Advertisement
real estate

Mortgage Outlook: Mostly Good News

Interest rates could rise, but down payments are manageable.

Erin Lantz is vice president of mortgages for Zillow Group, a real estate information company.

How would you describe mortgage lending now: too tight, too loose or just right?

It feels closest to just right. Borrowers with good credit scores, low to moderate debt and steady income should have no problem getting a mortgage. When interest rates rise and refinance originations slow, lenders will have more capacity and will need to innovate to grow business. We expect them to invest more heavily in new products that will expand credit access.

Advertisement - Article continues below

So you expect mortgage rates to lift off when the Federal Reserve acts?

The relationship between short-term rates and mortgage rates isn’t one-to-one, but mortgage rates will go up. The Fed’s own projections suggest about a one-percentage-point increase in the federal funds rate by year-end 2017. That would likely put conventional 30-year fixed mortgage rates in the low- to mid-4% range. [The national average 30-year fixed rate was recently 3.5%, according to Freddie Mac.]

What about down payments?

Despite the still-common misperception that you need at least a 20% down payment, you can get a mortgage with much less. FHA mortgages that allow you to put down just 3.5% have been common since FHA reduced the cost of mortgage insurance in early 2015. More recently, some lenders have begun targeting consumers with solid credit profiles who earn less than the median income in their area. For example, Quicken and Guaranteed Rate are offering loans for as little as 1% down to such bor­rowers who have FICO scores of 680 or higher.

Advertisement
Advertisement - Article continues below

How can borrowers smooth the way to closing?

I’ve heard anecdotally that appraisals are creating delays in some markets because the demand for appraisers exceeds the supply. Get your financial paperwork ready for the lender. The faster you turn it in, the faster the lender can order an appraisal. When the lender asks for something more, respond as quickly as you can. And ask your lender about a longer rate lock, too—say, 45 days.

Advertisement

Most Popular

12 Tax Deadlines for July 15 (It's Not Just the Due Date for Your Tax Return)
tax deadline

12 Tax Deadlines for July 15 (It's Not Just the Due Date for Your Tax Return)

Between due dates for IRA or HSA contributions, paying estimated taxes and other deadlines, there's more to do by July 15 than just filing your federa…
July 10, 2020
65 Best Dividend Stocks You Can Count On
stocks

65 Best Dividend Stocks You Can Count On

These 65 Dividend Aristocrats are an elite group of dividend stocks that have reliably increased their annual payouts every year for at least a quarte…
July 8, 2020
Know Why Your Credit Score Changes: 9 Money Moves to Consider
credit & debt

Know Why Your Credit Score Changes: 9 Money Moves to Consider

Your credit score is a key indicator of your financial well-being and of the risk you pose to lenders. How good is yours?
July 10, 2020

Recommended

13 Tax Breaks for Homeowners and Home Buyers
income tax

13 Tax Breaks for Homeowners and Home Buyers

Owning (or buying) a home is expensive. But at least there are some tax deductions, credits, and exclusions that can help you recoup some of those cos…
June 22, 2020
12 Things Every Home Buyer Should Do
real estate

12 Things Every Home Buyer Should Do

Buying a home may be one of the biggest purchases you will ever make.
June 12, 2020
11 Things Every Home Seller Should Do
real estate

11 Things Every Home Seller Should Do

As a home seller, your goal is to sell your property quickly for the most money possible.
June 12, 2020
13 Reasons You Will Regret an RV in Retirement
retirement

13 Reasons You Will Regret an RV in Retirement

RV-loving retirees talk about the downsides of spending retirement in a motorhome, travel trailer, fifth wheel or other recreational vehicle.
June 8, 2020