Mortgage rates have fallen more than 32% since 2006 according to US News. The stimulus package offers a tax credit of $8000 to qualified first-time home buyers who have not owned a home in the past three years. All of these factors have encouraged first-time homeowners to buy and current homeowners to refinance.

Mortgage rates are low by historical standards–5-5.5% for conforming loans, and 6.34 -6.5% for jumbo loans (more than $417,000). If you are in the market for a mortgage, you should monitor the situation carefully. Interest rates are unlikely to fall further, but they should remain fairly stable for a while. If you are refinancing, consider locking in a rate if you can get one at least one full percentage point lower than your current rate.

Mortgages are harder to get now because banks have tightened criteria. You will get the best rates only if you have an excellent credit score, and you will have to document your income and have a significant amount of equity in your home. If you don’t qualify on these points, consider waiting and cleaning up your credit by paying off loans or credit cards and saving up for a larger downpayment.

When the time comes to look for financing, shop around for the best rate and the least fees and closing costs. Also, be patient. It now takes 6-8 weeks to close on a mortgage because of reductions in bank staffs and the large numbers of people seeking financing.

This entry was posted on Tuesday, August 18th, 2009 at 8:03 pm and is filed under Buyers, First-Time Buyers, Mortgages. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.