Top 3 Home Loan Programs in a Booming Housing Market

Views: 78

Will the housing market remain strong  and robust in 2018?  In 2017, we saw home prices continue to go up in most parts of the country.

And it gets better! We are more than halfway through the year, and not only have mortgage rates not gone up much after the Fed hiked rates several times. Home loan rates have actually dropped!

That’s right. Mortgage analysts had been predicting 4.5% or higher rates in July 2017, and here we are in August and rates are often under 4%. Even for people with so-so credit, it is possible to get a loan at or close to 4%.

Home buyers in many markets are buying as soon as they can. The combination of attractive home loan programs, low interest rates and rising prices makes people want to pull the trigger.

In summary, it is a great time in summer 2017 to be shopping for a home loan. We recommend that you check out these top home loan programs today to get yourself a very good deal on a mortgage:

home loan programs

When the housing market is bursting there are typically more attractive home loan programs.

#1 Freddie Mac Mortgages

As of July 2017, the 30-year fixed rate on a Freddie Mac mortgage was 3.89%. This was the lowest rate of the whole year! That is 12 basis points less than the May average.

And rates for 30-year Freddie Mac loans are down a lot since January when the rate was 4.2%. It is a good time to consider this home loan product because it looks as if rates will continue to drift downwards.

Keep this in mind: Home buyers experience a hike in buying power by $10,000 for every .25% drop in rates. And refinance shoppers are finding it makes sense to consider a refinance again with rates this low.

#2 FHA Mortgages

Rates on FHA loans at the end of July 2017 also had dropped under 4% again. We had not seen this for several months. FHA home loans are a great choice for people with credit well under 700. They also are a good bet for those with credit as low as 580 if you want a 3.5% down payment.

FHA loan qualifications often offer even better rates than conventional rate loans due to the federal government guarantee against default. These are a very good choice in 2017 because the rates are even lower than conventional loans, and because it is possible to get a very low down-payment with a fairly low credit score. FHA does not insure $0 down home loans, but they do allow gift funds, so it is possible for a borrower to use a 3.5% gift as the down-payment with an FHA-insured loan.

#3 Fannie Mae Mortgages

Fannie Mae home loans also are a great deal right now – what mortgage loan isn’t a great deal in the middle of 2017? Fannie Mae also offers a conventional 97 loan product now that has a 3% down payment option. This is a very good loan product for people who want to limit their out of pocket costs.

Keep in mind that with a Conventional 97-loan, you have to have a 640-credit score.

The Conventional 97-loan is a good option because it has a lower down payment than an FHA first time loan. Your rate may be higher than an FHA lien, but you will not have to pay for mortgage insurance after your get to 20% equity. With an FHA loan, you need to pay for mortgage insurance for the entire life of the mortgage.

More Mortgage News to Consider

Reports from the media indicate that at least four million home owners could benefit from doing a refinance on their home loan. If they did this, they could save a total of $1 billion per month.

Why aren’t they doing it? According to CNBC, many consumers may not be aware how low rates are. The media usually does a good job of making people think that rates are higher than they are.

It’s true that rates went up after the November 2016 election. The idea was that tax reform and infrastructure spending that was promised by President Trump would cause more government borrowing. This would increase the sale of US Treasury bonds, which would cause rates to rise.

It hasn’t happened yet. Many of the president’s economic plans are not moving much in Congress. That has its down sides, but one advantage is that it is keeping mortgage rates low!

But some consumers still think rates are high. We are here to tell you that home loan rates are very low, under 4% in many cases, and you would be very wise to buy a home now if you have been thinking about it. Or refinance that 4.5% mortgage ASAP!

The Bottom Line

If we have not made it clear by now, you really need to get the top home loans right away if you have been thinking about it and have the financial means to do so. Home mortgage rates are even lower than they were a few months ago, and it is likely they may go even lower. As long as Trump’s economic plans are stalled by Congress, there is a good chance that rates will stay below 4%.

About Dusty Brazil

CA BRE #01780273- Dusty Brazil is a top ranked Realtor with Pacific Sotheby's International Realty. Mr. Brazil has been selling real estate in San Diego for over 10 years and lived in this coastal community his entire life. Dusty is an accomplished surfer who enjoys writing home buying articles when he is not catching waves.