Home Loan Trends

?If you own a home or plan to buy or sell a home in the next year, there are some trends on the horizon that will affect the U.S. housing and home loan markets in 2011. The first significant trend is that higher interest rates on home loans will likely cause mortgage refinancing to experience a decline in 2011compared with the activity in 2010. Those homeowners who did refinance in 2010 and are already locked into low fixed rates will have absolutely no incentive to refinance again in 2011. Conversely, people who did not refinance last year due to marginal credit probably won’t be refinancing this year either. Despite continued low interest rates, it’s far more difficult to qualify for a home loan today than it was a few years ago.

Even though mortgage rates are low and home prices have fallen a bit, lenders are not so keen on taking on any more bad loans these days and have tightened their guidelines resulting in more hoops for borrowers to jump through including multiple credit checks, income verifications and appraisals. While houses may be more affordable and plentiful right now, many buyers won’t be able to qualify for a home loan. Even people seeking FHA loans will see more stringent standards in 2011.

It may not be the best time to be selling a home in the next 12 months either, due to the lack of qualified buyers combined with the thousands of homes in foreclosure across the nation. Until the present rate of unemployment is reduced, home prices will probably continue to fall and lower prices could also increase the number of owners who simply walk away from their mortgages.

The rise in mortgage interest rates comes at a bad time with the threat of inflation looming on the horizon, as would-be buyers are denied the resultant increase in home values over the long term. Right now is actually a good time to purchase a home, that is, if you can get the financing.