With rising interest rates, low inventory, and changing markets, more creative loan solutions can help make your homeownership goals more attainable. A homebuyer’s unique situation might mean that a conventional 30-year, fixed-rate mortgage may no longer be as beneficial to them in the short or long-term. Other homeowners are also opting to stay in their current house rather than move, so are more inclined to do house renovations — and are looking to leverage the home equity to fund those projects.
Here are four products Sente offers that are particularly helpful and compelling in the current housing market conditions, depending on your objectives and personal circumstances:
- Sente’s Adjustable-Rate Mortgages (ARMs)
There are many reasons why we don’t keep our current mortgage as long as we stay in our homes. In fact, most Americans keep their current mortgage for around seven years, despite having a 30-year, fixed-rate loan. Any number of events can lead to this, such a refinancing your current mortgage or selling your house. If you plan to stay in your new house or keep your mortgage for ten years or less, an adjustable-rate mortgage (ARM) could give you better options than a fixed-rate loan in the current market.
The Basics: ARMs have 30-year terms, but a fixed rate only for a set number of years before the interest rate starts adjusting. The number of years the rate is fixed depends on the specific ARM product. Rate adjustments used to happen annually, but because of market changes, ARM rate adjustments now happen every 6 months. An ARM has two parts: the margin and the index. The margin is a specific number of percentage points that never changes, while the index is an interest rate that may move up or down, depending on market conditions. The index plus the margin is the interest rate you pay.
With ARMs, time is on your side. If you plan to remodel, refinance, relocate, or sell within their initial fixed-term period, you will have a lower rate for the time you own the house. You also have the option of selecting the ARM term that meets your needs: 5-year, 7-year or 10-year fixed periods. By the end of the fixed-rate term, your income may have changed significantly compared to when you qualified for the ARM loan, thanks to personal events like moving up in your career, finishing an advanced degree, or having children graduate. ARMs can therefore be a great way to get the house and payment you want upfront, with various options for how to handle the adjustable-rate period.
- Lock & Shop Program
A major concern for homebuyers has been the pressure to find a house before interest rates rise to the point that they no longer qualify for a mortgage and can’t afford a home in their price range.
Here’s where Sente’s Lock-and-Shop program comes into play. You can get locked into your interest rate with 90 days to find a home and 30 days to close. Our 120-day Lock-and-Shop product gives homebuyers the opportunity to determine your interest rate first and have the time to continue shopping for your home. You’ll have far more flexibility to find a home, negotiate the price, get inspections and appraisals done, and close the loan without worrying about how rising interest rates might impact you during that time.
- Extended Rate Lock Program (for borrowers building a home)
Homebuyers building their own home have faced a unique set of challenges in the current environment. From rising interest rates to supply chain issues, the home construction process can feel daunting now. But that’s where Sente’s Extended Lock Program can help.
For qualified loans, we’re offering a 110-day interest rate lock, with the option to go up to 350 days. With interest rates rising, we can help eliminate one worry during the construction phase by securing your interest rate today, which will allow you to be comfortable with your future rate and monthly payment. There is an upfront fee, but this is credited back at closing. The loan must also be for a new construction.
- Home Equity Second Mortgage (for Texas residents)
With price appreciation, many Americans have far more equity in their homes than they realize. Limited housing inventory also means people are staying in their current homes instead of moving — which makes many homeowners eager to remodel and make upgrades. But many people don’t want to give up their previous interest rates to do a refinance and access funds.
Sente’s Home Equity 2nd Mortgage enables you to take out a lump sum of money with a fixed term and rate. This helps borrowers with large financial needs, such as home remodeling, consolidating or paying off debt, or funding college tuition.
The loan amounts range from $100,000 to $750,000. The cashout maximum — i.e., your take home amount — is $500,000. We offer 15-year or 20-year terms on this type of loan.