We have been experiencing record low mortgages rates over the past year, but many forecast reports suggest that rates will rise in 2011. The rates in 2011 will probably still be considered historically low, but monthly payments on new mortgages will cost you more each month as rates rise.
Another issue in the mortgage industry is the hangover effect from all of the recent foreclosures. Due to bad underwriting and loans given to people who clearly could not afford the mortgages, we are all paying the price. The underwriting pendulum has swung to the opposite end of financial information review. The standards for getting a new mortgage or refinancing your current mortgage have become much stricter than in the past, and it is now extremely difficult for lenders to make individual exceptions from the normal standards. I work with an investor client who is currently unable to refinance his single family property mortgages on his rental properties due to the fact that he holds too many mortgages for Fannie & Freddie standards. When making their decision, mortgage underwriters cannot take into effect that the applicant has perfect credit, has never been late on any of his mortgage payments(personal or investment), and has a high income. I have spoken to many people in the mortgage industry about this, and they all feel that although things will eventually loosen up, this is the industry reality today.
So how does all of this affect you? If you are thinking about refinancing your current mortgage, you should act sooner rather than later. If you are thinking of financing the purchase of a new home anytime within the next 12 months, you should definitely meet with someone in the mortgage industry now. Find out what information you will need to apply for a mortgage and find out what amount you can qualify for right now. It is best to know if you can buy your dream home before you find your dream home.
Please contact me should you have any questions.
David Clay
Cell: 214-282-6150
David Clay Real Estate 