2012-08-29ml-implode.com

Tougher credit guidelines placed by banks, who are reconsidering how much risk they are willing to assume, are making it more difficult for consumers to make a home purchase. Many borrowers are working to get their financial house in order, pay down debt and saving for a down payment prior to making a home purchase.


It has always been the American Dream to own a home in the U.S. and for many years it actually appeared that many had reached their goal. Today, the numbers have shrunk after the devastating housing crisis took away the dream that many had worked long and hard to obtain. Homeownership has fallen despite affordable mortgage rates that have been at historic lows for quite some time.

There are actually two reports regarding the current homeownership levels, each with slightly different numbers. According to U.S. Census Bureau, homeownership fell to 65.5% which includes 3.8 million homeowners who are 90 days or more late on their mortgage payments. A survey conducted by John Burns Real Estate Consulting shows that the homeownership rate is 62.1% and represents homeowners who are not 90 days or more delinquent. This is the lowest level in almost 50 years.

Despite these numbers, the desire to own a home remains intact with most consumers. Many existing homeowners are trying to recover the fallout by refinancing their existing mortgage through traditional mortgage refinances. In many cases, numerous borrowers have lost equity in their homes but have continued to pay their monthly mortgage payments despite the declining value of their property. Through HARP, the Home Affordable Refinance Program, many have obtained lower mortgage rates or shorter terms which will help them build equity back in their homes quicker than their previous higher rate mortgages. HARP is available for borrowers who have mortgages that were sold to Fannie Mae or Freddie Mac prior to June 1, 2009.

FHA, the Federal Housing Administration, is known to help low to middle income families obtain homeownership with mortgages that require low down payments and flexible credit guidelines. Millions of FHA borrowers have continued to pay their FHA mortgage despite the falling values or financial hardships they incurred. These borrowers are now finding respite through the FHA streamline refinance program that, with no cash out, offers drastically reduced upfront and annual mortgage insurance premiums for mortgages that were endorsed before June 1, 2009.

Homeownership is a major financial responsibility that is no longer being taken for granted. While The American Dream is alive and well today as it was in the past, it is being looked at more seriously as compared to years ago when just about anyone could make a home purchase. Tougher credit guidelines placed by banks, who are reconsidering how much risk they are willing to assume, are making it more difficult for consumers to make a home purchase. Many borrowers are working to get their financial house in order, pay down debt and saving for a down payment prior to making a home purchase. At this time when responsible consumers are re-entering the housing market, affordable interest rates and responsible mortgage programs should be remain in place to meet them.

FreeRateUpdate.com surveys more than two dozen wholesale and direct lenders' rate sheets to determine the most accurate mortgage rates available to well qualified consumers at a standard 0.7 to 1% point origination fee.


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