Let's Make Sure Your Home Loan Still Fits You

As we approach the end of the year, I always like to remind my clients — now’s the perfect time to take a fresh look at your home financing. Whether you’re thinking about buying, refinancing, or using your home’s equity for a renovation or debt consolidation, I’m here to help you make smart, confident decisions.

With rates and programs constantly changing, a quick year-end mortgage review can help you:

• Lower your monthly payments
• Unlock equity for upcoming goals
• Start the new year financially strong and secure

Let’s connect before year-end to make sure your mortgage still fits your life and your goals for 2026.

Reach out today to schedule your complimentary loan review or pre-approval consultation — I’d love to help you finish the year strong!  Contact us today: 916-847-3090

NMLS ID 394275 | DRE ID 01769353

Happy Thanksgiving!

 

Happy Thanksgiving from Work and Associates Home Loans.

We are so thankful you for you! Hope you have a safe and healthy holiday.

Work and Associates Home Loans

Phone: 916-847-3090

1350 Old Bayshore Hwy Ste. 520

Burlingame,  CA  94010

margeate@workhomeloans.com

NMLS ID 394275 | DRE ID 01769353

3 Ways to Take Advantage of your Home’s Equity

Three common ways to take advantage of your equity;

 1.) Refinance with cash out

Refinancing with cash out involves taking out a new mortgage for the current value of your house to pay off your old mortgage and giving you “cash” back for the amount you have in equity. Most lenders require that you maintain a certain amount of equity in your home (usually up to 20% of the value). In rising interest rate environments, this type of loan is not as favorable as other home equity products because higher interest rates + higher mortgage means higher payments. Not to mention, if you obtained a mortgage in the last several years, there’s a good chance you already have a historically low-interest rate.

2.) Home equity loan

A home equity loan is a loan that is taken out against the equity you have in your home. In essence, your home is the collateral for the loan. The loan money is paid in one lump sum, usually has a fixed rate, and a fixed term for payback (usually 5-30 years). With the fixed amount borrowed, fixed rate and fixed term for payback, payments are the same each month throughout the life of the loan. Home equity loans are ideal for homeowners who have one big project or know up front the expenses that will need to be paid.

3.) Home equity line of credit (HELOC)

HELOCs are like home equity loans in the way the amount that could be borrowed is calculated. The main differences are that HELOCs most often have a variable rate, a dedicated draw period (the period of time, usually 5-10 years, where you can withdraw HELOC funds), and a dedicated repayment period (usually 10-15 years). With a HELOC, you withdraw money as you use it and pay interest only on the money borrowed (like a credit card). This type of loan is generally favored for homeowners who have multiple projects or needs that will occur over a span of time.  During the draw period, payments are usually interest-only payments and during the repayment period, payments are made on principal and interest. Because of the variable rate, possible fluctuations in the amount borrowed, and the differences in payments during draw and repayment periods, the monthly amount due varies.

Source

 

Why Fall and Winter Might Be the Best Time to Buy a House

Buying a house in the fall and winter has long been a smart move for bargain-hunters. These cooler months feature fewer competing buyers, more motivated sellers, and a higher chance you’ll see price reductions.

Cool Weather Advantages

In the fall and winter, it may be tricky to determine the state of a yard or see the roof if there’s a lot of snow, but there are some great benefits of house-hunting during this time:

• Less competition. Many buyers pause their home search when kids are back in school or when the weather turns, which reduces bidding wars and gives you more negotiating room. (This seasonal slowdown is still frequently mentioned by industry analysts for 2025.) National Association of REALTORS®

• More motivated sellers & price reductions. Sellers who list in the off-season are often more motivated to close (potentially due to job changes, relocations, or tax/timing reasons). Realtor.com and other data sources have continued to show a higher share of price cuts in the fall weeks. 

• Better service from professionals. Lenders, inspectors, and agents usually have more bandwidth after the peak summer season. This gives them more time for problem solving and more time for personalized attention.

• Realistic expectations. Homes listed in fall and winter tend to have been on the market longer or surfaced after price adjustments. If you’ve been searching through the summer, keep an eye on the homes that were just outside of your price range. Sellers might drop the price, meaning you could be in line for a bargain in the fall.

