Kathy Torvick
Seniors Real Estate Specialist
Realty Executives Arizona Territory
Searching for a better deal can pay off when looking for a mortgage.
According to the Consumer Financial Protection Bureau, you could save $100 a month on your mortgage by looking at multiple lenders.
Analyzing Home Mortgage Disclosure Act data from 2021 found that price dispersion—variation in mortgage rates among lenders for the same loan product—was around 50 basis points (.50%) of the APR..
That translates into a significant difference in monthly payments. For example, on a $300,000 loan with a 3% interest rate, opting for a 3.5% rate would increase the monthly payment by $82.
Since interest rates have risen significantly since 2021, the impact on monthly mortgage payments has become more pronounced.
With a loan amount of $300,000, the monthly payments for a 30-year fixed loan with a 6.5 percent interest rate and a 7 percent interest rate are, respectively, $1,896 and $1,996—a difference of $100 a month.
Still, finding a lower mortgage rate can be more difficult for older borrowers.
Research (https://bit.ly/3r39hh2) by the Federal Reserve Bank of Philadelphia found that older Americans face challenges getting a mortgage as they age and are more likely than younger borrowers to be rejected for such loans.
"I find that older borrowers face higher coupon rates on home purchase and refinance mortgages that were sold to Fannie Mae and Freddie Mac. Together, the empirical results suggest that, for a large part of the market for simple refinance and home purchase mortgages, older individuals who apply for such credit alone systematically face higher access barriers," wrote Natee Amornsiripanitch, the study's author.
The research found that the overall mortgage rejection rate was 17.5%. But for those in their 60s, that figure rises to 19% and to 20% or more for applicants in their 70s.
Even though it may be more challenging for those aged 60-plus to get a mortgage, it can be done.
Here are some tips:
If you last got a mortgage several years ago, refresh your knowledge of the mortgage process. Here are some resources:
Begin you search with Tucson Senior Loan Officer Resa Kaiser of VIP Mortgage. She has years of experience in the real estate and mortgage industry and can review your options with you. Call her today to begin the process of finding the right mortgage product.
Resa is skilled in fixed rate mortgages, she is a Certified Mortgage Planner, Home Equity, and U.S. FHA Financing. Strong finance professional with a Bachelor of Science degree.
