Interest Rates Decrease and Encourage Applicants for Mortgage Loans
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by: marciafreeman
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Word Count: 420
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. The rates are at the lowest point since Freddie Mac began tracking data on mortgage loans in the early 1970s. As the inventory of properties on the market remains high, many realtors, builders, investors and homeowners hold their breath to see if the historically low rates encourage some activity in the ailing market. It would be nice if all it took to boost the housing sector was low rates. But lenders have also adopted more restrictive lending practices as a result of the credit crisis and the economic downturn. 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. In addition, more money must be put down to obtain the loans. 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. Some potential buyers are wary of jumping into the housing market when they are unsure of when it will hit bottom. There are others who are just not willing to risk being saddled with mortgage loans during such tumultuous economic times. Then, of course, some want to buy but cannot qualify for a home loan under the more restrictive lending standards. Consumers who currently own their homes and wish to refinance have to undergo the same scrutiny as new home buyers. In addition to needing higher credit scores to qualify, homeowners must now have higher amounts of equity to be eligible for a refinance. Many banks are requiring 20 percent equity. 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. But many homeowners do qualify for refinancing and are taking advantage of the lower rates. After such dismal real estate times, many in the industry welcome any and all action in the real estate and loan industries, whether it is due to refinancing existing homes or purchasing new ones.
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