New housing permits are on the rise as well as existing home sales. Don’t expect that the new home you are looking to buy will be on the market much longer. In fact, there are documented cases where people are out bidding the original asking price. This is a sure sign of renewed economic growth in the housing market. Rising mortgage rates cannot be far behind.
The “window of opportunity” is there for those borrowers who are willing to take advantage of today’s low mortgage rates and low purchase prices. First time home buyers have an additional incentive, up to the end of 2009, to utilize the $8,000.00 Federal tax credit for home purchases.
Home owners who are looking to refinance their existing adjustable rate mortgages should be locking in on low fixed mortgage rates today. Their new fixed monthly payments may be equal to or slightly higher than their current payment due to the low teaser rate they first started with. However, the future of adjustable rates, when they reset can be highly volatile at best.
Refinancing today takes the gamble out of where mortgage rates will be in the next 12 to 18 months. The “window of opportunity” may be closed to those who wait to long to make the move to a fixed rate mortgage. Additionally, the criteria for refinancing one’s mortgage may be restricted do to tighter Government regulations on the banking industry.
As the mortgage market recovers from the current economic down turn, greater restrictions may be placed on future lending practices. Lending institutions are still smarting from the debacle of sub-prime, no income verification, 100% loan financing. In order to qualify for a new mortgage today, lenders are seeking higher credit scores, lower loan to values and tighter debt ratios. Multi-family homes, condominiums and investor property interest rates are currently priced at a premium. It may be some time before we see banks willing to lend on low FICO credit scores. Self-employed individuals are finding it difficult to refinance existing mortgages and financing loans greater than 80% of their value is becoming more costly.
How can tomorrow’s borrower keep the “window of opportunity” open? First, we must understand that low mortgage rates are not guaranteed, they are earned. Those of us who maintain low credit card balances, pay their mortgages and monthly bills in a timely fashion and accumulate savings will be rewarded with lower rates than those of us who do not. Banking institutions are always seeking customers with this type of profile and in this competitive market they are more than willing to offer lower mortgage rates to gain their business. Look for more articles by me about the current mortgage rate market and my insight into future developments.
Written by Greg Greco
Aequor Funding Corp The Mortgage Team 732.650.8696 www.aequorfunding.com
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