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Low Rates Boosting Purchase Home Sales

Mortgage Home Base reports on low mortgage rates and the sudden increase on mortgage approvals in the purchase market. The boom of the refinance market may be coming to an end in 2014 after all.

According to Freddie Mac’s 2014 second quarter refinance observations, the share of refinance borrowers has fell below 50 percent for the first time since the third quarter of 2008. This is said to have been the longest growing trend since Freddie Mac started its market reports in 1990.

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Many renters are waiting for the right time to make a home purchase. With the rates as low as they are, there is no better time than now. Speak with a lender today before rates increase.

With the continuing trend of low mortgage rates, the purchase market could be seeing increasing volume for the rest of 2014 and possibly into 2015. The refinance market was more popular than ever, with promoting low rates this year.

However, in the month of August, there were more purchase loans than there were refis. The volume of purchase home loans were 19 points higher and outnumbering last year’s average. Ellie Mae’s mortgage origination software detected purchase home loans at 66% of total loan closings in August.

Low Mortgage Rates Encourage Purchase Home Sales

There are several reasons that may have impacted the increase in purchase home loans. One of many could be the inclining home prices and with the mysteriously slow rise of these rates. Homebuyers are also seeing progress in the growth of home values, and may now that rates may be higher if they anticipate any longer on a home purchase.

Buyers are starting to realize just how unpredictable rates can be.
Mortgage Home Base
can guide buyers to the right lender who can help determine these rates.

With the home inventory in the U.S. currently low and a bidding war happening between realtors and buyer; builders should be finding themselves busy in 2015 with possible demands for more housing. According to a weekly mortgage rate survey provided by Freddie Mac, there were well over 100 U.S. banks with 30-year mortgage rates in a quarter percent of 4.25% for a year.

Refinance numbers on the other hand has been firmly dropping, down by 75 percent for the year. There are potentially eligible refinance borrowers, but there hasn’t seem to be any interest in doing so. The average household today would be able to save more than 30% on a refinance with today’s current rates. With the federal reserve scare, many homeowners may not be aware of the available low rates.

Ellie Mae Origination Insight

Ellie Mae provides an insight through its origination report for the month of August, the average FHA loan buyer is putting 5% down with lower credit scores than the month prior and the same time last year. FHA buyers today are getting approved with an average FICO score of 628, this is 12 points lower than a year ago. Some lenders are even seen to be approving borrowers with FICO score as low as 580.

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Some of these borrowers with low credit score ratings may be borrowers may be a part of FHA’s Buy-Again-After program. The Buy-Again-After offered through the FHA allows for borrowers to make another purchase on a mortgage 12 months after filing for bankruptcy, foreclosure or short sale. These borrowers have lower credit score due to past delinquencies.

If you have filed for bankruptcy or were forced into a short sale, you may still be able to get approved to buy again if it has been more than a year as long as you are able to meet the FHA’s Buy-Again-After program terms and conditions.
Speak to a lender today
to see if you can buy again!

According to Ellie Mae’s findings, there were more mortgage applications processed and approved in August than the past months with more than 65% purchase loans. Today’s lenders are helping more borrowers qualify for mortgages today than ever, helping many buyers take advantage of low purchase rates.

About the Author

About the Author: Jessica Lucas is the managing editor for Mortgage Home Base, a top real estate finance blog dedicated to helping borrowers and home buyers understand the home loan process. Follow Jessica on Google +, and share your comments here. .
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