More Stringent Home Mortgage Lending Standards
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by: marciafreeman
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Home mortgage interest rates the third week of March were still hovering around 5 percent. Most experts predict that the rates will slowly creep back up, but remain low for the rest of the year. In the current economic downturn, it is welcome news for potential buyers and current homeowners interested in refinancing a home mortgage. The one hiccup for some borrowers has been the tighter standards lenders now have in place. A better credit score, cleaner credit history and more money down are now required for most loans. That means that more home mortgage applicants than ever before are being turned down. Those who currently own homes and apply for refinancing must meet the same standards. The best rate loans now need equity percentages of 20 to qualify and credit scores of 680 or higher. The biggest hurdle for applicants in the areas of the country where values have dropped the most is having enough equity. Part of the new stimulus plan introduced by the Obama administration is designed to help those who keep up with their mortgage payments, but whose home values have dropped so much that they now have little or no equity. Consumers who are under water with the mortgage, however, will not qualify to refinance with the program. A minimum of 5 percent is required in equity to apply for refinancing.
Some consumers think the home mortgage rates will decrease even more, so will wait to refinance until then. Their gamble may pay off, or the rates may creep back up. As home values are predicted to continue to fall, homeowners who wait take on the risk that the equity in their homes may decrease if the values decline more. Those who are looking into home mortgage refinancing now with the low rates should make sure the benefits outweigh the costs for their particular situation before jumping in. The first task is to add up how much the refinancing will cost. Many people simply look at the savings differential between their interest rate and the new lower rate and forget to consider the actual costs of refinancing. If you plan to continue to own the house after you recoup the costs and start benefiting from the monthly savings, it probably makes sense for you to refinance. More Home equity loan
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