Since the government announced it would be taking custody of Fannie Mae and Freddie Mac, there has been a substantial drop in mortgage interest rates which has raised the hopes that more buyers will pull the home buying trigger and help hasten the housing market recovery.
We could not agree more with that possibility. The rate on a Conventional 30 year fixed rate loan fell to 5.75% with zero points on Tuesday, and most other mortgage loan programs followed suit. Of significant note in this change is the fact that the announcement also had a major impact on jumbo loan rates. For months, they have remained stubbornly high, as the secondary markets turned their back on the programs. That, too, appears to be changing with this announcement. For example, a true 30 year Jumbo loan is currently down to 6.875% and zero points and a 30 year Conforming Jumbo loan is at 6% and zero points. Granted, they are still higher than normal, but they are much better than the rate levels they were at just a week ago.
The thing for potential home buyers to remember is that over the last year, many changes have taken place in the lending industry’s practices. Guidelines for qualifying for a mortgage loan changed dramatically and new rules now exist for things like down payments, credit scoring and proof of income. The days of easy money are long gone and once again, common sense underwriting guidelines have risen to the forefront.
For many, including the ever present national media, cries of “no one can qualify for a mortgage under these new rules”, is a total red herring. We’ve been in the lending business for over twenty years now and there have only been of few of those years (2004-2006) where many of these types of things where not always part of the process. The bottom line is no one ever said that buying a valuable asset like a home should be easy. It’s not. But help is there for those who need it. The key is to find a responsible lender who can guide you through the process, answer all your questions and help you reach your goal of home ownership.
Metro Mortgage Company is a federally regulated Mortgage Banker specializing in residential Florida home loans including Conventional, Jumbo and FHA/VA mortgages. Call us today at 888-617-3674.
Tags: Interest Rates, mortgages
6 users commented in " Mortgage Interest Rates Drop Substantially "
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I recently met a young woman who is 27 and trying to get approved for a mortgage for a first home. She is frustrated by some of the issues — for instance, she is a contractor and has only been in this line of work for a year, and was told she needs two years of solid work history. She was told she will probably need a co-borrower, which complicates things since her parents may not be qualified. However, she hopes things work out because the mortgages are lower right now, and she may qualify for the $7,500 first-time homebuyer credit. But yes, things are definitely getting more complicated for younger people who aren’t as likely to be lended to right now.
Yes Emily, things are very rough right now in the lending industry. The days of the easy loan approval are long gone.
The bottom line now is you meet the lending guidelines or your SOL. No two ways about it.
The drop in the interest rates was great news for both buyers and sellers!
We got a few more buyers in the Texas market when it happened. I hope they stay low with the new bail out bill that just passed today.
There has always been an element in the mortgage industry (like any industry) that are …shall we say, not upfront about the small print. Perhaps the current climate will wipe this out leaving an ethical market place.
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