Cool Weather Challenges 

Of course, there still are challenges to buying a home in the fall or winter, and it's important to keep these in mind as you search:

• Snow cover means you won’t get a good look at the yard.

• Inspectors can have more difficulty seeing roofs and grading around the outside of the house, and they can’t inspect air conditioning units.

• Repairs to the outside of the home can be challenging in the winter, and paint won’t stick in freezing cold. This might be a time you need to escrow for repairs if your lending program allows it. 

• Because our days are shorter, it can be challenging to see the outside of the home well and gauge levels of natural light inside, too. 

Practical Tips

Use the following tips to make the most of your off-season house-hunting:

• Get pre-approved early. Even in a slower season, sellers want to see financing strength. A current pre-approval keeps your offer credible.

• Watch weekly rate and inventory reports. Mortgage rates shift week-to-week.
• Inspect for season-specific issues. Ask for thorough HVAC and roof inspections and consider a contingency that allows you to negotiate repairs.

• Be realistic about seller timelines. Even motivated sellers may want a specific closing date. If the seller needs time, offering flexible move dates (if you can) can be a negotiation advantage.

• Use price reductions as a signal. If a home has had a recent price cut, research how long it’s been on market and whether other listings nearby have also dropped — that strengthens your negotiating position. 

• Home prices can vary from neighborhood to neighborhood. It's important to work with an agent familiar with your target micro-market; they can tell you whether off-season deals are common there.

Source

NMLS ID 394275 | DRE ID 01769353

Where Should I Live? 6 Factors to Consider When Choosing a Neighborhood

Finding the perfect neighborhood for your family can feel overwhelming, especially when you're balancing tight budgets, work responsibilities, and children's needs. Whether you're a single parent, caring for multiple generations, or simply trying to create the best home for your loved ones, the search can be both exciting and anxiety-producing. 

You’ve likely considered the amenities you want in your first home and you probably have an idea of what city/region you want to live in, but there’s more to it than that. Even if you have a general location in mind, it’s important to dig deeper into the different areas of any city. If you're grappling with what to look for in a neighborhood, here are some crucial factors to contemplate while scouting for your dream location.

1. Neighborhood Safety

When it comes to creating a home, few things matter more than feeling secure in your surroundings. This is especially true for families with children or individuals living alone. While no neighborhood is completely problem-free, understanding the safety profile of an area you're considering can provide valuable peace of mind.

Here are some things you can look into to help you get a better sense of whether or not a neighborhood feels safe:

• Crime statistics: Every area will have some criminal activity from time to time, so don’t be discouraged if you can't find a completely crime-free area. There are plenty of reputable online resources to check crime maps, but the most accurate data will likely come from the criminal reports on the city’s website or directly from local law enforcement. Also, consider how things might change based on seasonality. For example, if you are house hunting in the winter, the month-over-month report for the colder months may be different than what it is over the summer when there are events and activities bringing more people to the area. 

• Neighborhood watch: If it’s important to you, find out if there is a neighborhood watch group established in the area. Ask local law enforcement or one of the residents. You might also see a street sign indicating it is a neighborhood watch area.

• Street lighting: Adequate street lighting can help many people feel safer in a neighborhood. 

• Talk with neighbors: If you see someone walking their dog, mowing the lawn, or just grabbing their mail, introduce yourself by telling them you may be interested in moving to the neighborhood. Residents can tell you firsthand whether or not they feel the area is safe.

• Safety considerations for solo parents: If you're a single parent, safety takes on additional dimensions. Consider evaluating emergency response times in the area, proximity to trusted neighbors who could help in a pinch, and the availability of well-lit parking close to potential homes. Many single parents find that neighborhoods with active community involvement tend to offer additional "eyes on the street" that create an informal support network. Look for areas where neighbors know each other by name and watch out for each other's children.

Of course, these aren’t the only ways to determine the safety of a neighborhood, and you should always trust your instincts. If it doesn’t feel right, keep searching for the neighborhood that makes you feel secure.

