Since we came into 2008, just about all we have heard is real estate and mortgage concerns. Interest levels are now bobbing around 6% for a 30-year fixed loan. If you want to refinance now, you will find interest rates very close to the historic lows seen in 2003. These mortgage rates are important because it shows that our lenders have confidence that the real estate marketplace is strong. Even with massive numbers of foreclosures and more to come, lenders are still willing to extend credit to homeowners.
Now lenders have a new catch to loan terms that is neither bad nor unexpected. But it does mean that to get this great rate, the borrower will have to take steps that they wouldn’t have 12 months ago. For instance, stated income mortgage applications (liar loans), are vanishing. Liar loans are basically where borrowers estimated income and the lender didn’t check it out. These loans are one of the greatest financial mysteries of our time.
Down payments are back. Buying with little or nothing down is now a thing of the past. Most lenders won’t back loans with less than 3% up front. And some lenders such as Fannie Mae and Freddie Mac are requiring as much as 5% up front.
You may ask, “Why is this good news”? This is the good news for you and the economy because it helps not only the lender but you decide how much you really can afford. Americans are drowning in debt and some don’t know when enough is enough. That’s why our economy is in the mess it’s in today. The new guidelines will help assure you will be able to make your monthly payments.
So 6% financing is really out there and lenders do want your business, but the rules have forever changed. So when you do the paperwork, be prepared for steeper down payments when you buy, and you will need more equity when you refinance.
When you are ready to buy a home in Missouri , contact us and I will help you get through all the new guidelines for these great mortgage rates.
