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Are Home Loans Easier To Get Today?

August 22nd, 2013 · No Comments · Mark Lomas and Kirsten Wolfe, Mortgage Information

Here are five ways home loans are beginning to become easier to get.  The operative word in that sentence is “beginning.”  At the moment it appears things are loosening up a little, and here are five insights into what’s happening in the mortgage market right now.

     Some lenders are easing payment and credit score requirements.  In recent months lenders have relaxed their grip somewhat as the market has rebounded, and home prices have soared. As such, more ways to get a mortgage are in the offing.  And, rising interest rates could spur renewed competition among lenders.     Piggyback loans are popping up.  The term describes two mortgages taken out at the same time for one property so a buyer can avoid paying for private mortgage insurance on a traditional loan representing more than 80 percent of a home’s value.  This would also help buyers avoid higher interest rates on jumbo loans.
     Stated income loans area back.  These don’t require tax returns to prove income.  Stated income loans are important to self employed homebuyers because they tend to have flucuating income and frequently write off expenses.
     Subprime loans are emerging again. Lenders entering the subprime market now tend to require hefty down payments from borrowers, who may have a healthy income but went through a short sale or took another credit hit before the market rebounded.
     Rising interest rates could encourage competition.  Some are predicting that rising interest rates could soften consumer demand and increase the size of available loans.  Interest rates are expected to continue to rise. Some people are suggesting fixed rate mortgages could hit 5 percent in the next 12 months.  They reached 4.51 percent two weeks ago.
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