2. Nearby Necessities 

Food, medications, and toiletries are necessities for daily life. If convenience is important to you, you may want to consider choosing a location that’s close to where you will be running a majority of your errands.

Map out where the neighborhood is in relation to the nearest pharmacy, grocery, and department stores. Are they conveniently close, or will your trip to the store require more time or effort? If these stores are not necessarily close to your home but are on your way to/from work, school, or daycare, that is also something that may factor into your decision.

For busy families, especially those headed by single parents, consider the proximity of these additional necessities:

• Affordable childcare: Look into nearby daycare centers, preschools, and after-school programs. Visit facilities, check their hours of operation (including early drop-off and late pick-up options), and ask about their emergency closure policies.

• Healthcare facilities: Is there a pediatrician, urgent care, or hospital within a reasonable distance? For families managing chronic health conditions, proximity to specialists might be particularly important.

• Convenience services: Check if the area has services that can make life easier, such as grocery delivery, laundry services, or meal preparation businesses that can help during especially busy times.

3. School District

Whether you're planning to have kids in the near future, you just had your first child, or you have a few youngsters in school already, finding a well-performing school district is something many families prioritize when looking for the right location to live. 

For parents, few neighborhood factors carry more weight than the quality of local schools. Not only do schools directly impact children's educational opportunities, but they often serve as community hubs and significantly impact home values. Looking beyond simple ratings to find the right educational fit for your unique child can be challenging but tremendously rewarding.

How do you determine if a school district is "good" or not?

• Test scores and data: State test scores can be an indicator of whether a certain school district is performing at, below, or above the state average. 

• Beyond test scores: Consider teacher-to-student ratios, staff turnover rates, and special education services. Visit during school hours to observe classroom dynamics and speak with current parents about their experiences. 

• Programming: School programming can be a big deal for some families. If the adults in the house work full time during the day, after-school programs can be a big help in the few hours after school before the workday ends. For families with children who have special needs, it is very important to choose a district that has the resources to give them proper accommodations, extra support, etc. If your student does well in many classes, you may want to see if the district you're considering offers Advanced Placement (AP) classes or college-level courses that can go toward continued education after high school. 

• Extracurricular activities: Maybe your child loves writing or performing in musicals. Does the school have a newspaper? What about a science/math/art/book club? Finding a district that caters to your children's interests and strengths will help toward their success.

• Sports programs: Maybe you assume all school districts offer high school football, have a swimming team, and are competitive in lacrosse. But maybe the district you're looking into is too small or lacks the funding to support specific sports. Double-check to see what athletic programs are offered. 
• PTO: If open parent and teacher communication and cooperation is important to you, ask about its Parent Teacher Organization or Association (PTO/PTA). Is there one? How many people actively participate? How often do they meet? What types of topics are discussed when they do meet? Is it an open and welcoming group?

• Single-parent support: Look for schools offering flexible conference scheduling, multiple communication channels, inclusive family events, homework support during after-school programs, and emergency care options.

4. Nearby Parks, Walking Paths, or Dog Parks

Access to outdoor spaces enhances wellbeing for everyone, providing places for exercise, play, stress relief, and connecting with neighbors. Even if you’re looking to buy a home during the winter season, it is still important to check out the outdoor amenities a neighborhood has to offer.

You may want to consider taking a drive or walk around the area, and checking for things like:

• Sidewalks: This may seem like an obvious one, but well-maintained sidewalks make a neighborhood more accessible for people with disabilities and/or no alternative route of transportation. 

• Parks: This may be important for you, your children, and even your dog. Is there one within walking distance, or is it a short drive away? What amenities does the park have? If it's not something you would visit, it might not matter, or it might deter you from buying a house in that neighborhood.

• Walking trails: Maybe you take your dog for a walk every morning before you go to work, or you enjoy a family stroll after dinner. Look around for nearby walking trails or locate a city trail map.

• Extended family gatherings: If your family regularly hosts large gatherings, look for neighborhoods with homes featuring adequate indoor/outdoor spaces, sufficient visitor parking, and community spaces that can be reserved for celebrations. Parks with pavilions or picnic areas can provide affordable alternatives for family events.

