Home equity loan

Mortgage loans are looking more attractive to many consumers as the third month of 2009 nears its close, with rates hitting record lows. The rates were even lower than the previous records set in January 2009. In fact, interest rates for mortgage loans are lower than they have ever been since Freddie Mac started keeping statistics on them over 35 years ago. As the inventory of properties on the market remains high, many realtors, builders, investors and homeowners hold their breath to see if the historically low rates encourage some activity in the ailing market. It would be nice if all it took to boost the housing sector was low rates. In a post credit sector meltdown reality, however, banks and lending institutions have now instituted stricter standards. Riskier borrowers that just a couple years ago would have easily been given a loan are not being considered now. Borrowers need to have cleaner credit histories and better credit scores to obtain mortgage loans offered by most banks and lenders. In addition, more money must be put down to obtain the loans. More and more consumers are applying for mortgage loans, but less and less can now qualify.

A lot of experts in the industry anticipate that the low rates will persist in encouraging more applicants hoping to refinance mortgage loans than those wishing to take out loans for new properties. There are still many buyers who are not ready to invest in real estate when they are not sure when it will recover. Others are simply being cautious in the current economy and are hesitant to take on additional financial burdens like mortgage loans. Then, of course, some want to buy but cannot qualify for a home loan under the more restrictive lending standards. Consumers who currently own their homes and wish to refinance have to undergo the same scrutiny as new home buyers. In addition to needing higher credit scores to qualify, homeowners must now have higher amounts of equity to be eligible for a refinance. A large number of lenders now require equity of at least 20 percent. For homeowners who lost equity when real estate values dropped, this requirement can be frustrating. Those applicants who not long ago would have been able to refinance can no longer do it, because they cannot meet the equity requirements. That being said, there are a lot of homeowners who are eligible to refinance and are jumping at the chance to lock in a better mortgage interest rate than that of their original loan. After such dismal real estate times, many in the industry welcome any and all action in the real estate and loan industries, whether it is due to refinancing existing homes or purchasing new ones.