Shopping for mortgage rates might have become easier but shopping for a mortgage is still quite difficult. Did you know that half of the loan applications taken last month did NOT result in a funded loan? The long desired 4.5% mortgage rate is hard to get. We’ve been there twice and you received a 4.5% mortgage if you:
- Have impeccable credit
- Have lots of equity (many borrowers were surprised at how foreclosures stole their equity)
- Have plenty of documented income and were prudent in your use of debt.
- Only refinanced the loan amount you used to purchase the property (you didn’t extract any cash out from a previous refinance)
- Dealt with an originator who understood that mortgage rates were VERY volatile, gathered your information, picked a lender who wasn’t swamped with loans, and executed a rate lock at the appropriate time.
Have you seen what happened to mortgage rates this past week? They shot up from the mid 4’s to over 5%; that’s a half-percentage point rise in eight days. The mortgage bonds market is skittish about our new President. His Economic Recovery Plan relies on huge government borrowing and that is inflationary.
I have no comment about his plan; that’s far above my paygrade. I do, however, think this massive government borrowing will drive rates into the 6’s within 12 months. Still, there should be a pinprick of light through this dark cloud (in the form of a low mortgage rate)
Listen to this 3 minute podcast to find out when we should see that light.