5. Commute to Work

As gas prices continue to climb, many people would greatly appreciate a shorter commute. Finding a manageable route between work and family responsibilities is so important. Pay attention to the routes you can take to get there–just because the distance is shorter in mileage does not necessarily mean it will take less time with traffic and construction. If driving yourself isn’t an option, or one you prefer to avoid, look into transportation options such as metro transit buses, light rail, and cycling routes.

For families, take a look at these transportation considerations:

• School-to-work logistics: For parents juggling work and school drop-offs/pick-ups, consider the full transportation loop from home to school to work and back. Is this manageable daily?

• Public transportation reliability: If you'll rely on public transit, research actual reliability (not just scheduled service) and contingency options for when systems experience delays.

• Carpool potential: Are there neighbors or coworkers nearby with whom you might share driving responsibilities?

• Walking and biking safety: For older children who might transport themselves to school or activities, evaluate the safety of walking and biking routes.

• Emergency transportation: How would you handle transportation during unexpected situations, such as a child's illness during the workday?

6. Activities in the Area

Aside from the necessities you need to survive, does your potential new neighborhood have what you need to thrive? If you’re someone who enjoys going out or getting takeout, scope out the nearby restaurant scene. If you enjoy spin classes or yoga, check to see if there’s a gym or studio nearby. If you’re a big reader, see if there’s a library or bookstore close by. 

Here are more cultural amenities and community diversity options to look out for:

• Cultural resources: Look for neighborhoods with access to museums, libraries, community centers, and arts programs that align with your family's interests and cultural background.

• Community diversity: Research the neighborhood's demographic makeup. Diverse communities often provide rich learning environments for children and opportunities for broader social connections.

• Cultural and religious institutions: If maintaining connections to specific cultural practices or religious services is important to your family, identify neighborhoods with accessible resources that support these needs.

• Community events: Areas with regular community gatherings—festivals, farmers markets, holiday celebrations—often provide opportunities for meaningful social connections without significant financial investment.

• Language resources: For multilingual families or those hoping to maintain heritage languages, look for communities where those languages are spoken and which resources (like bilingual programs) are available.

Source

Am I Ready to Buy a Home? 12 Signs You’re Ready to Buy

Buying a home is a wonderful investment, but it can also feel very intimidating. It will likely be one of the biggest—if not the biggest—investments you will ever make in your lifetime. So it’s important to have confidence going into the process that you are ready to buy.

Here are 12 signs you are ready to buy---

1. You have saved enough money for a down payment.

Saving for a down payment is a good place to start when getting ready to buy a home. So how much should you save? In an ideal world, it’s great to save at least 20% of the price of the home you want to buy. That said, there are many loan programs in place today to help people who are in less-than-ideal situations or who haven’t yet been able to save much money. Don’t let potential down payment numbers scare you from taking the next step in your home-buying journey.

2. You have a great credit score.

Your credit score is a number that ranges from 300 to 850 and indicates to lenders whether you are credit-worthy. Several key factors—including your amount of overall debt and consistency to pay your bills—factor together to determine your credit score. If you plan to apply for a conventional loan, it is recommended that you have a score of at least 620. But again, loan programs exist for every kind of credit score.

3. You can comfortably afford a mortgage payment.

It’s easy to fall in love with the perfect house or neighborhood and lose sight of how much house you can afford. So ideally, it’s best to start with the mortgage you can comfortably afford and then look for a house that fits your budget. A good standard for how much house you can afford: Spend no more than 28% of your monthly income and no more than 36% of your income on overall debts.

4. You are comfortable with the current market.

When asking the question, “Am I financially ready to buy a home?” one of the most important factors is the current housing market. It’s best to buy a home when the current housing market favors buyers over sellers since the more competitive the housing market, the higher the counter offers will be. Also, the more competitive the market, the higher the likelihood for disappointment since sellers can entertain other offers and essentially choose other buyers. If the market is currently not favorable to buyers and you can afford to wait, take the time to save money and pay down any existing debts.

