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Posts Tagged ‘fixed rate mortgage’

If You’re Qualified, Buying A Home Now Is Smart!

October 2nd, 2008 by Matthew C. Keegan | 2 Comments | Filed in Home Financing
Home prices remain depressed in some areas of the country, but for other areas prices continue to rise. This good news/bad news scenario can be different for buyers or sellers from market to market.

Home prices remain depressed in some areas of the country, but for other areas prices continue to rise. This good news/bad news scenario can be different for buyers or sellers from market to market.

Talk of a $700 billion federal bail out; the collapse of Washington Mutual, Wachovia, and Merrill Lynch; as well as uncertainty about the coming presidential election has cast a gloomy cloud over the housing market. But, for people who are qualified to get a home today, the best deals can be had possibly making the fourth quarter of 2008 to be the best time to buy a home in a long time.

Are You Mortgage Qualified?

The key, of course, is being qualified. Unlike just a few years back when mortgage lending rules were relaxed to let hundreds of thousands of people buy homes who would never had been qualified under today’s rules, the mortgage market is actually quite good for today’s buyers. Consider the following:

Mortgage Rates — Lo and behold, mortgage rates are still quite good. A 30-year fixed rate mortgage can be had for just under 6% while jumbo mortgages are going for around 7.25%. This means that if you’re in the market for a modest home, you’ll find the best rates provided you have a sizable amount of money to put down and your credit is very good.

Weak Housing Market — You’ll want to steer clear of neighborhoods where foreclosed homes are dominant, but don’t be afraid to pluck a distressed sale from a better neighborhood where few homes are being offered for sale. Make your move quickly because savvy investors are smelling an opportunity and although they may be thinking about flipping, they still have to consider whether the market will rebound in the next few months to consider making an investment now.

At Or Near Bottom — Double digit drops in housing values over the summer and additional drops this fall are indicating that the bottom of the market may be near. Unfortunately, no one knows when the bottom has been reached, but if home values are off by 20% or more in your area, do you think that a downward spiral will continue?

If you plan on looking for a home this fall, get your financing lined up in advance. That way, when you find a home, you can show wary sellers that you are mortgage qualified and ready to negotiate seriously and follow through on your offer. Check out some smart money tips before you jump in too.


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Fed Rate Cut Opens A Window For Refinancers

January 28th, 2008 by Matthew C. Keegan | 3 Comments | Filed in Consumer Financing, Home Financing

The Federal Reserve Bank cut interest rates by three quarters of a point this week, opening a window for consumers who need to refinance their homes. With hundreds of thousands of adjustable-rate mortgages expected to reset in 2008, the timing of this cut is on the mark for credit-worthy consumers.

The Lowest Mortgage Rate In Four Years

The new rate, at 3.5% will eventually filter down to mortgages, indeed the trend has already started. According to Bankrate, the average rate for a 30-year fixed mortgage now stands at 5.57%, the lowest it has been since March 2004.

The Fed’s Emergency Action

The Fed’s rate cut has been called an “emergency action” as the federal government looks at ways to stem the current mortgage financing crisis. With so many homeowners holding low-rate adjustable mortgages expected to reset at much higher rates over the next few months, politicians are seeing a crisis in the making.

When 2007 began, the subprime mortgage mess unfolded resulting in a higher number of loan defaults leading to a surge in home foreclosures. The U.S. Congress encouraged the relaxing of qualifying standards in the early part of this decade by expanding home ownership to lower-income consumers. Barely able to make mortgage payments many at-risk homeowners weren’t able to meet their higher monthly payments which began to reset in 2006 for some.

Qualifying For Refinancing In 2008

Despite the good news of a rate drop, not every homeowner will qualify for refinancing. Mortgage companies have tightened up lending requirements and are insisting that the following standards be met before lending money:

Consumers must have good credit. Those homeowners who have already defaulted on their loans are not eligible to refinance and many who are behind on their payments and approaching foreclosure will also be left out. A good to excellent credit score is what most mortgage companies are now requiring.

Adequate documentation is required. Those “no-doc” or no documentation loans from just a few years ago have disappeared. Today, consumers must show proof of income, show job stability and they may have to show their federal tax returns dating back as many as the past three years.

Refinance Now or Lose Out

Some homeowners are likely to want to wait and refinance when rates drop further in order to gain the best rate possible. This could be a mistake for two reasons:

  1. There is no guarantee that rates will drop much further, and
  2. Mortgage rates are already below historical averages.

Any delay on seeking refinancing could close that window for some consumers. If your financial picture is stable right now, what will it be in April or in August? Industry experts are advising consumers needing to refinance their loans to act while they can, before the refinancing window closes for good.


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