Mortgage Refinance Popular; Homebuying NotBy Nathaniel Hutchinson on May 11, 2012 with 0 Comments
In its most recent survey, the federal mortgage giant known as Freddie Mac reported average 30-year mortgage rates at record lows, continuing a trend that has kept home loans more affordable than they’ve been in decades. Unfortunately, few Americans have been able to secure new mortgages, thanks to tougher lending restrictions that have made it difficult for some prospective buyers to earn approval.
Rates Continue to Plunge
According to Frank Nothaft, VP of Freddie Mac, 30-year mortgage rates averaged 3.83 percent during the first part of May and have rested under 4 percent for all but one week since December. Affordable rates have combined with descending home prices to generate a veritable buyer’s paradise throughout much of the country; however, sales have remained stagnant, thanks to strict lending requirements.
These days, banks will only provide loans to borrowers who meet specific standards. Both the federal government and National Association of Realtors have tried to convince lenders to loosen their restrictions; unfortunately, the so-called freeze-out has continued. If you have a good job, good credit and enough loose cash to put toward a hefty down payment; you can get a very nice home at an amazing price. That said, if you don’t have all three, you aren’t likely to get approved for a mortgage.
Who is Taking Advantage
Although buyers are struggling to take advantage of low mortgage rates, many existing homeowners are having a field day. Mortgage refinance is more popular than ever, with many homeowners saving a bundle by switching their 30-year loans to 15-year plans and vice versa.
According to Freddie Mac, 15-year mortgage rates averaged 3.05 percent during the first part of May, down .75 percent from the same time in 2011. If you are doing well financially, you can save a bundle on interest fees by switching from a 30-year mortgage to a 15-year plan. On the other hand, if you already have a 15-year loan, you can lessen your monthly payments by switching over to a 30-year plan.
Low rates have made mortgage refinance a smart move; however, before getting a new mortgage, it’s important to find out how much you will have to pay in closing costs and other fees. After all, these expenses can take a big chunk out of whatever savings you might enjoy by refinancing to a cheaper home loan.