5. You have steady employment.

Steady employment is important both before you buy a home—since lenders want to see that you can afford to pay them back—and after you buy a home—since you’ll need money to pay your mortgage. Lenders generally prefer that you prove consistent employment for at least the past 2 years in order to qualify for a loan. If you haven’t been employed in the same job for the past 2 years, you will likely need to provide additional documents to demonstrate employment history and consistent income.

6. You can afford surprise expenses.

When you’re renting an apartment and your air conditioning quits working, it’s frustrating, but when you own your home and your air conditioning quits working, it’s expensive. And air conditioning is only one thing on a list of items you become responsible for when you sign the dotted line. This shouldn’t deter you from buying a house, but it should definitely give you pause. It’s a good idea to plan at least 3.6% of the original price of the home for yearly maintenance.

7. You are planning to stay in the same area long-term.

Typically speaking, houses don’t make the best short-term investments. Obviously it’s impossible to know your long-term plans with certainty. But when it comes to buying a house, you want to stay in it as long as possible in order to regain your investment and hopefully make a good profit. When asking yourself, “Are you ready to buy a home?” one way to answer that question is to consider how long you want to stay in the area. Experts recommend you stay in a house at least 5 years before trying to sell.

8. Your future goals are aligned.

What are your hopes and dreams for the future? Do you hope to start a family? Do you want to build a business? These questions may not feel as applicable to the house-buying process, but your future goals are very much impactful on the type of home you should buy. Your mortgage, for example, will impact how much of a business loan you may be able to get. And the number of bedrooms in your house may impact how quickly you need to move if you have kids. Don’t just buy a house for the life you have right now; buy a house for the life you want five years from now.

9. You know what you want.

Until you know what you want, either every house or no house at all will meet your criteria. And nothing will be more frustrating. This is where a good realtor or real estate agent can help you narrow down your wish list. One quick tip—it has been said that the three most important things in a house are as follows: location, location, location. You can love the quirks and imperfections of a house if you love your neighborhood and neighbors.

10. You want more control of your property.

If you’re tired of living in a rental property where you can’t even paint the walls without asking permission—or if you want the freedom of changing the landscape or building an edition—you may be ready to buy. Nothing gives you more freedom or a greater sense of satisfaction than owning the place you call home. If you understand that, it may be time to take the next step.

11. You’re ready for more responsibility.

Buying a house is a big step with big responsibilities—especially if you hope to maintain or improve the value of your home over time—but more responsibility can be a good thing. Once you’re ready to roll up your sleeves and tackle the maintenance challenges that come with ownership, you’re ready for the final step …

12. You’re ready to commit.

As you know by now, owning a home is a big commitment. In fact, it may be one of the biggest commitments you ever make. But it can also be a commitment that brings you great joy. If you can enthusiastically answer, “Yes!” to each of the items on this list, then you may be ready for one of the most rewarding commitments of your life. Source

Happy Veterans Day!

 

"We recognize the sacrifices you and your family have made. Thank you for your service to our nation." 

Work and Associates Home Loans

Phone: 916-847-3090

1350 Old Bayshore Hwy Ste. 520

Burlingame,  CA  94010

margeate@workhomeloans.com

What Do Interest Rates Really Mean?

What is interest and an interest rate?

To put it simply, interest is the price you pay to borrow money — whether that's a student loan, a mortgage or a credit card. When you borrow money, you generally must pay back the original amount you borrowed, plus a certain percentage of the loan amount as interest. There are some exceptions: if you pay your credit card balance in full every month, or you have a promotional 0 percent interest rate, for instance, you will not pay interest.

If potential lenders and creditors see a past record of responsible credit behavior and consider you a low-risk borrower, you may receive lower interest rates.

The total amount you pay back in interest can vary, depending on the length of your loan and whether interest rates are fixed or subject to change (known as variable interest rates). A fixed interest rate does not change; a variable interest rate is tied to a benchmark interest rate called an index. When the index changes, the interest rate may change as well.

When interest rates are high, it's more expensive to borrow money; when interest rates are low, it's less expensive to borrow money. Before you agree to a loan or sign up for a new credit card, it's important to make sure you completely understand how the interest rate will affect the total amount you owe.

