Today's Mortgage Market
How to Navigate in Crazy World that is Today's Loan Market
With interest rates in flux and the loan market changing quickly, borrowers need to know where they stand and what they should do next. Now might be a good time to buy.
By now most readers should know that the mortgage industry has gone crazy. Due to a variety of factors (increase in mortgage defaults, decrease in real estate prices, and others) it has become very tough to secure a loan to make a home purchase. Furthermore, those readers considering a Jumbo loan (any loan greater than $417,000) will be faced with even more challenges. There is still hope; however, for those who really need to get into a property sooner rather than later.
When considering a mortgage is to make sure that it will be possible to qualify for a loan. Borrowers with bad credit are considered “persona non grata” in the mortgage industry right now. While this will certainly change in the next year or two, it’s not even worth taking the time to look if credit has been a problem in the past.
Be very aware for schemers out there. During times when it is very hard to qualify for mortgages, many unscrupulous characters will try to convince borrowers they can get them qualified at an extremely high interest rate or for some type of upfront fee. Don’t fall for that. The markets are simply not open to borrowers with below average credit right now. A borrower would be better off spending their time paying off current debt and ensuring that no other blemishes hit their credit report, than trying to work with a “miracle” mortgage broker.
For the people with average to good credit looking for conforming loans, the market is still surprisingly good. Interest rates have come down a bit and the loan markets have opened up nicely. These are the easiest deals to get done now. Furthermore, buyers in markets under $400,000 have the advantage. Supply has increased dramatically and many great seller concessions are available. Take advantage of this market by asking sellers to pay closing cost or making more aggressive (lower) bids. If a borrower is in this range, life will not get much better than it is right now.
Finally, the jumbo loan borrower with average to good credit needs to get creative. Right now fix and adjustable rates seem to be converging, so take advantage of that by locking in a fairly low rate now. More importantly, make sure the mortgage broker handling the loan looks at a Conforming Loan with a Home Equity Second, as well as, a straight Jumbo mortgage. Their may be better blended rates on the former because of the high current rates of Jumbo loans. Regardless of where rates are, its always a good idea to look at both. The Conforming/Home Equity combo also allows buyers the unique feature of paying off the second early and securing a lower payment without the hassle of refinancing.
Now, more that any other time, borrowers need to be smart and shop around. Getting the best mortgage can save a borrower thousands, possibly even hundreds of thousands, of dollars over the life of the loan.
