Over the past year, homebuyers have watched interest rates on home loans continue to rise. Even though rates are still considered historically low on average, it’s stressful for people looking to buy homes or refinance existing mortgages.
Jeff Bentley, president and CEO of Northwest Federal Credit Union, said that most people chase the interest rate. But he cautioned that rates change — in some cases hourly. “If someone’s quoting a rate today, by the time you’re ready to pull the trigger on that loan, the rate has probably changed again.”
So what should a homebuyer consider when choosing a mortgage lender? Bentley’s advice: “Go with someone that you feel you can trust. Not someone who is just pushing product and then they forget your name as soon as the deal’s done.”
If you’re shopping for a mortgage, you have options
Northwest Federal offers first-time homebuyers both a 100% finance option and a 97% finance option, which has a slightly higher rate.
Bentley said the credit union focuses on helping people and building long-term relationships. And part of that help is educating customers about the different financing options as well as the ups and downs of the various products that are available.
For example, “you can do a 30-year fixed mortgage. You can do a 15-year fixed mortgage. You can do a five-year ARM, which is an adjustable rate mortgage,” he said. “If you think rates are going to come down in the near term — in the next three to four years — maybe an ARM would make sense for you.”
But ARMs come with a risk.
“If you’re more conservative, and you want to know what tomorrow holds from a payment perspective, you probably need to focus on a fixed rate,” Bentley said, “Those are questions and conversations you need to have with an expert somebody that you can trust that does this every day and is looking out for you and not trying to maximize their profit.”
Ultimately, that’s the goal of Northwest Federal — to be a trusted adviser, he said. Yes, it aims to provide competitive rates, but it also wants to be an educational source for its customers and to establish lasting partnerships, Bentley added.
When is the best time to buy?
One big question many people have, especially in the current environment, is: When should they buy a house?
“The best time to buy is when you’re ready to pull the trigger on the house that you find,” Bentley said. “If you’re trying to gamble and wait for the best- rate environment or wonder if that house price is going to come down, frankly, no one has that crystal ball. You’re just going to make yourself crazy trying to do that.”
A number of banks and credit unions have closed or reduced their mortgage operations because of profitability concerns. “They’ve got all these employees, and nobody’s buying homes. And so the layoffs start,” he said. “We don’t do that. We have long-term employees that know this business. We don’t consolidate. We don’t ebb and flow with the mortgage industry. If you’re searching for a company to find a good product, a good product that matches your situation, not what helps a bank or even another credit union find the most profit, stop searching and go Northwest.”