In today's 24/7 instant news now environment we hear a lot of talk about mortgage loans drying up and banks refusing to lend to the everyday buyer. It leaves a person to wonder, can I even get a loan to buy a house?
In an effort to clear up all this confusion, I interviewed one of my favorite lenders, Doug Martin with DFW Texas Home Mortgage and asked him some very direct questions concerning home loans in Texas.
Q: Can buyers still get a mortgage loan in today's market and what is the minimum credit score a buyer would need to qualify?
A: Mortgage loans are readily available for buyers that qualify. The big difference today is that zero down financing no longer exists. The minimum down payment requirement is now 3% and we can do this with a mid credit score as low as 600. The 3% can also be a gift from a relative or a loan from a retirement plan. When you hear on the national news that mortgage lending has dried up, that is just not true for the state of Texas.
Q: What about interest rates?
A: Today's interest rates are at the lowest level since 2003. A qualified borrow can get a 30 year fixed rate for 5.50%.
Q: I heard on the news that there is a potentially unconventional move about to be made by the Treasury Department to help bring rates down even further. Do you know anything about that?
A: There is a rumor that the US Treasury Dept. is exploring a plan for Fannie Mae and Freddie Mac to buy up more mortgage-backed securities (MBS) to help drive borrowing costs approximately 1% lower than this week’s current level of 5.53%. Now there are a couple of things to keep in mind. The Treasury Dept. already has authority to buy billions of dollars of mortgage-backed securities and has yet to use that authority to any large degree. The Federal Reserve did announce plans to buy $500 Billion dollars of MBS from Fannie and Freddie on Monday. This did cause a lower spike in rates on Monday but rates closed flat to slightly higher at the end of the day. So the bottom line is, currently there is no concrete plan in place with qualifying parameters or any type of timeline for implementation if this plan actually takes form. So based on today’s rates, it is a great time to buy or refinance a current mortgage to lower your interest rate.
So in summary, yes, you can still get a loan and qualify for a great rate! The opportunity to buy has never been greater than in today's market.
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