Mortgages Today: What to Know
Through my REMAX website, a monthly email newsletter is published. The article below comes from the Real Estate Advisor: October 2008.
Mortgages Today: What to Know
With so much changing in the real estate and financial markets in recent weeks, many potential buyers are looking for answers. If you're currently shopping around for a mortgage, here is some information to consider.
Rates Remain Low
The federal government's recent backing of mortgage giants Fannie Mae and Freddie Mac has helped re-assure financial markets about the stability of the mortgage industry, and as a result already-favorable rates have dropped even further.
Interest rates on traditional 30 year fixed rate mortgages dropped by between .3 and .5 percent in the days following the news of the government bailout. Some analysts believe that rates will continue to drop, particularly if the government reduces or eliminates some of the fees that Fannie Mae and Freddie Mac currently charge lenders.
Today's Loans Require Extensive Documentation
Interest rates remain very favorable for buyers, but obtaining a home loan is not as easy as it has been in recent years - even for buyers with good credit. Some lenders had previously been amenable to approving buyers for a loan based on either basic income documentation, or in rare cases, no documentation at all. Today, lenders are carefully scrutinizing the income and credit situations of all loan applicants.
For the best chance at getting the loan you want, make sure to provide complete financial documentation, including:
Completed federal tax returns for the previous three years.
One to two month's worth of pay stubs.
All W-2 forms for each person who will be named on the loan.
Contact information of your supervisor or human resources manager, to confirm employment.
Two to three statements for every bank account, 401(k), IRA, or other retirement account that you have.
Addresses and account numbers for any open forms of credit in your name.
Down Payments Grow
On the flipside of lower loan rates, some banks are raising the minimum down payment required in order to secure a loan. The existence of the once-popular "no money down" mortgages has already all but disappeared this year. Today, even homeowners able to put down 10 percent of the home's purchase price may find difficulty securing a loan product.
The reason: banks concerned over soften markets are attempting to limit their exposure. As a result, many are already adopting guidelines that Fannie Mae has indicated it would apply in 2009. Chief among those guidelines is the requirement that homeowners put down 15 percent of the home's purchase price.
Mortgages Today: What to Know
With so much changing in the real estate and financial markets in recent weeks, many potential buyers are looking for answers. If you're currently shopping around for a mortgage, here is some information to consider.
Rates Remain Low
The federal government's recent backing of mortgage giants Fannie Mae and Freddie Mac has helped re-assure financial markets about the stability of the mortgage industry, and as a result already-favorable rates have dropped even further.
Interest rates on traditional 30 year fixed rate mortgages dropped by between .3 and .5 percent in the days following the news of the government bailout. Some analysts believe that rates will continue to drop, particularly if the government reduces or eliminates some of the fees that Fannie Mae and Freddie Mac currently charge lenders.
Today's Loans Require Extensive Documentation
Interest rates remain very favorable for buyers, but obtaining a home loan is not as easy as it has been in recent years - even for buyers with good credit. Some lenders had previously been amenable to approving buyers for a loan based on either basic income documentation, or in rare cases, no documentation at all. Today, lenders are carefully scrutinizing the income and credit situations of all loan applicants.
For the best chance at getting the loan you want, make sure to provide complete financial documentation, including:
Completed federal tax returns for the previous three years.
One to two month's worth of pay stubs.
All W-2 forms for each person who will be named on the loan.
Contact information of your supervisor or human resources manager, to confirm employment.
Two to three statements for every bank account, 401(k), IRA, or other retirement account that you have.
Addresses and account numbers for any open forms of credit in your name.
Down Payments Grow
On the flipside of lower loan rates, some banks are raising the minimum down payment required in order to secure a loan. The existence of the once-popular "no money down" mortgages has already all but disappeared this year. Today, even homeowners able to put down 10 percent of the home's purchase price may find difficulty securing a loan product.
The reason: banks concerned over soften markets are attempting to limit their exposure. As a result, many are already adopting guidelines that Fannie Mae has indicated it would apply in 2009. Chief among those guidelines is the requirement that homeowners put down 15 percent of the home's purchase price.
Jim Starwalt
Thinking of making a move? Log onto my website at
www.StarHomeFinders.com and search the Multiple Listing Service from over 150,000 homes for sale. Registering is quick and easy!Jim Starwalt, Broker Associate RE/MAX Center, Phone: 847-548-2625 Jim@StarHomeFinders.com
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