(NEW YORK) -- Realtors and mortgage brokers are saying this year may be the best time ever to purchase a home, with mortgage rates at historical lows not seen since President Harry Truman dealt with his own divided Congress.
But the times of easy mortgage money are over, locking out many with tarnished credit from getting a loan. In addition, one of four U.S. homeowners can't borrow because their homes are worth less than the amount of their mortgages.
Freddie Mac announced Thursday fixed-rate mortgages fell near 60-year lows as investor concern over the European debt market keep Treasury bond yields low. The 30-year fixed rate mortgage averaged 4.09 percent, a new all-time low. The 15-year fixed rate mortgage, a popular refinancing option, according to Freddie Mac, also reached a new record low, averaging 3.30 percent for the week.
Long-term, fixed-rate mortgages backed by the Federal Housing Administration averaged 4.08 percent for several months from 1950 to 1951.
Tom Mellett, a senior loan officer at Cole Taylor Mortgages in Pennsylvania, said it may be more difficult to get a mortgage loan that it was two years ago, a period that he calls the "wild, wild West." During that time, mortgage lenders were more widely giving loans to buyers without the wherewithal to purchase a home, hence leading to the sub-prime mortgage crisis.
But Mellett said people who really are in a position to receive a mortgage are actually getting them. He recommended a few initial steps to take advantage of the present low mortgage rates.
First, he recommended checking your credit score for inaccuracies.
Second, set realistic financial expectations for your price range. One guideline is that your proposed housing expenses, including monthly mortgage payments and all other debts, not exceed 45 percent of your gross income, though Mellett said that percentage is not set in stone.
Next, he said it may be wise early on to talk to a mortgage broker or someone registered with the National Mortgage Licensing System to get pre-approved for a mortgage. Mellett said that most realtors recommend pre-approval if you want to be considered a "serious" buyer, sometimes before even taking a potential buyer to look at homes.
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