While people trying to obtain mortgage credit are finding that the loan requirements are still stricter prior to the housing bubble burst, we have seen it become a little bit easier every year since 2009. As a potential mortgage or refinancing candidate, you will find that it’s still fairly easy to obtain a mortgage and the interest rates that are available to you at historically low. This year, we have seen the traditional 30-year fixed rate reach its lowest rate of the year in October at 3.76 percent, but most of the year, it was offered at four percent. Since 2009, the interest rate hasn’t increased beyond five percent, and the industry doesn’t anticipate to see anything different in 2016.

For conforming jumbo mortgages, the interest rate premium that was added by the lenders in the midst of the financial crisis has almost completely dematerialized. Jumbo mortgage loans are an optimum situation for lenders, according to Guy Cecala, publisher of Inside Mortgage Finance. In quarter four, lenders were offering interest rates for jumbo mortgages as low as 3.6 percent. Lenders actually consider jumbo mortgages to be more low risk because the borrowers tend to have liquid capital available for a large down payment and A-paper credit.

In 2016, those looking to take out mortgage loans or refinance their current loan will have a five percent down opportunity with a fixed-rate or adjustable-rate mortgage backed by Fannie Mae and Freddie Mac. Those same institutions will also offer a three percent down program to low- to moderate-income borrowers as a less expensive alternative to the FHA 3.5 percent down mortgage loan.

Homeowners were definitely looking to refinance in 2015, and that is not looking like it’s changing in the first half 2016. Of all of the loans that were generated in September 2015, 42 percent of them were refinances. Because borrowers of jumbo mortgages can make a big dent in their payments by a small adjustment in their interest rate, many of them have refinanced even just a year after their previous refinancing endeavor.

Lenders have been cautious when it comes to rolling back the strict restrictions that Fannie Mae and Freddie Mac have implemented for credit scores, loan-to-value and debt-to-income ratios. Lenders will more likely compete for your business in the underwriting process rather than adjusting the interest rate. They tend to allow more leniency in one area if the borrower over performs in another area like a higher credit score to offset the high debt-to-income ratio.

In 2016, we will likely see a more challenging application process if you’re unemployed, self-employed, you work off of a commission-based income, or you’re changing jobs. One of the biggest benefits are new procedures that were implemented in early October that will allow for reduced paperwork and more clear disclosures.

Orlando closing agent professionals, Real Estate Closing Solutions, are always looking to improve the residential and commercial real estate transaction process. For any assistance or questions, contact our Dr. Phillips at 407-615-8550, or our North Orange Ave. office at 407-440-5025 today.