Lenders who must satisfy the requirements of Fannie Mae and Freddie Mac ”” the dominant buyers of U.S. mortgage debt ””now are demanding bank statements, big cash reserves and second appraisals before they approve a loan to refinance a home.
“The lenders are making it so difficult to qualify,” said Jaye, who now mainly works with homebuyers snapping up foreclosed properties and homes selling for deep discounts.
“I know everybody’s scared right now, but It’s just so over-the top.”
Mortgage rates are hovering around 6.6 percent, about the same level as a year ago. But if investors weren’t so nervous, rates would be about 1 percentage point lower, based on historical comparisons.
“Mortgage debt is viewed as much riskier now than it was a couple of years ago during the housing boom,” said Greg McBride, senior financial analyst at Bankrate.com.
[blockquote]Lenders who must satisfy the requirements of Fannie Mae and Freddie Mac — the dominant buyers of U.S. mortgage debt —now are demanding bank statements, big cash reserves and second appraisals before they approve a loan to refinance a home.[/blockquote]
Gosh! You mean they actually have to do due diligence before they risk the capital that belongs to their depositors? Shocking!
A 6.6% mortgage is a FANTASTIC rate, especially considering that we are currently experiencing about 5.9% inflation! When the tax deductions are taken into account…THAT IS FREE MONEY! Folks with mortgage interest rates below the combined inflation rate and tax rate are actually making money on the loan.
If someone can’t afford that, they really cannot afford a house and should not get a loan under those circumstances.
On our first house, we used my EARNED VA loan [for which we paid $2,000 non-tax deductable fee]. For our second home, we worked and saved for years and put 20% down so we wouldn’t have to pay PMI. Then, when rates were low, we refinanced.
Work hard and save. What a concept!
Just for perspective…
The Soldiers’ and Sailors’ Civil Relief Act of 1940 (SSCRA)[updated in 2003], the law that protects the rights of active duty service personnel and helps them continue to meet their financial obligations when they are deployed, only reduces mortgages to 6%. That’s it. Military personnel, putting their lives on the line to protect us and our way of life, only have the potential to get their interest rates reduced to 6% for the duration of their deployment. Joe Smith or Jane Doe can currently get a 6.6% 30 year fixed rate safe and sound here in the good ol’ USA. These are historically low interest rates.
Really and truly, if folks can’t afford that, they shouldn’t be buying a house.