How is my interest rate determined?

Lenders and creditors have their own criteria to decide what interest rates to offer you. These may include credit scores, credit reports, factors such as your income and the length of the loan. Economic trends, such as the benchmark interest rates mentioned above, also can influence your interest rate, particularly on home mortgages.

Interest rates are generally unavoidable when borrowing money, but it's worth it to comparison shop and understand the real costs of the loans or credit before you accept.

What is considered a high interest rate and what is considered a low interest rate?

What is considered a high or low interest rate depends on the specific type of loan. For example, credit cards often carry high interest rates, commonly in the double digits, making them comparatively expensive forms of debt. Mortgages typically feature lower interest rates, with rates significantly below historical averages often perceived as low. Auto loans and personal loans fall somewhere in between, with rates influenced by factors such as creditworthiness and the length of the loan term.

What is an APR?

An Annual Percentage Rate (APR) is another rate that you may come across when borrowing money. An APR is your interest rate for an entire year, rather than just a monthly fee or rate, on your credit cards or loans, plus any costs or fees associated with the loan. It's the total cost of having the credit card or loan, stated as a percentage. The APR is intended to make it easier to compare lenders and loan options. Credit card companies are required to disclose the APR before issuing the card and also on monthly statements.

It's important to do your research and be aware of how interest rates affect the total cost of the loan and using credit. Source

DRE ID # 01769353

NMLS ID # 394275

Homebuying Wants and Needs: Determine Each Before Your Home Search

Purchasing a home is sometimes a balancing act between wants and needs. Finding the right mix is increasingly important as home inventory remains low and interest rates are higher compared to just a few years ago. Yes, you can still find a home that suits your budget and style, but your search will be easier if you carefully consider your priorities. 

Start with a list of your homebuying need

A need is something that’s a deal breaker, a must-have that’s absolutely required for you and your family. Everyone’s non-negotiables are different, but your list could include things like: 

• A bedroom for each child 
• A guest space for a frequently visiting family member, like a grandparent 
• Staying in the same community (or moving to one you’d prefer) 
• Having a reasonable commute to work, activities or family  
• Accessibility or mobility features, such as walkability to stores or restaurants 
• An outdoor space for children or pets    

Sometimes it’s hard to differentiate between must-haves and hope-to-haves. For example, perhaps two siblings close in age would be fine with sharing a room—and even prefer the company. Or maybe a large kitchen seems like a must, but compared to how much you prepare large meals, a smaller kitchen could work just as well. When you aren’t sure, simply put these borderline items on your lists and circle back to them later. They’ll become clearer in time. 

Evaluate your homebuying wants

Your wish list should be realistic and attainable. Understanding your home aspirations also plays three important roles in homebuying: 

1. It can help you highlight your actual needs  
2. It can help you narrow your search and stay within your budget  
3. It can help you decide between two similar homes  

 Your nice-to-haves can enhance your living experience but are not essential. You should be able to compromise on each, especially if they can be changed or added later. Items on this list can include home features such as:  

• High-quality countertops and cabinets 
• Underground sprinklers 
• A home office  
• A fireplace 
• Additional bedrooms 
• Walk-in closets  
• A three-car garage  
• A large yard  

 Your wants can also include other physical characteristics, including:  

• New or newer construction  
• A specific neighborhood  
• A specific style of home (i.e. craftsman)  
• A beautiful garden or outdoor space  
• Updated kitchen or bathrooms  
• A pool  
• Hardwood or tile floors

“Don’t wants” are equally important

Finally, consider things you absolutely do not want. Maybe you have a few things right off the top of your head. Maybe you need to reminisce about past living situations. Purchasing a home is a long-term commitment, so make sure you’re not stuck with something that you’ll never be able to fix. Common items include: 

• Neighborhoods too far from important commitments (family, work, etc.)  
• Busy streets  
• Awkward floor plans or yards 
• High-maintenance properties  
• Homes that face specific directions 
• Prioritize your lists

Now it’s time to rank your wants, needs and “don’t wants.” At this stage, you can also share this list with your realtor. When your agent knows what’s on your mind, you’ll receive better home recommendations that also fit your budget. Be sure to ask which additional features would add to the price of a home so you can set realistic expectations. As you create and rank your items, it can be helpful for both you and your agent to divide them into categories.  

