What Has Changed in the Mortgage Market in 2019?
The mortgage market has changed so much over the past few decades, and so has the process of applying for a mortgage. What's a good rate? What type of mortgage best fits your needs? The answers to these questions are always changing, so here's a look at recent mortgage trends in 2019.
1. Mortgage Rates Are Still Falling
When mortgage rates plummeted back around 2012, many people scrambled to buy homes, figuring that rates were sure to climb back up from this all-time low. And rates did increase again, but they're back down. In September 2019, interest rates are down about 1% from where they were last year. While 1% may not sound like a significant difference, it often equates to several hundred dollars worth of savings per month on your mortgage payment. That really adds up over the years.
Now is a good time to buy, thanks to low mortgage rates. Since mortgage trends experts are predicting rates will rise again before the end of the year, you may want to start looking for that perfect home sooner, rather than later. Many customers are being offered low rates between 3 and 4%.
2. Refinancing Is Popular
If you're happy in the home you own and have no intention of moving, you can still take advantage of the current mortgage rates by refinancing. If you have a mortgage at 4 to 5%, it's worth applying for a refinance to see what rate you qualify for now. Even if the current rate you're offered is a half-a-percent lower than the rate on your current loan, you'll save thousands on interest over the life of your loan. Banks are seeing a lot of refinance loans right now since rates are so advantageous.
3. Lending Standards Are Relaxing
After the market crash of 2008, lenders tightened their standards, making it harder to secure a home loan. Now, 11 years later, standards are finally beginning to loosen again. What do these mortgage trends mean for you as someone who is applying for a loan? Well, you may not need to provide quite as much documentation as you did a few years ago. The bank may also agree to a smaller down payment. The 20% down that is often cited as an industry standard is becoming less and less of a hard-and-fast rule, with many banks offering conventional loans with only 10% down — sometimes even less.
4. There Are More Options for Applicants With Lower Credit Scores
If you have less-than-perfect credit, taking the time to improve your credit will still help you secure a better rate. But if you can't afford to wait, there are options for obtaining a mortgage with a lower credit score. FHA mortgages are desirable for first-time homebuyers with lower credit scores. As long as your score is above 580, you can qualify with only 3.5% down. USDA mortgages, which are generally available for rural properties, generally only require a 640 - 680 credit score to qualify.
The mortgage market is changing, and in a good way. If you've been waiting to purchase a new home, now is a good time to get out there and start looking. There are more financing options available, and at better rates, than there have been in a long time.
Equal Housing Lender