Getting a Mortgage Before the Door Shuts

If you’ve been sitting on the fence trying to decide whether to buy a house or refinance a mortgage, you should act soon.  New loans are starting to get costlier.

The mortgage market is facing pressures from new laws and regulations, still-declining home prices and the ongoing need for government-owned mortgage players to shore up their finances.  The Mortgage Bankers Association predicts mortgage originations, which reached $3 trillion in 2005, will be less than $1 trillion this year, the lowest level since 1997. 

“The price of mortgage money is going to go up, and the availability of mortgage money may also be impinged,” says Keith Gumbinger, vice president at HSH Associates, which tracks mortgage data.

The silver lining is that the rate for a 30-year fixed loan is hovering around 5% for those with good credit.  That is up about a percentage point from last year’s lows but is still an attractive rate by historical standards, though expected to keep climbing as the economy improves.

Home prices in some areas are still falling, but they are bottoming out or firming up in others.  It may not be the perfect time to buy a home — but better mortgage options today may be a worthy trade-off to the possbility of lower prices tomorrow.

–adapted from The Wall Street Journal