• Location and neighborhood. These can impact your home’s future value. Be sure to get specific (being close to this school), have some general items (preferred parts of town) and be clear about what you don’t want (perhaps a home with an unfinished basement).   
• Property quality, type and size. These categories will influence lifestyle, time committed to maintenance and ongoing costs. Also consider your property preferences (town home, single family, condo, etc.), as well as square feet.  
• Features and amenities. Are there any preferred features that will make your home more comfortable or stylish? Your list could contain an energy efficient HVAC or a washer and dryer on the first floor. Make sure you know what’s reasonable within your budget.  

Creating a housing budget can be a complex calculation based on many moving parts like market conditions, available interest rates, your income and housing availability. Other costs include property taxes, maintenance, home insurance, utilities and a home warranty or mortgage insurance if you need it. You’ll also need to consider your average monthly living expenses and lifestyle choices. Creating a budget is one part of your homebuying checklist that also includes finding your credit score, determining your down payment and gathering all the paperwork needed for a home purchase.  

Once you have a general idea of what you can afford each month, it’s time to reach out to your lender. Your lender can look at your income and down payment and provide advice on potential loan options. They can then help you apply for a mortgage pre-qualification. A pre-qualification isn’t binding, but it can give you a general idea of your price range. 

Source

NMLS ID 394275 | DRE ID 01769353

APR Vs. Interest Rate: What’s The Difference?

When you’re shopping for a home loan, you’ll see lenders advertise their best mortgage interest rate vs. APR, or annual percentage rate. They’re required to show you both rates, because APR gives you a sense of the lender’s fees in addition to the interest rate. As a borrower, you need to know if a lender is making up for a low advertised interest rate with high fees, and that’s what the APR can tell you. If the APR is close to the interest rate, you’ll know that the lender’s fees are low. We’ll explain how lenders use APR vs. interest rate and how you can use your new understanding of these terms to save money on your home loan. Even if you already think you understand how APR works from your experience with credit cards and auto loans, there’s a lot you may not know about how APR works for home loans.

What Is an Interest Rate?

An interest rate is the cost to borrow money. When you borrow money to buy a home or a car, you pay interest. When you lend money, you earn interest. If you have a savings account or certificate of deposit, you’re lending money to a bank and they’re paying you a small return so you’ll have an incentive to put your money there. Interest is usually expressed as an annual rate. Freddie Mac, which publishes a weekly Primary Mortgage Market survey, found in late August 2020 the U.S. average weekly mortgage rate was 2.91% on a 30-year fixed-rate mortgage.

What Is APR?

APR, or annual percentage rate, is a calculation that includes both a loan’s interest rate and a loan’s finance charges, expressed as an annual cost over the life of the loan. In other words, it’s the total cost of credit. APR accounts for interest, fees and time.

Going back to Freddie Mac’s Primary Mortgage Market survey, there’s an important piece of additional information you need to know: The average interest rate of 2.91% comes with an average of 0.8 fees and points, or $800 for every $100,000 borrowed. So the national average APR on a 30-year fixed-rate home loan was 2.99% at the end of August.

APR vs. Interest Rate: Why These Numbers Matter in a Mortgage

Since APR includes both the interest rate and certain fees associated with a home loan, APR can help you understand the total cost of a mortgage if you keep it for the entire term. The APR will usually be higher than the interest rate, but there are exceptions.

One is a no-closing-cost refinance: In this case, the interest rate and APR will be the same.

Another is an adjustable-rate mortgage (ARM). The APR for an ARM will sometimes be lower than the interest rate. This can happen in a declining interest rate environment when lenders can assume in their advertising that your interest rate will be lower when it resets than when you take out the loan.

However, the APR on an adjustable-rate mortgage is only an estimate, because no one can predict what will happen to interest rates over your loan term. Your APR on an ARM will only be knowable after you’ve paid off the loan. Source

DRE ID # 01769353  NMLS ID # 394275