Anyone who is considering the idea of purchasing a home these days will naturally try to fathom whatever direction the trends in mortgages may try and take. Tracking any sort of pattern in these tough economic times is difficult if not impossible. Along with the after-effects of a dismal housing market climate in general, potential home-buyers might just as well resort to a crystal ball or the roll of a dice to zero in on any accurate forecast. It is widely felt that mortgage rates should continue at or below 5% for a greater part of 2012, and perhaps for the whole year, which is simply an ongoing scenario seen in much of 2011 as well. The across-the-board interest rates for 30 year fixed mortgage rates hovered on the underside of 5% for the preceding year, though the 4% range became a reality for a while in the last quarter. Economists at organizations such as the Mortgage Bankers Association predict that these same mortgage rates will hold at the same level for 2012. In other words, unchanged.
Today’s Mortgage Rates
When compared to rates over a longer historical period, there is no doubt that today’s mortgage interest rates are indeed at a notably low level. This is certainly a boon to any prospective homeowner planning to acquire a mortgage anytime in the upcoming year. The down-side of this is quite a few potential borrowers may have trouble qualifying for these low rates. This is simply because it is much more difficult to meet the newer and more rigorous credit standards as a result of the housing crisis in general. This factor is also expected to be a major characteristic of the ‘trend’ in mortgage rates for the coming year as well. Based on this outlook, prospective home-buyers with less-than-optimum credit standings, extreme levels of debt obligations, or even unpredictable employment security should undoubtedly have difficulty acquiring a housing loan during 2012 due to much more meticulous lending constraints and oversight.
Current Mortgage Requirements
The requirements a potential borrower will need to be eligible for a mortgage in 2012 will be quite detailed. They will need to be very thorough in providing sufficient background material. They should also be prepared to meet the more rigorous requirements of having credit ratings at a minimum of 600 or higher, depending on the lending institution. In addition, there will be greater scrutiny with regard to documented proof of employment steadiness and security as well as verifiable income levels. Debt obligation levels are required to fall within certain percentages in relation to a home-buyer total income.
The Reality of the Current Mortgage Environment
As an ongoing after-effect of the housing crisis of 2008, there will be fewer mortgaging options for home-buyers in the coming year, leaving the more ‘exotic’ type of lending methods a thing of the past. One form of collateral damage caused by the crisis has been the ‘stated income’ loans, which permitted potential buyers to rely on undocumented income statements to acquire loan approval. Likewise, the identical treatment will be extended toward ‘no-doc’ mortgages, where the lender will request far more detailed information regarding employment, income, assets, and debt standings than was required in the recent past. Piggy-back mortgages have also gone the way of the chopping block in many states, which were utilized when a borrower combined two mortgage loans to avoid paying the private mortgage insurance (PMI) requirements on the loan.
The potential home buyer looking to secure a mortgage loan needs to possess a good bit of insight and instinct to understand not only the trends in the local mortgage market, but those that affect the national mortgage market as well. Each of these have a direct impact on the prevailing interest rates. Careful and diligent research via numerous online sites should provide adequate information regarding the current mortgage trends and lending practices in a borrower’s desired market. No amount of investigation or thoughtful planning is wasted in this all-important milestone for acquiring the best possible mortgage at the most favorable rates.