Record Low Rates Difficult To Get With Tight Underwriting
The average rate for a 30-year fixed rate mortgage hit all-time record lows last month with rates being reported as low as 3.49 percent, more than a full point below the 4.55 percent average from a year ago at this time. While the historic rate means great things for affordability, it also appears to be historically difficult to qualify for these record low rates.
Record rates are a boon to buyers. The monthly payment on a $200,000 mortgage at the rate reported last month translates into a monthly principle and interest payment of $897 compared to $1,019 last year at this time. That is a savings of $122 per month and more than $13,000 over a 9-year period, the average tenure of a homeowner. That all sounds great, but the clutch of would-be buyers who qualify for these rates have tightened in recent years.
The current average credit scores on loans made by the FHA is 707, which is an improvement from 2011 when the rate averaged 709. However, the average score for a denied loan application was 669, well above the 656 average for loans originated back in 2001 and above to the 660 mark used by the Office of the Comptroller of the Currency to delineate prime loans.
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