My Loans Consolidated

As home prices has dropped more than 32% since 2006, the real estate market is opening up tempting opportunities for Americans to own a home with the outstanding bargains available. Additionally, Obama’s stimulus package offers up a tax credit worth up to $8,000 for qualified first-time home buyers. Moreover, since the Federal Government bought up Fannie Mae and Freddie Mac mortgage-backed securities and long-term treasury bonds, mortgage interest rates have dropped to a record low below 5%. Currently, homeowners and first-time home buyers are looking to take advantage of these low rates, whether through buying a new home or refinancing. Below are a few tips on how to get a dirt-cheap mortgage loan.

1. Study the trends.

Keep up with the news about mortgage rates and find out the current national rates. Until 22 May 2009, the interest rate for a 30-year fixed mortgage was 5%. This week, it has gone up to 5.29%. It is expected that interest rates will remain a little over 5% until the end of the year. According to Real Estate Analyst for Weiss Research, Mike Larson, the rates may move up to 5.5% in the next few months. The massive amount of government debt needed to finance Obama’s stimulus package and bailout plan has triggered a rise in mortgage rates. However, the jumbo mortgage interest rate has fallen sharply from 7.90% back in October 2008 to 6.34% in the week before 22 May 2009.

2. Act fast.

When you are deciding to buy a home, mortgage rates are not the only thing that you need to consider. If you are confident about your employment prospects and also planning to live in your home for at least 3-5 years, with the current mortgage rates the time can not be any better. If you are thinking of refinancing, you are better off locking into today’s mortgage rates and not hope for the interest rates to go down further.

3. Study the criteria.

Many mortgage lenders have tightened their lending standards. So although the mortgage rates are currently very attractive, you have to fit their tighter credit profile to be eligible to get the low interest rates. If you are a first-time home buyer, your FICO score should be around 720, make a downpayment of 3.5% and able to submit a documented income verification.

4. Make yourself eligible.

Just because you don’t think that you fit the credit profile, there is no need to panic. There are plenty of ways to get your credit cleaned up and polished to meet the mortgage lenders’ requirements.
- Reduce your debt by paying off your credit card and student loan before applying for a mortgage
- Delay your plan to get a house so you can save up for down payment
- Get your credit report and examine it carefully to make sure everything is accurate
- Contact your credit bureau to file a dispute if you find any errors in your credit report

5. Do your due diligence.

In today’s market, mortgage rates and fees vary among mortgage lenders. Therefore, make sure you shop around first to find the best mortgage deal. Check out at about 20 mortgage lenders and compare their mortgage rates, fees and closing costs.

6. Be patient.

With the sudden drop in mortgage rates early this year, mortgage lenders have been swamped with applications that it may take about 6 weeks for a refinance deal to close. Just be persistent but also patient.

7. Prepare your documents.

When you are ready to apply, make sure you have all the necessary documents and paperwork ready before speaking to a lender. This will help improve the effectiveness of your mortgage application.

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