After 9 straight weeks of falling interest rates, the average rate on a 30-year fixed mortgage has now dropped to 5.1%. 15-year fixed rates were even better, at 4.83%.
While falling interest rates often put consumers in a “wait and see” frame of mind, this time homeowners are jumping at the chance to refinance their higher interest loans. The Mortgage Bankers Association reported that loan applications are now at the highest level in more than five years. The last such surge was in January of 2003.
Borrowers seeking new home mortgages made up only 20% of the loan applicants.
These low rates present a great opportunity for borrowers with solid credit and plenty of equity in their homes – and for prospective new homeowners with high FICO scores and a down payment in the bank.
Those in danger of foreclosure won’t get the benefit of these low rates because late payments and defaults have destroyed their credit ratings. Thus, unless one of the talked-about plans to bail out homeowners comes to pass, we can expect to continue to see more foreclosure properties coming on the market in the coming months.
This offers a double benefit to prospective new homeowners with high credit scores. As mortgage companies strive to clear out their inventories of repossessed homes, home prices will continue to drop. Those consumers with the ability to buy will find bargain homes and low interest rates – making home ownership more affordable than it has been for at least the past 5 years.
If a home purchase is even an idea in the back of your mind, now is the time to get a copy of your credit report and make sure you’re going to be ready when a bargain presents itself.
Even if you have consistently paid every bill on time; and even if your debt load is low; your credit report could reflect a lower than expected FICO score. This could be due in part to the structure of your existing debt, to data entry errors on your report, or to an undetected instance of identity theft. Be on the safe side: Get your credit report today.
