As an Oklahoma City real estate agent, this is one of the most common questions that I hear. Most people are wondering whether they are flushing their rent money down the toilet every month while they could be building up equity on a home for the same price. The truth is that renting is a complete waste of money, and depending on the location, you may be paying as much rent as you would be on a mortgage.

Inside Oklahoma City

If you are currently renting a house or an apartment inside the city you are probably paying an astronomical amount of rent every month. Somebody else is making money off of your rent check every month. Somebody else owns this property and they are using your rent money to help pay off the mortgage on it or the mortgage has already been paid off and they are enjoying pure profit. When you think about it this way, it isn’t very pretty is it?

If you enjoy the convenience of living right inside the city you are probably paying less for rent then you would be for the mortgage of a house inside Oklahoma City. If, however, you were willing to look at homes just outside of the city, you could very well be looking at a mortgage payment that is the same or lower than the rent you are currently paying now.

It all depends on the down payment

All of the figures that you will be working with to determine how much you will pay on a mortgage versus your rent will depend on how much the property is worth and the down payment you can pay. If you only have a small down payment to make and find a small house just outside of Oklahoma City, you may end up paying less on a mortgage than you would be paying for rent right inside Oklahoma City.

If you are willing to move outside the city and look for a small home, or even one that needs minor renovations, you’d be better off than you are if you are renting an apartment in Oklahoma City, in many cases. As well, even if you do have to pay a slightly higher mortgage, you’ll at least know that your money is going towards eventually owning your own property. There is no better feeling than that. ?And, of course, if you were renting, your rent would probably go up every year or so. ?Unless you refinance or change something, your mortgage payment never will.

If you would like help working out the figures on rental payments versus mortgage payments in Oklahoma City, give me a call. I have been able to help many tenants get into their own homes and start building a future that leads towards homeownership, and I’d love to do the same for you.

There is a direct link between your credit card and your Oklahoma City mortgage and it does not have to do with using your credit card with a 30% rate of interest to purchase your new home. The link between your card and your mortgage lies in your credit rating. If your credit is out of whack you are not going to be able to qualify for a mortgage. If you want to buy a house and get approved for a home loan you need to make sure that your credit card bill payments reflect responsible credit ownership so that the lenders consider you a good risk.

Credit card problems

If you have any credit card problems at all these will be reported to the credit agencies. Just by paying one payment late on your credit card bill reflects badly on your credit history. Any time you make a late payment it shows up as a black mark on your credit file and too many of these marks will influence your ability to get an Oklahoma City mortgage.

Always make your credit card payments on time. By doing so, lenders will look at you as a responsible cardholder that knows how to handle credit. When you apply for a mortgage, your credit file will be pulled and these things will be assessed. Having a good credit history is one of the most essential components of being approved for a mortgage.

Purchasing with your credit card

Another thing that will be accessed when you apply for a mortgage is how much credit you have available. If you are thinking about purchasing a large screen TV with all the bells and whistles and using up the credit left on your card, it is best to do so after you have purchased your house. The lender wants to see that you have available credit.

Applying for new cards

Don’t apply for any new credit cards when you want to get an Oklahoma City mortgage. You need to assume the position of not needing any extra credit at the time. Applying for too much credit at the same time will appear desperate to many lenders.

When you are applying for an Oklahoma City mortgage it is best to lay low with your credit and don’t do anything that will possibly raise any red flags. Make sure that you make all of your payments on time on your credit card, don’t apply for any extra credit and don’t make any big purchases. These steps will help you when you are trying to get approved for a new mortgage. yment for expenses related to moving to the new property, appliances etc.

If you have a Oklahoma City home loan you will be paying interest monthly on the whole balance that is still owing. At the beginning almost all of your payment will be put towards paying off the interest. As the years go by, however, less money is put towards the interest and more gets put towards the principal.

If you have a 30 year mortgage to pay off, for example, at a 7% rate, you will still be paying more towards the interest than the principal, even when you are halfway through the payments. When you are fifteen years into the mortgage only about 75% of your payment will apply to the interest. At this point only 1/4 of your payment is building up the equity in your Oklahoma City home.

You will not see more than half of your payments being put towards the principal until you are in your 22nd year. That is when the equity continues to build at a rapid pace and everything gains momentum.

With this 30 year loan, you do not own half of the home until the 22nd year or so. There are a couple of ways to reduce this time, however, if you can afford them.

Extra payments

As long as there is no clause on your mortgage for prepayment penalties, you can make extra payments when you have extra funds at hand. This will speed up the process so that your payments go towards building up equity in your home faster.

