Where will mortgage rates head this year? Will the housing market pick up steam? Will the economy strengthen? We’ve gotten through January (and avoided the fiscal cliff), and while there’s still talk about debt ceilings and minting trillion dollar coins, I DO think it’s safe to make these predictions for 2013.
Prediction #1: Refinancings Will Remain Strong Mortgage rates should stay extraordinarily low unless the economy becomes much stronger than anticipated. Even borrowers who refinanced just a couple of years ago will be tempted by interest rates in the low-to-mid 3% range. During 2012, 80% of my loans were refinancing. I expect this trend to continue this year.
Prediction #2: Shorter Term Loans Will Continue to be Popular Rock-bottom rates take the sting out of refinancing to a shorter term. Monthly payments on a 30-year loan at 5% may be almost the same as the payments on a 20-year or 15-year loan at rates in the 3% range. Many of my clients are selecting shorter term mortgages that will be paid off before college tuitions hit or retirement arrives.
Prediction #3: Paperwork Will Continue to Increase Lenders are scrutinizing data and asking for more and more documentation. They are requesting letters from borrowers explaining every recent credit inquiry in their records, or explanations for non-paycheck deposits made to bank accounts. Instead of one year of tax returns, it is not unusual for a lender to request two years or more.
Prediction #4: Processing Times Will Stretch Appraisers are swamped and lenders are requesting more documentation than ever. The result is that loan underwriting and processing can take longer than anticipated. Delays vary from lender to lender, so I pick my lending partners carefully and work hard to guide applications along as quickly as possible.
Note: regarding the last two predictions, this is why working with a company like Westchester Mortgage can really help. At Westchester, one person handles your mortgage from beginning to end. You work directly with a licensed Massachusetts loan originator with years of experience. We handle all the paperwork in-house so that you don’t have to worry about it.