The mortgage crisis has thrown an enormous amount of homes on the market. The supply of homes certainly surpasses the demand at the moment. As a result, home prices continue to drop throughout South Florida even though some areas are experiencing a rise in the sale of existing homes and condos. In this depressed market, interests rates are low. However, few Americans are able to take advantage of these historically low interest rates.
The ongoing foreclosure crisis has made lenders behave more conservatively. Consequently, people are finding it difficult to qualify for a mortgage. Even those with relatively good credit scores are having a hard time qualifying for a mortgage.
According to news reports, an analysis of more than 25,000 loan quotes and purchase quotes shows that about one-third of Americans are unlikely to qualify for a mortgage because of their credit scores.
For example, someone with a credit score below 620 who requested quotes on a 30-year, fixed-rate mortgage were unlikely to receive even one quote, even if they were able to make a down payment of 15 percent to 20 percent. On the other hand, mortgage borrowers with excellent credit scores (720 or higher) were able to get the lowest interest rates, which was usually around 4.3 percent for a 30-year, fixed rate mortgage.
On the bright side, borrowers with credit scores between 620 to 719 can save a substantial amount in interest by improving their credit scores. For each 20-point credit score increase, the average low APR drops 0.12 percent. Over time this may represent a good amount of savings. For instance, on a $300,000 home with a 20 percent down payment, this decline equates to a savings of $6,400 over the life of a 30-year loan.
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