Unemployment is currently at historically low levels, and the US economy is performing very strongly. Because of this, many analysts and aspiring homeowners expect the housing market to pick up, even more so after the Federal Reserve recently cut interest levels. Is this a good time to buy? The Bank of America mortgage rates, as an example, are notably going down. Some consumers, on the other hand, might prefer the already low PennyMac payment.
Either way, getting a mortgage looks easier than it actually is. Many US households can afford the monthly installments, including interest. After all, rent is almost always more expensive than paying a mortgage, especially a long-term one. However, the majority of aspiring homeowners will struggle to come up with the downpayment. Even if they do, the credit score requirements, in themselves, are daunting.
Having said all that, there are plenty of options that may allow you to overcome these hurdles. To clarify, the PennyMac payment is advantageously affordable, especially when weighed against the current 30 year mortgage rates. Equally as important, low-income households and borrowers with a bad credit score, alike, can still qualify for a loan. Similarly, PennyMac also serves investors and existing homeowners who want to refinance their mortgage.
Accessible to All
The US Census Bureau tells us that, during 2015, the average American household paid over $1,400 per month on rent. Those who own their residence, on the other hand, had an average monthly mortgage payment of about $1,000.
In short, if someone can afford to pay the average rent in the US, they certainly can handle the much cheaper mortgage installments.
Your Credit Score Isn’t Everything
One of the main positive aspects to the PennyMac payment is that it isn’t influenced by your credit score alone. Instead, the lending firm looks at other aspects, such as an applicant’s earnings and other debt obligations.
For example, a recent college graduate may have a good enough income to pay the rent and afford a monthly mortgage installment. However, their credit score is low because of their sizable student debt.
This factor, in itself, doesn’t suggest that this prospective homeowner cannot handle their finances. If anything, while their debts are large, holding a college degree means that this applicant will likely maintain (or even grow) their income over the years.
Because of this, PennyMac takes all of these factors into consideration, regardless of a household or individual’s annual wages, debt-to-income ratio, credit score, or level of education.
An Open Market
PennyMac offers even more flexibility through connecting borrowers with a network of lenders. The firm’s website will do so based on an applicant’s income, credit score, and background.
As opposed to a conventional bank, consumers can choose between various interest rates, qualification requirements, and loan terms.
Just as importantly, PennyMac provides these options to buyers that have different objectives. Their tools cater to homeowners who want to refinance their mortgage and investors that purchase property to rent it out.
Above all else, PennyMac processes applications online. Potential borrowers don’t need to visit a physical office location or prepare paperwork. Instead, they fill out their forms on PennyMac’s website and upload documents digitally.
The PennyMac Payment vs. the Bank of America Mortgage Rates
Alongside a lower interest, PennyMac lets approved applicants pay a much smaller down payment in comparison to traditional mortgage lenders. In fact, many of PennyMac’s loans have a 0% down payment, especially those that the government offers.
Yet, even other types of mortgages have a three percent or less requirement. On the national level, the average down payment (through all types of lenders) is 7%. Additionally, homeowners that want to refinance or purchase a second house must put down 16% of the property value.
As far as interest is concerned, the current Bank of America mortgage rates can be as high as 4%. This applies to first-time buyers and refinancing applicants, alike. Equally as important, most other conventional mortgage providers have a similar (or, at times, more expensive) average interest rate.
The PennyMac loans, on the other hand, can be lower than 3.5%, even if your credit score is below 640 points. To clarify, the difference between the PennyMac and Bank of America mortgage rates can save consumers over $1,000 per month.
PennyMac: The Cons
Just as any other entity, PennyMac has its own downsides.
Firstly, while online applications are convenient, many people prefer to talk to a live agent. The fact that PennyMac has less than ten office locations, across the country, may be problematic.
Yet this doesn’t take away any of the positive aspects that are related to digital mortgage applications. When consumers fill out the forms at home, they are saving plenty of gas expenses and time, to begin with.
Moreover, all types of lenders, including big banks, are rapidly switching to online financial services. As a result, these institutions save money on office rent, which translates to more affordable payments and other benefits that consumers can enjoy at a lower price.
Secondly, some people are concerned because PennyMac connects homebuyers to government mortgage providers. More specifically, these loans come with a lot of restrictions and requirements.
For example, the government may limit the size of the home that borrowers can purchase. They might also prohibit buyers from renting out the property and using their mortgage as an investment (rather than for residential usage).
However, this picture isn’t entirely true. PennyMac works with different sorts of lenders, including government agencies and private firms. To add to that, PennyMac also offers jumbo loans (for expensive homes) and options for those who want to invest in a house.
If someone wants to get a government loan because of its minimal (or nonexistent) down payment, they can also do that through PennyMac.
More Money, Less Problems
The low and affordable PennyMac payment allows you save money, make more rent revenues, or both. This program is available to borrowers who have different goals and objectives.
To illustrate, look at your savings when you compare a PennyMac loan to the Bank of America mortgage rates, as an example.
Above all else, PennyMac will work with households regardless of their income level, credit score, or down payment savings.
If you have an existing conventional loan, considering PennyMac might go a long way. Those who get a first-time home buyer loan will likely enjoy even more benefits.
Either way, consumers that can afford to pay the monthly mortgage rate are going to qualify for a PennyMac loan.