Interest Rates Decrease and Encourage Applicants for Mortgage Loans
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by: marciafreeman
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Mortgage loans are looking more attractive to many consumers as the third month of 2009 nears its close, with rates hitting record lows. 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. 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. But lenders have also adopted more restrictive lending practices as a result of the credit crisis and the economic downturn. Riskier borrowers that just a couple years ago would have easily been given a loan are not being considered now. 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. So, although applications for mortgage loans are up, fewer applicants are actually eligible.
Many analysts believe there will continue to be more consumers refinancing mortgage loans than taking on loans for new homes. 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. 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. 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. Related articles Loans --
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