The interest rates for mortgage loans dropped to historically low levels the end of March 2009. The rates were even lower than the previous records set in January 2009. In fact, interest rates for mortgage loans are lower than they have ever been since Freddie Mac started keeping statistics on them over 35 years ago. The glut of unsold homes continues to weigh heavily on the market and many in the real estate industry are hoping the new rates will spark some movement in the housing sector. One would assume that the low rates and significant drops in home prices in many markets in the country would be enough to get people buying again. In a post credit sector meltdown reality, however, banks and lending institutions have now instituted stricter standards. They are more risk averse and are not willing to lend as freely as they were just a few short years ago. In order to qualify for mortgage loans, applicants must now have higher credit scores and better credit reports than ever before. Higher down payments are also being required. More and more consumers are applying for mortgage loans, but less and less can now qualify.
A lot of experts in the industry anticipate that the low rates will persist in encouraging more applicants hoping to refinance mortgage loans than those wishing to take out loans for new properties. There are still many buyers who are not ready to invest in real estate when they are not sure when it will recover. Others are simply being cautious in the current economy and are hesitant to take on additional financial burdens like mortgage loans. Then, of course, some want to buy but cannot qualify for a home loan under the more restrictive lending standards. Although applications for refinancing make up the bulk of the mortgage applicants this year, current homeowners are also facing tighter lending standards. A homeowner needs to own more equity in his home now to be eligible for refinancing, in addition to the same high credit score and solid credit history required of a new borrower. A large number of lenders now require equity of at least 20 percent. For homeowners who lost equity when real estate values dropped, this requirement can be frustrating. Many who may have had enough equity to qualify for a refinance a year ago may not now. That being said, there are a lot of homeowners who are eligible to refinance and are jumping at the chance to lock in a better mortgage interest rate than that of their original loan. And some analysts say any activity in the mortgage and housing sector is good news, claiming there is no where to go but up. More Reading Home equity loans Mortgage rates Mortgage Mortgage Home loans

View PDF | Print View
by: marciafreeman
Total views: 76
Word Count: 472

About the Author

For more info on refinance mortgage, go by Getsmart.com.

Comments

Add Comment