If you’re thinking about buying a house or refinancing your mortgage, now is the time. But can you get a mortgage loan?
Experts agree that while the ability to buy a house is dependent largely on your circumstances, there is no better time to get a great mortgage rate than right now.
“The Federal Reserve has taken steps to help mortgage rates,” said Jonathan Bonck, sales manager at Bonck & Baker Mortgage Group, a branch of Network Funding. “Essentially, all of this is ensuring the banks and lenders that if they lend out money at these historically low rates, there is someone who is willing to purchase these loans. This is providing much needed stability to loan pricing and keeping rates at or near all-time lows.”
Rates were almost a full point lower than at the same period a year before in the last week of April. And now they’re even lower at 3.23 percent.
For potential homebuyers, this means huge savings. A 30-year fixed-rate mortgage of $200,000 at these rates would equal over $100 a month in savings compared with the same loan at average rates a year ago.
“When you consider that your mortgage is lasting over several decades, the interest rate you get now is really key,” Rusty Gates, realtor with Keller Williams Platinum, said. “Thirty years is a long time in terms of compound interest. If you can get a low interest rate now, that will help you for decades to come in paying off your house.”
Gates is excited to continue serving clients in the greater Houston area and said he is seeing steady real estate business in Texas.
Bonck agreed, saying that if you’re in a place financially — and you have a steady job — where you are able to buy a house, you should consider it. Refinancing a mortgage also helps stimulate the economy, he said.
“There has never been a better time in our country’s history to finance a loan,” Bonck said. “If a homebuyer is in the process of a purchase and gainfully employed, stay the course. The real estate market in Houston and Texas overall is really strong right now. If it makes sense for a homeowner to refinance, do it. In addition to homeowners taking advantage of lower rates, many of them are shortening the term of their mortgage and/or doing a cash out as well. If you can take advantage of the current market, don’t miss the opportunity. The rule with mortgage rates is that they tend to drop like a feather and shoot up like a rocket. The main thing for borrowers right now is they need to be working with a lender who can get their loan closed and closed on time.”
But even though rates are at a historic low, not everyone can benefit from them.
The requirements to get a loan are changing almost weekly, Bonck said. Normally they might see requirement changes only once a year.
Potential homebuyers may find they are up against changing requirements like needing to have a higher credit score or offering a higher down payment. If you’re trying to get a jumbo mortgage, a loan larger than $510,400, qualifying could get even more difficult. Some of the biggest jumbo investors have completely backed out of the jumbo lending market, Bonck said. If you can still get one at all, you might find that they require a higher down payment as well, or proof of asset reserves to guarantee 12-24 months of mortgage payments. Those are just a few of the tightened requirements, Bonck said.
For people who are feeling the financial impacts of the coronavirus pandemic, obtaining a mortgage hasn’t been this difficult since 2015, according to the Mortgage Bankers Association’s latest home loan Credit Availability Index.
“Lenders are essentially hedging their bets and trying their best to eliminate as much risk as possible,” Gates said. “They are looking at things like credit scores, because a low credit score may come with the assumption that you could be only a payment or two away from missing a mortgage payment. Because no one really knows what the market could look like in a month or even through the end of the year, they are trying to make the best bet on the information they have now.”
From a buying perspective, Gates encourages potential homebuyers to evaluate their circumstances right now.
“If you have good credit steady income — even if it is lower paying, or any essential workers who are still employed — think seriously about buying a house. This is a great time to buy and you could get an excellent deal and a rate that will serve you well for years,” Gates said. “If you don’t have good credit or you just got laid off, security of basic needs should be your first priority.”