If you have applied for a mortgage loan in recent months, you may have noticed some trends occurring in the industry these days. Some trends are good while others may be holding some people back from enjoying the home-buying process. Here are five things that analysts are predicting will happen in the mortgage industry for the next few months.
Rates Continue to Drop
One of the best things about the current mortgage industry is that mortgage rates continue to drop. As a result, these rates are consistently setting new record lows for mortgage interest rates. This was a shock to many mortgage insiders who thought rates would begin rising again once the autumn season hit. Now, these insiders are saying mortgage rates may continue to drop during the last few months of 2010 and possibly into the first part of 2011. It will be interesting to see just how low these rates will go before they begin to climb or even stabilize.
Fewer Foreclosures Will Occur
If you have been keeping up with the mortgage industry at all, you know that several banks in the country have now put a freeze on thousands of foreclosure proceedings as a result of many bank officials admitting to signing foreclosure paperwork without reading it. This means that they could have signed off on thousands of foreclosures that should have never been approved. When all is said and done, there may be thousands of homeowners who will not be foreclosed upon which leaves fewer foreclosed homes on the market.
The Mortgage Process is Lengthy
The time it takes to process a mortgage and a refinance is very long these days because of underwriting and other factors. Some mortgage lenders are suggesting that home buyers lock in their rates for 60 days when applying for a mortgage because it could take that long just to get the paperwork pushed through. Home appraisers are in high demand which means their schedules are full and they cannot make it to homes as quickly as before to appraise them which only adds to the amount of time it takes to process a mortgage loan. Remember to be patient and diligent during the process and you will be able to see it through.
Jumbo Rates are Falling
A jumbo mortgage is a mortgage loan for an amount larger than $729,750. The mortgage rates for these huge loans are falling faster than those for non-jumbo loans. A couple years ago, these rates were much higher and they didn’t continue to drop until just recently. Currently, rates for jumbo loans are only about 0.75 of a percentage point more than the rate for a regular mortgage loan. Unfortunately, there are not many people who are refinancing their jumbo loans because the underwriting process is very strict and they either do not qualify for the low rates or they simply don’t want to go through the lengthy process.
No-Cost Refinancing is Attracting Homeowners
With mortgage rates at historic lows, many homeowners are refinancing their loans with zero-cost refinances. This term is misleading, however, because homeowners still have to pay closing costs and other fees when they refinance their home. With this type of refinance, though, the homeowner accepts a higher mortgage interest rate in return for paying zero fees and costs to refinance.
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