Great Mortgage News: Falling Interest Rates! Lenders Begging for Business!

Here's the Real Story

First, contrary to the dominant news stories, it's a promising time to be a creditworthy borrower. As property sales volumes have fallen, mortgage loan originations have fallen in tandem. Likewise, stricter underwriting standards for home equity loans and high existing LTVs among many property owners have reduced this potential market. So, many lenders are receiving too few loan applications relative to the amount of funds they would like to lend. Remember, to thrive and survive, lenders must loan. Loans are the products that lenders sell. 

Therefore, if you are a creditworthy borrower, lenders are begging for your business   - especially 80% LTV, 30-year fixed-rate mortgages. Do you have a good, stable income? Cash reserves? Credit score above 680, say? Lenders will offer you rates and terms better than any I've seen since 2004. And even if you do not present a perfect cash/credit profile, you can still look to FHA for excellent home financing. In fact, many sad borrowers who were lured into ill-advised subprime and option ARM products could have qualified for much superior, lower-cost FHA programs.

Third, some alternative products are worth investigating. If you'd like to build equity faster, pay off your loans sooner, and reduce mortgage-borrowing costs at the same time, now could be the time to act. Lenders are offering attractive rates on 15-year mortgages. Or investigate the 5, 7, or 10-year hybrids.

For a majority of potential borrowers, the doom-and-gloom news reporting signals opportunity, not despair. Falling interest rates and declining mortgage originations provide credible homebuyers and investors their best chance to borrow in several years.