Friday, September 19, 2014
Recently, bankers have joined loan guarantors to push the ease the proposed capital rules for mortgage insurers. The bankers advised that easing up on the proposed rules will make real estate financing even more affordable for buyers seeking a new home and loan. Along with the bankers, the National Association of Realtors discussed the importance of having accessible mortgages for first time home buyers.
According to the Wall Street Journal, Citigroup and Bank of America are providing mortgages at discounted interest rates as a part of their efforts to help borrowers with low incomes or lack luster credit histories. These discounts are larger than what other banks currently offer on fixed-rate mortgages with high credit scores.
This new home loan program encourages borrowers to pay points as a means to receive an even larger discount rate. A point upfront fee lowers the interest rate on a mortgage, and one point is equivalent to 1% of the loan. If you have a $100,000 loan, one “point” is equivalent to $1,000. In the past, a 15-year fixed mortgage could be as high as 3.25% of the loan, but with this program in place, there have been cases where it dropped to an astounding 0.125% for the entirety of the loan.
Because of bankers pushing to ease the capital rules, and loaners like Citigroup and Bank of America offering discounted programs for mortgages, what does that mean for you as a borrower? It means as a borrower, you have easier access to a mortgage even if your credit isn't stellar.
If you are considering a home purchase, the mortgage game has changed and the benefits are to your favor!