As the housing market continues to heat up, many potential home buyers wonder whether it is now easier to get a mortgage than it has been in the recent past. The answer, according to the experts at Kiplinger, is yes. In fact, even though no one would characterize the current loan situation with the term “easy money,” there are certainly fewer obstacles for those who want to purchase a home in 2015.
Some key facts to rememberHere are a few things to jot down in your house-hunting notebook as you begin to look for that perfect home:
- As always, your financial qualifications will have a major impact on the interest rate you end up getting on a loan.
- A good rule of thumb, for whatever part of the country you live in, is that a credit rating at or above 740, along with a down payment of 25 percent, will snag you the most favorable loan terms.
- Those who can’t meet the qualifications for the best rates could end up paying as much as 3.25 percentage points above the best rates.
- Down payments: There are several misconceptions about down payments, the key one being that you must put at least 20 percent down to get approved. Actually, for most conforming (Fannie Mae/Freddie Mac) fixed loans under $417,000, typical borrowers will only have to front 5 percent of the total. For adjustable conforming loans, that amount will be about 10 percent.
- Fannie Mae and Freddie Mac should both have programs in place by the end of 2015 that allow for 3 percent down payments for first-time buyers.
- Be ready to pay private mortgage insurance in most every case where you are unable to make a down payment of 20 percent or more. In most every situation, the more you can put down and the better your credit rating, the better deal you will get. That applies to interest rates on the loan itself as well as the cost of any PMI (private mortgage insurance you might need to buy).
It’s always a good idea to check current mortgage news online before you embark on your search for a new home. Get a feel for what the current rates are and keep an eye on any important trends in the market. Kiplinger and Bankrate are two good sources to consult on a regular basis, as are any of the major search engine news sites. Be sure to use keyword search terms like “mortgage news,” and “new housing market,” to find the most recent headlines that are relevant to your situation. Remember, in the world of real estate especially, knowledge is power.