Mortgage Rate News

Mortgage applications are on the rise again, reports the Mortgage Banker’s Association. CNN Money reports on the gains in mortgage applications:

Refinance volume increased 4.4%, while purchase volume grew 1.8% during the week. Refinance applications accounted for 35.9% of all applications during the week, compared with 35.2% during the previous week. …

Application volume rose from its 2008 low as interest rates were mixed. The average rate for traditional, 30-year fixed-rate mortgages fell to 6.41% from 6.46% during the prior week.

This is an interesting trend, and one that may indicate some slow turning around for the housing market. Some buyers are realizing that they can get good deals right now (my next-door neighbor just sold his house for $20,000 less than he bought it for), and are pressing their advantage in this buyer’s market.

Unfortunately, even though mortgage applications are up, it may not mean that more home buying is going on. That will depend on how many of these applications are approved. It is increasingly difficult to refinance, thanks to falling home values, and mortgage lenders have been tightening their standards on all home loans.

If you are looking to buy a home, you will need to have a down payment (3% for FHA loans and at least 5% for many other mortgage lenders) and good credit, as well as a favorable debt-to-income ratio. This means that you may need to plan ahead to prepare your finances and credit situation in order to receive mortgage loan approval.

Here are the steps you should take in order to increase your chances of mortgage approval (and they will ensure that you are more financial stable as well):

• Pay down your consumer debt.
• Work to improve your credit score.
• Save up money for a down payment.
• Avoid a bigger mortgage than you can easily afford.
• Look for state and federal programs geared toward homebuyers.

Tags: mortgage lenders, FHA loans, home mortgage loan, mortgage loans,
mortgage applications, credit score, down payment