Many people are baffled that the record low mortgage rates have not sparked a refinance or housing boom this year.  In the past when the Federal Reserve took measures like discounting key interest rates it usually spurred a housing boom that led to a sharp rise in homeownership.  In 2010 there is a decrease in homeownership mostly because even though money is cheap it is still not financially feasible for struggling consumers who are experiencing a loss of income and the threat for job loss is the most real it has been since the Great Depression in the 1930’s.

Lowest Mortgage Rates Since 1971

Mortgage refinance applications have risen in recent weeks, but only a small percentage of loan applicants qualify for home buying or mortgage refinancing.  Mortgage lenders have significantly tightened home loan guidelines in an effort to reduce foreclosures.  Even government mortgage finance options like VA and FHA mortgage loans have experienced major changes that make qualifying for a refinance or purchase more difficult than ever.  According to BofA mortgage executive, Jeff Moran, “Home mortgages have truly become a commodity, because the interest rates are very appealing, but very few borrowers meet the criteria to qualify for these record low interest rates.”  Moran continued, “If a borrower has good credit, good income and minimal liabilities then there is a real opportunity for the applicant to qualify for the mortgage loan of a lifetime.”

Popular loan programs like cash out second mortgage loans and interest only mortgages have almost completely disappeared.  Bad credit mortgage options are few and far between with FHA and VA home loans occasionally taking a risk on a borrower with a poor credit score.  Home equity loans were once offered at 125%, but now you can consider yourself truly blessed if you qualify for a 90% equity loan.  Even the FHA streamline refinance loan requires borrowers to pay for the closing costs “out of pocket.”  Most borrowers are using a FHA loan for cash out refinancing because they do not require a 700 credit score like most home equity lenders demand today.

Undoubtedly the pool of borrowers that qualify for mortgage refinancing or home buying has shrunk, but maybe there is a silver lining.  In the near future interest rates will likely rise.  If you are one of the chosen few who meet today’s lending requirements you just might qualify for the mortgage loan of a lifetime.  If you do qualify -- - -- Seize the opportunity and lock into the lowest fixed rate ever!