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Mortgage Rates hit 38yr Low… but can you get one?

Mortgage rates hit 38 year low!

The Wall Street Journal is reporting today that mortgage rates “generally” fell this week to the lowest level in 38 years according to the most recent Freddie Mac Survey after falling for the 5th straight week in a row.  Clearly this is great news for homeowners and home buyers but the question is, with today’s more stringent underwriting guidelines… will you qualify and can you get the lowest rate?

Food for thought…

  1. Do you want a no point or no cost loan?
    Average rates reported typically quoted with up to 1 point (1% of the loan amount).  No point or no cost loans carry slightly higher rates.  If you are looking to keep your costs down, consider that your rate will be slightly higher.  On average 1/4 point reduction in your rate will cost you 1 point (1% of the loan amount) up front.
  2. How good is your credit?
    These days a lower credit score can be costly but it doesn’t necessarily mean you can’t get the loan.  Generally speaking, if your credit score is 740 or more, you will be in the highest tier and qualify for the best rates.  Below that you will likely pay a little more but should still be able to qualify.  If your score is 620 or lower you will have difficulty qualifying.
  3. Can you prove your income?
    Low Doc and No Doc loans are a thing of the past.  This time around you will need to provide full documentation of your income to the lender.  Things have changed… if you want to borrow money, you will need to document everything.
  4. What is your Loan-To-Value?
    Loan-to-Value (LTV as we call it in the industry) is the percentage of your home’s value you are borrowing.  Borrowing $80,000 on an $100,000 home is an 80% LTV.  Higher LTV loans are still available but  will cost you more due to the increased lending risk.  The higher cost can come in the form of higher rates,  loan fees or the addition of Mortgage Insurance.  Mortgage Insurance is required on all loans over 80% of the home’s value.
  5. How much do you need to borrow?
    What you typically see quoted are loans made at or below Freddie Mac’s current standard loan limit of $417,000.  Increased temporary loan limits go as high as $729,750 but vary depending on where you live.  These “Conforming Jumbo” loans typically come at a slightly higher cost.  Anything over the temporary limits in your area will be considered a Jumbo loan and could be a much higher cost depending on the loan program you are looking for.

Keep in mind, the more honest information you provide the more accurate your rate quote should be.  If you appraisal or credit score come in lower than you expect, be prepared for your lender to call you with some adjustments.

The bottom line…

Rates are at 38 year lows which means odds are, this is a good time to jump on it.  To see what you will qualify for you need to apply.

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