A lot of changes are happening in the mortgage industry for 2013, thanks to increased regulation and the lending industry tightening down on its rules. Knowing about these changes will help you make the best decision whether 2013 is the year for you to apply/refinance.
Tip 1: Now’s The Time To Refinance
Rates are expected to rise after the first few months of 2013, so taking advantage of the opportunity to refinance should be done now if you plan to do it. It is highly likely that the rates offered will be lower than what you’re currently paying—as long as you refinance soon.
Tip 2: Now’s The Time To Buy
The economic crunch of 2008 is still showing some effects on the mortgage market, particularly with low rates and low (but rising) home costs. If you plan to buy, don’t wait until the end of the year—now’s the time to do it. Both rates and home prices are likely to be at their pre-2008 levels before the end of the year.
Tip 3: FHA Might Not Be Better Than Conventional
In the past, most new homeowners opt for the FHA loan route due to requirements for very little money down. However, the FHA is set to make some significant changes this year in their requirements for down payments. Add this increased amount to the higher loan costs of acquiring an FHA loan and an FHA loan might not still be your best option. If you have at least 5 percent in down payment and a decent credit score, it is likely that a conventional loan will be the better bet.
Tip 4: Good Credit Is Your Golden Ticket
If you plan to buy a home this year, ensure that your credit score is at its absolute best. A score of 720 is optimal in acquiring the best mortgage rate. If it’s lower than that, expect to pay higher interest rates. If it’s lower than 620, expect to be denied a loan.
Tip 5: Underwater? You Can Rise Above It.
The Home Affordable Refinance Program, or HARP 2.0 is a federal program that has been revamped for 2013 to allow homeowners who are “underwater” the opportunity to refinance. Don’t miss this opportunity, even if you have been denied for a refinance in the past. You might now be able to qualify.