Shopping for mortgage rates might have become easier but shopping for a mortgage is still quite difficult.
Did you know that half of the loan applications taken last month did NOT result in a funded loan? The long desired 4.5% mortgage rate is hard to get. We’ve been there twice and you received a 4.5% mortgage if you:
1- Have impeccable credit
2- Have lots of equity (many borrowers were surprised at how foreclosures stole their equity)
3- Have plenty of documented income and were prudent in your use of debt.
4- Only refinanced the loan amount you used to purchase the property (you didn’t extract any cash out from a previous refinance)
5- Dealt with an originator who understood that mortgage rates were VERY volatile, gathered your information, picked a lender who wasn’t swamped with loans, and executed a rate lock at the appropriate time.
Have you seen what happened to mortgage rates this past week? They shot up from the mid 4’s to over 5%; that’s a half-percentage point rise in eight days. The mortgage bonds market is skittish about our new President. His Economic Recovery Plan relies on huge government borrowing and that is inflationary.
I have no comment about his plan; that’s far above my paygrade. I do, however, think this massive government borrowing will drive rates into the 6’s within 12 months. Still, there should be a pinprick of light through this dark cloud (in the form of a low mortgage rate)
Listen to this 3 minute podcast to find out when we should see that light.
Last 5 posts in Approval/Qualification Process
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- $8000 Tax Credit is Extended through April 30, 2010...and it's been Expanded! - November 6th, 2009
- How to Boost Your Credit Score – Part 2 - November 2nd, 2009
- Is It Harder to Get a Mortgage? Perception is Reality.... - October 29th, 2009
- RateWatch October 28 - Sustainable? Depends on what you mean. - October 28th, 2009
Comments
3 Comments so far
sas
the hope for 4.5 rate is gone
http://money.cnn.com/2009/01/21/markets/thebuzz/index.htm?postversion=2009012113
Brian Brady
Sas,
That article is about 6 months too late. Where was the MSM when we talked about the CRA?
AHarris
The mythical 4.5 or 4% rates do not seem to exist or reduction in bank closing fee’s.
We have the income, the credit score and the equity in our house. We have been trying to close on a 5% loan since mid December. The paper work has stalled on our loan reps desk who called today to say - oops sorry. We are now closing next week. What I do not understand is why it is so hard to get any lenders to quote a rate, quote fee’s and to actually process the loan request in a timely manner. Congress and the Senate acted faster giving the banks their TARP funds.
Why cannot the lenders be honest about what their rates are and how long the process will take????