New Year, New Mortgage Loans

New Year, New Mortgage Loans

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For a large number of homeowners, the past year dealt a serious blow to their property values. Some real estate professionals predict that 2009 will offer a turnaround in the housing market. They feel that potential home buyers will be encouraged to take on mortgage loans with the new low interest rates and help reduce the current glut of home inventory. Most financial analysts see it differently, however. They foresee a deepening of the economic recession and a continued downturn in home values. Buyers can currently find some good deals on homes and mortgage loans, which could spur sales in some areas. The excess of inventory exacerbated by increasing foreclosures, however, will likely keep the housing market down. Making matters worse are the mortgage loans at adjustable interest rates that will reset soon. That will likely increase the foreclosure rate and add to the inventory of unsold homes. Some consumers who would like to buy right now are finding that they are not eligible for mortgage loans like they once were. Banks now have much more restrictive lending practices, resulting in less mortgage loans being awarded to applicants than there were prior to the credit crisis.
Many people who currently own properties would like to lock in the low rates and refinance their mortgage loans. The past week had the most applicants for mortgage loans in half a decade. About 80 percent of those applications were for refinancing. Unfortunately, a fair number of those who applied were denied. One mortgage lender in South Florida said that only about 5 of the 50 customers who called about refinancing recently qualified. Some homeowners that purchased in areas like South Florida that have experienced a decline in values are finding that they owe more on their mortgage loans than their homes are worth now. The more restrictive lending practices are leaving these mortgage loan holders out in the cold. To be eligible for refinancing, a consumer must now have an excellent credit score, own at least 20 percent equity in the home and have a low percentage of debt. This is in stark contrast to the lending standards for mortgage loans of just a few years ago.
Many refer to the previous loose lending standards as the wild west. Those standards often required little or no down payments for mortgage loans and appeared to disregard the credit worthiness of many applicants. Although the new lending standards may be compounding the already suffering real estate market, they will offer a necessary correction for a credit market that appeared to be out of control. We will have to wait and see if the new year will offer a renewed confidence in the credit market, and ample encouragement for consumers to take on new mortgage loans to get the ailing real estate market going again.

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Find more information on refinance, visit mortgagecalculator.ilearnt.net/?Your-Home-Mortgage-Interest-Rate-Options&var=3364.



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