Will There Be a Better Time to Get a Mortgage?

If you can qualify for a mortgage, you may not get an opportunity like you have right now for a very, very long time. This may, in fact, be one of the best times in history to get a mortgage because of the low mortgage rates.

Last week, the mortgage rates for a 30-year fixed payment mortgage plummeted to a whopping 4.56 percent. That’s the lowest rates have been since the early 1970s, according to Freddie Mac.

Those tax credits for first-time homebuyers have been expired for a few months now, but if you qualify for the 4.56 percent interest rate, you can still benefit. In fact, the low interest rate may make up for the $8,000 tax credit. Although the tax credit is something you can see and experience in the price right away, the historically low interest rates are long-term benefits which can provide homeowners with a much higher savings after the term of the loan is over and paid off.

However, before rushing into the mortgage market, it is important to compare the type of mortgage that is best for you. The rules of the mortgage industry have changed in recent years so there are some things to consider before getting too excited. Here are a few of the things you should know:

• Unless your credit score is 620 or above, you are going to have a very difficult time finding a mortgage loan, much less finding a rate of 4.56 percent.
• If you are interested in staying where you are at and you have no plans of moving for the next three or four decades, a 30-year fixed rate loan is ideal for you. The rate stays the same for the term of the loan and you won’t find lower rates than you can right now.
• Most mortgage lenders are requiring buyers to put down at least 20 percent on their home purchase.
• If you can pay off your home in five years, consider a five-year fixed rate loan because you may qualify for even lower rates than the 4.56 percent that you’d get with a 30-year fixed loan.
• If you have less than 20 percent to put down on your new house, you may be able to qualify for a mortgage through the Federal Housing Administration. With this type of insured loan, you only need about 3.5 percent of the total purchase price.

These are just a few of the new regulations you may run into when getting a mortgage these days. These new guidelines are designed to help prevent the crash that happened a couple years ago which led to the economic downturn we are now experiencing. Check with a local mortgage broker to find out which rules apply to you and how you can get the best deal on your new home loan.