15 year mortgage

You will save an incredible amount of money on your Oklahoma City home loan by taking out a fifteen year loan at the beginning. If there is any way to afford it, this is your best option in terms of long-term savings.

As an example, if you have a Oklahoma City home loan at 7% for $150,000, a 15 year mortgage will save you about $117,000 dollars over a 30 year loan. This is a staggering amount of savings and makes a 15 year loan well worth your consideration when you are first looking for a mortgage.

You will have to take another look at your budget to see where you stand before making a final decision about your mortgage. If you can’t afford a 15 year Oklahoma City home loan, you’ll still have the option of making extra repayments when possible with a 30 year term.

Interest Rates are currently hovering between 4.25% and 4.5%.  If you buy a $350,000.00 house today with a 4.25% rate and 20% down your payment on a 30 year fixed rate mortgage would be 1377.43 per month(Principal and Interest).  Add in taxes at $3000.00 per year and insurance at $1600.00 per year and your total payment would be $1760.77.  If you are interested in what that will buy you click here.

Everybody and their dog from TV and Radio is going to be advising you to go out and buy a house.  If you are smart and in the know you will hear it first here at the Oklahoma City Real Estate Blog. 

The Fed said Wednesday that it would put over a Trillion Dollars into the economy.

$300 Billion Dollars of Long Term Treasuries.

Another $750 Billion Dollars of Mortgage Backed Securities.

Purchase of Freddie and Fannie debt of up to $200 Billion Dollars.

Keep the Fed Fund Rates between 0 and .25 for a long time.

What does this all mean?  It means interest rates are going down and the Fed has got your back.

How do you take advantage of this.  Buy a house and find it quick.  The ridiculously low interest rates along with the First Time Home Buyer’s Tax Credit is going to heat up the market.  The builders have quit building.  There is over three years of pent up demand for housing and when they come flooding back in the supply will not be there.  I know there is a lot of supply but when you subtract all the busted up foreclosure that most do not want or can’t get financing for you have very few houses.  I will say it again there are very few good houses on the market for serious buyers and as the army of sideline buyers enter the game, prices on good homes are going to go up.  So in short, if you do not move quickly you will pay more for your house and you will be talking about the chance that you missed.  If you wait for the statistics to show this or you are waiting for all the reporters to tell you now is the time to buy a house you are going to miss the boat.  If you want to hear someone call a bottom to the housing market.  Here it goes. 

 This is the bottom of the housing market. 

If you buy a house now you will be rewarded.  There you  have it.

There has been so much talk about the super low interest rates that I thought you might be interested in seeing how it affects your payment.  So, I calculated these payment amounts as principle and interest in a matrix with loan amount going down on the left and interest rate across the top.  So if you were getting a $150,000.00 30 year fixed rate mortgage loan at 8.00% your payment would be $1,101.00.  What is striking is that you see that your payment almost doubles from 4.5% to 10%. Read the rest of this entry »

This in from the Associated Press

NEW YORK — The price of money for American consumers went on sale in a spectacular way Tuesday after the Federal Reserve cut interest rates to their lowest level on record and promised to keep them low for a long time.

In response, most banks cut the rate they charge their best customers, known as the prime rate, to 3.25 percent from 4 percent. The last time it was that low was in 1955, according to data from the Federal Reserve Bank of St. Louis.

What does this mean to you as a Buyer?  It means that the money you need to buy a new house is cheap.

How Low are interest rates you ask?

Here is what a local lender here in Oklahoma City was quoting today with no points.

5% Fixed Interest Rate on an FHA Loan. And are you ready for this on a 95%LTV with a 740 FICO score we are at (drum roll please) 4.875% Fixed Interest Rate.

That is right 4.875%!

These rates are historically speaking about as low as they get. See chart below from  Freddie Mac.

Monthly Average Commitment Rate And Points On 30-Year Fixed-Rate Mortgages Since 1971

If you took a close look at the above table you will notice that you did not see any loans under 5% and you definitely did not see any under 5% with no points.

If you were looking for the perfect time to buy a house.  Look no Further.

It was reported today that new housing starts are at their lowest since they started tracking them in 1959.  What does that mean?  That means there are very few new houses being put out there which will lead to decreasing inventories leading to a stabilization of home prices and possibly in the near future increasing house prices.  In short it means we are at or near the bottom of housing devaluation.  Throw in the lowest mortgage interest rates ever and a $7500.00 Tax Credit and those sitting on the sideline are going to look back on today with regretful nostalgia.

Don’t miss out on a once in a lifetime opportunity and I won’t have to say “I told you so.”

Search for a Home Here.

Get a Loan Quote Here.