Shopping for low mortgage rates in Salt Lake City is a game of luck.
Some days, SLC mortgage rates are favorable. Other days, they're not. And while you can sometimes make an educated guess about where rates might be headed, you're not always going to guess right.
Even the experts get it wrong more often than they'd like.
But some parts of the rate shopping process can be predicted and one of them is the future of mortgage guidelines.
In general, the more often homeowners default on their respective mortgages, the harder it is for future mortgage applicants to be approved.
This is why "now" may be the best time to apply for a FHA mortgage. Defaults are climbing, suggesting that FHA underwriting guidelines are about to tighten.
Indeed, the FHA has implemented two major changes since last summer:
- The minimum down payment requirement was raised by a half-percent to 3.5%.
- Cash out refinances are now limited to 85 percent, down from 95 percent.
These changes create barriers to entry for potential Utah FHA borrowers, improving the overall quality of the FHA loan pool.
For a taxpayer-funded agency like FHA, loan performance is an important goal. Therefore, as the number of defaults grows, expect FHA guideline to get tighter.
The problem is, though, we can't predict just where the FHA will tighten. Maybe the FHA raises its minimum FICO score requirement, or maybe it gets tough on seller-paid closing costs. A hike in loan fees isn't out of the question, either -- that's the path Fannie Mae took, after all.
Whatever the FHA does, fewer people will qualify for FHA mortgages once it's done. So, if you're planning to buy a home in Salt Lake City and your down payment is limited, or your credit scores are suspect, or there's some other "red flag" in your profile, consider moving up your time frame to act.
Mortgage rates may rise or mortgage rates may fall, but neither is going to matter if you can't get qualified for a home loan. And, for FHA mortgage applicants, tougher mortgage guidelines are only a matter of time.
To check out our list of "trusted" Utah lenders, ( folks that have provided our home buying clients with superior service over the years), or to keep up with the latest Real Estate trends and statistics in Salt Lake , stop by our website @ Salt Lake Real Estate and explore all of the information available about the local market. Or give us a call at 801-567-0946. We love to talk about Utah Homes For Sale.
Image courtesy: The Wall Street Journal Online)
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