Getting a Mortgage in 2019; What to Expect
With the declining state of the housing market and all the problems with the economy, it is a surprising fact that this is a good time to apply and be approved for a mortgage.
You will not be approved if your credit is not good though.
Borrowers that have a good Credit score are able to receive a great deal on the fixed rate, conforming 30-year mortgage. Qualifications for approval will include proof of a stable income, a good FICO score, and a debt load that is reasonable.
In 2009 rates are probably going lower too, raising the point that it may be better to wait for a better rate or to go ahead and borrow now. There is a lot of disagreement on this fact even between the mortgage experts. In plain terms: if you don’t mind gambling, then go ahead and wait. But if you are the type of person that will fret and worries that the rates will go up soon, then you need to borrow now.
In the current mortgage market here a few points to consider:
Comparison Shop is as Important as Ever
Under a normal economy, most loans are pretty much equal to the others, due to the fact most of the interest rates on the 30-year type fixed loans are bunched together with only a .25 of a percentage point dividing them. This is not the case today. The lenders today vary hugely as far as the amount of risk they’re going to take on with loans these days because of the uncertainty of the economy. This fact makes it imperative that you shop and see where the best deals are. Check often too because the rates on home loans fluctuate constantly.
Lock in a Fixed Rate on That New Loan
Disregard what you used to know about the pros and cons comparison that was made in the past between adjustable and fixed rate loans. You’ll only receive the best quotes on the fixed rates today, because this is the area that congress has decided to back. The time for analyzing the adjustable rate mortgages is long over, so most of the lending institutions don’t want to deal in ARMs. They do not offer the alluring rates on risky loans like these anymore.
Right Now Hold on to Your ARM
If you are paying on an ARM already don’t hurry to rid yourself of it, the rates are due to be adjusted soon. Short-term type interest rates have gone down so much now that you’re going to find that your monthly payment goes down too. The yield of the one-year Treasury bill has gone all the way down to under half a percentage; so you will see that with an ARM that is indexed on a one-year Treasury bill, it is likely that you will only be paying 3.25 % yearly. Now for the ARMS that are differently indexed on LIBOR they are adjusted to a low 4 percent range, which still makes a good rate.
Monitor Your Present Finances
Being accepted for one of these new low rate fixed loans is not an easy task, because of the fact that Freddie Mac and Fannie Mae have now set stricter standards for the loans they will either guarantee or buy, even with the fact that these huge companies have now been put in the control of the government.
To get the best interest rates you will have to now have a FICO score of about 720, with a fee though, both Freddie Mac and Fannie Mae have guaranteed loans for people having the mid 600s for their FICO scores. Under these circumstances you may be required to place 20% as a down payment.
Probably the largest hurdle for most homebuyers has been the lenders’ getting more strict on the standards of debt to income ratio. Mortgage payments are now required to not go over 28% of the gross monthly income for Freddie Mac and Fannie Mae conforming loans, and then the combined monthly debt payments can’t be over 36% to the gross income of the borrower.
Now for the Federal Housing Administration to guarantee a loan, the figures are as follows: mortgage debt can’t be over 29%, and the complete debt monthly can’t be over 41%.
Carefully Consider if it is Right to Refinance Now
Deciding at what time it is right to refinance just really involves what kind of risk you will accept. Using an online calculator to analyze this will help you decide. Just remember that if you can beat your present loan’s interest rate by one full percentage point than it is a good deal for you to refinance, as long as you are not going to move in the near future.
The debate for putting off refinancing is that the Treasury and Federal Reserve are really trying to get mortgage rates to go lower in this year 2009, and are probably going to manage to do it too. They are placing pressure on all banks to continue lowering the interest rates; and not only for Mortgage loans, but also on the personal loans.
And even though it is likely that the rates will go somewhat lower, it is never a guarantee! The rates have crashed with such speed attempting to hold out for the bottom may hurt you. If the percentages work in your favor, then it is not wrong for you to refinance now.