Are you hoping to become a homeowner this year? There’s good news. According to a recent article in the Chicago Tribune, mortgage rates are easing. By the end of February, Freddie Mac reported that interest rates had fallen, meaning better rates for borrowers. This news comes after weeks of rising rates.
Dropping Interests Rates Mean Good News for Potential Borrowers
Which loan terms is Freddie Mac referring to? In fact, most terms have shown that they’re easing a bit. For well qualified borrowers, 30-year mortgage rates have dropped from 3.56 down to 3.51 percent (the average this year was 3.7 percent), 15-year fixed loans dropped from 2.77 to 2.76 percent, and even the start rates for “popular types of adjustable mortgages” fell slightly. Of course, these rates are typically offered for buyers who have “good credit scores, 20 percent down payments or home equity, and the financial wherewithal to afford payments. But even if you don’t have excellent credit or have dealt with foreclosure issues in the past, you may still be eligible for a home loan, such as a dignity mortgage.
Despite the fact that rates are easing, the Mortgage Banker Association reported that the number of mortgage applications dropped toward the end of February, approximately 3.8 percent. If you have questions about obtaining a mortgage after a foreclosure, an experienced attorney can answer your questions today.
Do You Know Enough About Home Loans?
But in the meantime, do you know enough about mortgages? The Los Angeles Times published a mortgage quiz, intended to test its readers’ knowledge. As you may know, you’re likely going to need a mortgage in order to become a homeowner. But in the past years, a “multitude of risky home loans, many of them made without documenting borrowers’ incomes.” These loans prevented millions of Americans from life-long homeownership and led to the bursting of the housing bubble, which has shown itself in the “shock waves of foreclosures” across our country.
What you may not know is that, in reaction to the housing collapse, the Federal Reserve has worked to make interest rates lower than ever to encourage borrowers to buy a house, despite the stringent mortgage standards. In fact, interest rates for a 30-year fixed home loan averaged nearly 16.6 percent thirty years ago, compared to 3.7 percent in 2012. According to the Los Angeles Times, there are a few other pieces of information you might like to know about mortgages. The Federal Housing Administration created the popular 30-year mortgage with a fixed interest rate to allow millions of Americans to become homeowners. Next to mortgages, nearly all other homeowners—people who don’t need a mortgage loan—are “investors who are flush with cash.” In other words, if you want to own a home, you’ll likely need a mortgage, and home ownership can seem tricky amidst all the foreclosures in our state.
If you already have a mortgage, lower interest rates mean good news for you, too. The Mortgage Bankers Association reported that 80 percent of home loan applications in recent months have been for refinances rather than purchases—like large numbers of other Americans, you can save money even if you’re already a borrower. If you have questions about home loans, foreclosures, or other real estate matters in Illinois, a licensed attorney can provide answers. Contact us today to learn more.
See Related Blog Posts:
Dignity Mortgages May Offer Help in the Homeownership Crisis
Reestablish Your Credit and a New Loan May Be Possible Sooner than you Think