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Mortgage loan apps surge as mortgage rates hit new lows

[Sep 1, 2010.]


Stagnant US housing markets received a beacon of hope as mortgage applications increased last week in response to lower mortgage rates. Reuters cites a Mortgage Bankers Association report indicating that mortgage and refinance applications rose by 2.7 percent during the week ending August 27.

Although this may bode well for housing markets, and also signals a willingness of consumers to spend and borrow, it could be the beginning of the end for record low mortgage rates as the laws of supply and demand kick in. Mortgage rates are not the only factor in shopping mortgage loans, and rarely are advertised rates available to any but the best qualified borrowers. When shopping for a mortgage loan or refinance, these tips can help you save money and find your best home loan:

  • Find out how much you can afford: Use a mortgage calculator to help you estimate how much you can spend on a home, and how much you can afford to borrow to pay for it. Multiple factors can influence mortgage loan costs; in general, the higher your credit scores the better mortgage rates and terms you'll receive.
  • Establish short and long term goals: How long do you plan to keep the home you're buying? If refinancing, are you going to live in your home long enough to break even on closing costs? If you're buying a starter home that you'll sell in a few years, your best mortgage loan may be different than for someone who's retiring in a few years and plans to stay in their home for the long term.
  • Compare multiple mortgage quotes: Mortgage lenders and brokers may market their products differently; one may offer very low mortgage rates, but pile on the points and junk fees. Another may offer higher mortgage rates and charge fewer fees.
  • Ask questions and negotiate: Request clarification of anything that you don't understand. Negotiate with lenders, and use competing mortgage quotes for doing so. Third party vendors such as title companies, escrow companies, and appraisers may not adjust their costs, but lender fees are typically negotiable to some extent.
  • Know your points: A point is one percent of the amount of your mortgage loan. If you have credit issues, you may be asked to pay points to lock in a lower mortgage rate. Ask potential lenders what you can do to minimize paying points; evaluating multiple loan scenarios can help with finding your best option.

Mortgage lenders want to make home loans, so taking time to evaluate loan options, negotiate terms, and compare and negotiate mortgage quotes is a worthwhile aspect of your home buying or refinancing process.


About Author:

Karen Lawson is a freelance writer with extensive experience in mortgage banking and home loan loss mitigation programs. She holds BA and MA degrees in English from the University of Nevada, Reno.

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