Home Mortgages and Refinancing

Mortgage rates have been on their way down after the Fed cut the prime rate to near historic lows in an effort to help stabilize the economy. More than 5-million homeowners are facing re-adjustments in their adjustable rate mortgages nationally in 2009 and 2010, and the drop in home borrowing rates will provide the difference for many homeowners between being able to refinance their mortgages.

Rates on conventional 30-year mortgages now hover right around 5.0% but vary from day to day, and sometimes even hour to hour with many lenders. It’s best to shop around when you’re looking for a new mortgage since the difference can be significant. Lenders mortgage rates on conventional mortgages often vary by as much as 1 to 2 percent even with exceptionally good FICO or credit scores.

With a good credit score it may be easier to get a mortgage from some lenders than many think possible. Fed Chairman Ben Bernanke has signaled that the Fed is pulling out all the stops in order to do every-thing possible in an attempt to help the ailing U.S. economy. Home foreclosures are setting new records as a direct result of the credit crunch and the souring economy.

Appraisers are also taking a hit in the spill over of the mortgage crisis. As a result, many appraisers are tightening under-writing criteria and some banks are requiring two appraisals on some properties in particularly hard hit housing markets.

Housing Predictor was the first research firm to forecast the foreclosure epidemic. More than 3.3-million homes have been foreclosed setting a new all-time record. The spill over into the conventional market is having a severe impact on investors with credit scores above 700 considered to be excellent credit risks. Many are investors who have purchased real estate in hopes of having a nest egg for retirement.

There are still many types of mortgage products available in today’s marketplace, including adjustable rate, fixed rate and interest only loans. Veteran Administration loans (VA) provide no down payment options and Federal Housing Administration Loans (FHA) provide for low down payments as low as 3.5% to get into a home. Buyers need to meet certain lending criteria to qualify for a loan.

To encourage investing and help make it profitable there are loans that provide investors with a lower interest rate. As a result of the lack of investors willing to take on the additional risk in the current economic environment subprime loans have all but dried up.

However, private money mortgages are beginning to become more popular in some areas and owner financing on home purchases is showing signs of increasing.

In order to get the best possible interest rate FICO scores must be as high as possible. Loan rates are based on these scores. Lenders adjust rates based on FICO scores calculated from guidelines provided by the major insurers of home mortgages. The higher the score is the better interest rate you qualify for on a mortgage.

After applying for a loan or refinance lenders are required to provide a Truth In Lending statement to perspective borrowers within 3 days, according to federal law. The statement is an estimate of closing costs the borrower will have to pay at the time the loan closes and includes the interest rate on which the loan is based.

After application is made to apply for a loan, lenders provide the written statement to assist borrowers to get the inside track on obtaining the best mortgage possible. Some lenders require fees to be paid in advance such as an appraisal or loan application fee. Other lenders do not require advance fees to be paid.

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