2. Owners may be able to refinance their "jumbo" loan to a lower rate conforming loan and possibly drop mortgage insurance, too.

3. Combining (or avoiding) smaller 1st and 2nd mortgages may now be an option.

4. The increase reaffirms the health of the housing market and your decision to invest in a home.

For all the specifics about the FHFA Conforming Loan Limit increase, click here.

The FHA also Increases Loan Limits for 2022

In addition, the FHA also announced they are increasing loan limits for 2022. This also means an easier path to homeownership for home buyers. For those who don’t have much saved up to buy a home or if their credit score could use some work, this new increase is beneficial.

The increases will allow more borrowers to take advantage of FHA’s benefits:

1. Low down payment options

2. Lower total cash-to-close requirements with gift or seller contributions

3. More lenient and streamlined refinancing

4. Ability to combine purchase and rehab financing

5. In some high-cost areas, higher loan limits than conventional mortgages

For more specifics on FHA’s Loan Increase for 2022, click here.

Bottom Line:

Buying a home in 2022 has just become easier for you! Reach out to the experts at Greenway Mortgage to learn about your home buying options.

Want to create a home office to call your own? Before getting started you’ll want to take into consideration functionality as well as aesthetics. We’ve got some design tips to help you get started!

Location Is Key

No Spare Room? No problem. Find a small nook in your home to make into your work from your home office. All you need is a desk and a chair. 

Don’t forget that natural light is your best friend! Make sure the area you pick has enough natural light flowing in. You’ll want to avoid any glare on your device screens as well. This way you can continue to be productive without straining your eyes.

Storage

Be sure to figure out how much storage you’ll need before you start planning. Instead of adding filing cabinets, maybe you could add shelves for a more stylish approach.

Furniture

If you sit for long periods during the workday, then you’ll want a comfortable chair. Your desk should also have enough room for the devices you need such as your computer and printer.

Pick The Perfect Color 

This is the fun part! Pick a color that will get in a productive mindset for work. Research shows that orange stimulates concentration and boosts creativity! The colors white and purple tend to improve motivation. What color would you choose?

Personalize Your Work from Home Office 

Make the office space your own- add a touch of you! Here are a few ideas:

·        Add photos of your family, friends, or pets

·        Add shelving around your work area

·        Add a chalkboard or a whiteboard for ideas or a vision board with your goals

·        Put up posters

·        Buy a plant for your desk

·        Add a clock

Tips for Funding Your Home Office

Wondering how you’ll be able to pay for this new home office? The cost of your home office will depend on many factors. For instance, will you be building a new office or renovating an existing space?

In our recent blog, you’ll find tips on how to fund your home office from using your savings to refinancing to using Greenway’s Home Renovation Loan. Click here for all the details.

Helpful Resources

·        Tips for Funding Your Work from Home Office

·        Create Your Work From home Office with a Renovation Loan

·        Greenway’s Home Renovation Loans

·        Home Refinance

·        A Cash-Out Refinance May be the Solution You Need for Your Renovation Needs

·        Contact Greenway Mortgage

·        Get a Free Pre-Approval

The holiday season is officially here. Why not tap into your home equity with a Cash-Out Refinance? A Cash-Out Refinance can be a good way to pay for those home improvements you’ve been longing to get done.

A recent report from data firm Black Knight found that the average U.S. homeowner has $153,000 in “tappable” home equity — an all-time high. How do you take equity out of your home? And when is it a good idea to do so? We’ll cover all this and more in today’s blog.

What Does It Mean to Have Equity In Your Home?

Basically, having equity means that you have cash value build up in your home. It is the difference between what you own on your mortgage and what your home is currently worth. Take for instance if you owe $150,000 on your mortgage and your home is worth $200,000, you have $50,000 in equity in your home.

Equity grows year by year as you pay down your mortgage and as your home increases in value.

However, don’t think of equity as liquid cash. Instead, to put the money to work, you need to convert home equity into liquid cash. Que the cash-out refinance loan.

What is a cash-out refinance?

A Cash-Out Refi is designed for homeowners who have an existing mortgage and want to refinance to get cash in-hand at the time of closing. This is achieved using the equity in your home that we talked about before.

A cash-out refi will replace your existing mortgage with a new home loan for more than you owe on your home. The difference goes to you in cash, and you can spend it on things such as home improvements, to pay off debts or other financial needs.

Is it a good time to get a cash-out refinance?

Most homeowners nowadays will find that they have a significant amount of equity built up. If that’s the case, why not put it to good use? Contact the loan experts at Greenway Mortgage to discuss your options so we can help you get the loan that meets your needs.

With a cash-out refi, you can tap into your hard-earned equity. Here are a few benefits a Cash-Out Refinance has to offer:

• Consolidate high-interest debts into a single, low-interest loan

• Invest in home improvements that will increase your home’s value

• Build the perfect work from home office

• Buy your dream vacation home

• Invest in your future – pay for education

• Pay off your wedding

• So much more!

Bottom Line:

With rates currently still low, now might be a uniquely good time to tap into your homes’ equity. Reach out to the experts at Greenway Mortgage to discuss your options.