Mortgage Applications Rise as Interest Rates Drop

[Nov 28, 2008.]

Mortgage brokers around the U.S. saw an increase in applications this week after a sharp drop in mortgage interest rates, according to USA Today. Mortgage interest rates fell to an average of 5.97% from 6.33% the week before. In some places, rates have been as low as 5.25%.

Part of the rush to apply for mortgage loans was due to the governmen'ts plan to pump $800 billion into the economy to unlock lending for mortgages, car loans, credit cards, and student loans.

A spokesperson for Quicken Loans told USA Today that mortgage applications had quadrupled Tuesday from Monday. And Brian Koss of Mortgage Network in Danvers, Mass., said that mortgage brokers who were used to 10 applications a day may have gotten 200 on Tuesday.

Koss recommended that borrowers who find a good rate lock it in as soon as possible. "If the number works, lock it, and lock it in for 60 days. Drop everything you are doing, get the mortgage professional all of the paperwork they need, so you don't run out of time," he said.

But not everyone will qualify for the best mortgage interest rates anyway. Lenders have gotten stricter about credit scores and down payments, leaving many potential borrowers out in the cold. Even if you want to refinance and get the best rates you'll need to have a good credit score, a home that isn't underwater in value, enough income to make mortgage payments, and a reasonable debt load.

However, if you've continued to manage your finances well during the credit crunch and pay your bills on time, it may be worth it to investigate what kind of refinance deal you might qualify for.

About Author:

Francine L. Huff is a freelance journalist and the author of The 25-Day Money Makeover for Women. She has appeared on a variety of TV and radio shows.

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