Current Mortgage Rates Might Be At Historic Lows, But What About Your Income?

Posted by  on Mar 23, 2010

Current Mortgage Rates Improve Once Again

For the third consecutive week, mortgage rates improved, reaching their lowest levels since late May. Although still quite a way from the record lows of mid 4% rates seen just a few months ago, mortgage rates seem to be settling back near 5% for traditional 30 year fixed mortgages. But even with the best mortgage rates seen in years, there's still a sense of nervousness around the housing markets because of high unemployment rates.

In the latest poll of potential home buyers, MSNBC reports the number one reason home buyers were hesitant to enter this market was the fear of losing their jobs. In the survey conducted by Realtor.com, nearly a third cited future job uncertainties as the main reason for shying away from this market. Interestingly, only 8% feared home prices would continue to fall, while 16% were worried about selling their existing home.

Borrower's Employment Concerns Rightly Justified

Even with mortgage rates sitting at historic lows and homes at discounted prices, borrowers are correct to be worrying about their future incomes. Unfortunately, the Fed is also forecasting unemployment rates to top 10% in 2009. Though many are now stressing the importance of higher down payments and invested equity, household income is just too significant to overlook. Compared to loan-to-value ratios and credit scores, job losses and reduced incomes accounted for over 45% of all delinquencies reported by Fannie Mae. Although most people can't simply decide to improve their incomes like they would their credit score, the best thing to do is to make sure mortgage lender guidelines are being met.

Nowadays, this means providing full documentation of income and providing letters of explanation for any special circumstances. A common example is when borrowers compensate a limited employment history with a letter from their employer providing more details about their current position--and possibly confirming future job stability. Lenders may also require monthly paychecks, tax returns, or profit & loss statements for the self employed. Before comparing mortgage quotes from different lenders, it's a good idea to prepare this paperwork beforehand to give lenders all the information they need. With this information on hand, lenders will be able to give you a more accurate quote based on your individual borrower qualifications.


Get Mortgage Rates by Email

  • Compare mortgage rates offline
  • Get updated rates in your inbox
  • Apply for a mortgage from your email
  • We don't spam

Get Your Rates Emailed Now!

Subscribe To Lending Lowdown
Your information will never be shared
Shoprate User Survey