Low Mortgage Rates for First Time Home Buyers
Today is a great day for first time home buyers who are looking to maximize their housing affordability. According to Freddie Mac, home loan rates fell to a new record low for the fourth time in five weeks. But low home mortgage rates haven’t been able to revive a struggling housing market. The weekly rate report indicated that average interest rate for 30-year mortgage featuring a fixed interest rate this week dropped to 4.56%. This mortgage rate index dipped to the lowest point in almost 40-years when since Freddie Mac started recording home mortgage rates. Home loan rates have not been this low since the 1950s, but the home loan schedules back then ranged from 15 to 25 years as 30-year mortgages had not yet become fashionable. The fixed 15-year mortgage loans fell to a 4.03% which was the lowest point in 19 years.
Borrowers continue to comment on how much more difficult qualifying for a home loan or mortgage refinance today as mortgage lenders and banks have tightened loan programs. Now new home buyers need to be able to document their income with a 2 year history as stated income home loans have been repealed by most lenders. The bottom line is that for the near future borrowers will have to prove their income to qualify for these appealing home purchase loans that guarantee fixed rates for 15 and 30-year terms.
The National Association of Realtors said Thursday that last month’s sales fell 5.1% to a seasonally adjusted annual rate of 5.37 million. Most economists have suggested that the housing market stalled when the federal tax credits for first home buyers expired on April 30th. Refinance applications increased in recent weeks but home purchase loan applications have stalled. With home loan rates this low you have to wonder what kind of incentives consumers need to finance a home.
With home prices continuing to drop, more and more consumers now more have new opportunities to finance a home with a monthly payment they can actually afford. While most conventional lenders are requesting 20% down-payments, FHA mortgage loans make more sense because borrowers only need to come up with a 3.5% down-payment. According to Johnny Davis, a loan officer at Chase, “Loan applicants are usually surprised at how accommodating the FHA loan requirements are for first time home buyers.” Davis continued, “Although the home loan rates have dipped to record lows, many consumers are nervous to commit to a long term home mortgage because they are uneasy about the economy and future employment.”
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