| The times, they are a changin'. In the not to distant past | | | | term bond rates. These bonds are traded in |
| anyone with a pulse and a home mortgage could get | | | | exchanges every day and investors there set prices |
| a refinance. It didn't matter what your credit was. Heck, | | | | they'll pay for long term bonds. The bond market has a |
| it almost didn't matter if you even had gainful | | | | much more direct effect on your mortgage interest. |
| employment. After all, home values would continue | | | | Interest rates are low now, but they can and will |
| going up for ever, wouldn't they? All that appreciation | | | | change based upon future economic conditions |
| would cover up any sins of the borrower or lender. If | | | | perceived by investors, and the prices they are willing |
| there was a problem a bit of equity could be siphoned | | | | to pay for long term debt. |
| off, or the home could be sold, and any losses could | | | | Even highly credit worthy borrowers are being hit with |
| be recouped. | | | | stringent conditions, and large down payment |
| That was last year. In 2008, the bottom has fallen out | | | | requirements if they want to get a home loan. Today it |
| of the market for many people. Even those borrowers | | | | seems like 20% down is the norm, much like years |
| who were almost guaranteed a loan last year are | | | | gone by. The problem is that few new homeowners |
| having trouble getting one at all now. It's a bit of a | | | | can manage to scrape together 20% for a down |
| paradox, much to the chagrin of would be | | | | payment, especially when one considers that the |
| homeowners or stressed-out ARM holders. There are | | | | average home price in many cities averages well over |
| truly fabulous interest rates to be had, and there is an | | | | $300,000. |
| abundance of value priced homes on the market in | | | | Those who'd like to refinance can do so, provided they |
| many communities. The problem is that it has become | | | | have the required amount of equity in their homes. |
| very difficult to get financing. It's maddening; plenty of | | | | Again, there are problems, as the real estate markets |
| homes, comparatively low prices, and low interest | | | | in many areas have been soft or have experienced |
| rates, but it seems to many borrowers like no one is | | | | depreciated home values. Some or all of the equity |
| lending. | | | | homeowners had last year is gone now. In many |
| Mortgage interest rates have been in the news lately, | | | | cases there isn't enough left to provide what lenders |
| along with the nation's credit woes. After a few years | | | | are looking for in order to refinance. |
| at historic lows, they had been rising for the last year | | | | That isn't a hard and fast rule, but this situation is being |
| or so. After the credit problems the Fed cut short term | | | | experienced by many prospective borrowers, wither |
| interest rates, and mortgage interest rates fell too. | | | | those wanting to refinance or buy a new home. It all |
| Don't think that the Fed actually cut the mortgage | | | | points to the importance of improving your credit score |
| interest rate offered by your lender. They are not the | | | | before you apply for your loan, and optimizing your |
| same thing. Don't get confused by the Fed's recent | | | | financial situation, such as your debt to income ratio. |
| short term interest rate cuts. The Fed directly affects | | | | With the current market situation, you need to have |
| short term interest rates that banks pay, but not long | | | | every advantage in your corner. |