Jan 2, 2009 6:39 pm US/Eastern
Not Everyone Can Bank On Low Mortgage Rates
BOSTON (WBZ) ―
Rates have been wildly volatile over the last few weeks, and mortgage experts expect they will continue to drop, and stay low in the coming months.
Amy Tierce, the President of Fairway New England Mortgage, says one person could qualify for a 4.25 percent rate one day, and a few days later be at 5.5 percent.
"Certainly if you have a rate over 6 percent, it's time to start pursuing it. Even people with rates in the high 5s, or an adjustable rate mortgage, now would be the time to get those into nice fixed rates," she said.
What To Look For When Refinancing
But a lot of people are still out of luck.
"We hear about record low rates, and there are some record low rates, but they don't apply to everybody," Tierce said. "People who have credit scores under 700 are more challenged, and certainly below 680 they're more challenged. That used to be A credit a couple years ago, it isn't any longer. Self employed individuals may have trouble today because the underwriting guidelines are more restrictive."
Equity in your property is now more important than ever.
"People who are really being left out today are people who don't have any equity in their property."
If you've got less than 20 percent down, you likely won't be able to refinance now.
"With bad credit and equity you can still get a loan, but good credit and no equity you likely can't, so equity is probably the biggest factor," Tierce said.
Tierce says if your credit score is low, you can take action to increase it, and also waiting could help.
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"Thirty days away from a blemish will make a difference."
There are some misconceptions. For example, mortgage lenders use FICO scores, which may be different from the score you find online.
Also, because there are two thirds fewer mortgage lenders than a few years ago, it takes longer to get applications processed. That's why Tierce says to start the application process now, so that when the rates drop you'll be able to lock it in.
Tierce believes we could see rates drop next week, as soon as the Fed begins buying up mortgage backed securities. She expects they will stay consistently low through at least the first half of the year.
"It's good for our industry," she said. "We're excited and we like to be able to save people money, but be patient because it takes time today to get a loan underwritten and approved."
"We're seeing a lot of people at all levels of the income and credit stratosphere saving a hundred, hundred and fifty, two hundred dollars a month on the mortgage payment. And I believe if we can keep this up, we will help stimulate the economy. That's my goal, one loan at a time."
(© MMIX, CBS Broadcasting Inc. All Rights Reserved.)
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