There has been a lot said in the media over the last 2-3 months about the mortgage industry. The best advice I've heard is don't believe everything you hear. The market is definitely slower than a year ago for buying and selling. And, yes, there have been many changes. But there are still many people that will need to refinance out of an ARM or adjustable mortgage. There are still plenty of people looking to buy and sell homes. The limits have come for those who really couldn't afford another home and for those who were trying to buy everything on the market and resell for profit.
These changes are affecting borrowers with very low credit scores due to nonpayment of other bills and those who couldn't prove their income because of no job! How can anyone think that this is a bad thing? Just before August 1, 2007, there were over 63,000 licensed mortgage brokers in the state of florida! My guess is that at least 50%, probably more were never trained to look at a customers financial situation. They were taught, "get your license and you can make a killing". Very sad but true. Many of these sharks have been and are in the process of being weeded out. This is actually great news for most of the people needing to refinance into fixed mortgages and especially those looking to purchase a home.
First, the 30 year fixed rates are still very low at less than 7%. Secondly, if you are looking to purchase a home, there are tons of homes on the market with all sorts of incentives. Builders looking to lighten inventory are offering closing costs, pools, upgrades, etc. Investors who are now carrying a plethora of payments are looking to depart with homes for what they paid for them. The unfortunate ones are the average joe that was simply looking to sell and move to a different area. Now he has to sell his home for less in order to be competitive.
There are still many programs for 100% financing, however you could save nearly 2-3% on your rate if you have a down payment. As for your credit, don't close old accounts after paying them down or off. They are considered tradelines which help your credit score. Try not to carry more than 40% of the high balance on any credit account. Always try to keep at least 3 tradelines or accounts open and active on your credit. Make sure to take advantage of your free credit reports each year and dispute any incorrect items. These are going to become very important for future home buyers.
The last bit of advice is to get at least 2 quotes or good faith estimates. Why is it that when we get our a/c fixed we call 2 or 3 techs for pricing, but when we are considering hundreds of thousands of dollars we talk to 1 person? Be very strict about holding your broker to the costs he quotes. There is NO such thing as a NO COST loan! Ask for references from the last 3-6 months. Clients will not lie if they feel they were treated unfairly. Finally, the cheapest closing costs isnt always the best deal.
Comments(4)