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Mortgage Loan Tips When the Housing Market Heats Up

Daniel Cohen
UpdatedMay 14, 2024
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    5 min read
Key Takeaways:
  • Review reasons the housing market is heating up.
  • Understand how a hot market can affect your loan options.
  • Be a well-prepared borrower, so you can move quickly, if necessary.

How to Get the Best Refinance or Purchase Mortgage Loan in a Hot Housing Market

New home purchases are up in volume and housing prices are rising in many parts of the country. It is too soon to know if these positive signs in the housing market are going to continue, but there are some reasons for optimism. If you are looking to refinance a loan or buy a home, you should reevaluate your financial strategy, as market conditions change.

The home purchase market is heating up in many markets in the US. Housing demand is being pushed up by various factors, including:

  1. Record-low mortgage interest rates borrowing
  2. A reduction in the number of foreclosed homes on the market
  3. The Federal Reserve's continued commitment to purchase mortgage backed securities and to keep interest rates down.
  4. Federal Reserve Chairman Ben Bernanke, in a Sept. 13th 2012 press conference, said, "The program of MBS purchases should increase the downward pressure on long-term interest rates more generally, but also on mortgage rates, specifically, which should provide further support for the housing sector by encouraging home purchases and refinancing."

Mortgage Meltdown

Following a six-year steady rise in home values from 2001-2007, the housing market collapsed. Property values plummeted in many parts of the US, with some areas, such as Phoenix, Las Vegas, and parts of California seeing property values falling as much as 67%! It has been a long, slow recovery from the mortgage meltdown of 2007.

Across the country, millions of homeowners, found themselves with property values that were worth less than what they owed on them. At the peak of the crisis, there were over 12 million underwater homeowners. According to Core-Logic, the largest aggregator of real estate data in the United States, "11.4 million, or 23.7 percent, of all residential properties with a mortgage were in negative equity at the end of the first quarter of 2012." Today, it is estimated that just under 11 million homeowners remain underwater.

How to Prepare for a Rising Housing Market

Housing prices rose by their highest level in six years in July 2012. As the market heats up, there are steps you can take to improve your financial position, whether you own a home with equity, have an underwater home, or are looking to buy a home.

  1. Refinance now- Take advantage of the record low rates, before they rise. Even if you've refinanced in the past year, rates are so low that you should see if it makes sense to refinance. A hot housing market and an improving economy generally cause rates to rise. Act before rates go up.
  2. Buy now- When you expect prices to rise, it is also a smart time to speed up a plan to buy a home, as long as it fits into your budget.
Quick tip #1

if you are considering refinancing or buying a home, the smartest way to find the best possible loan is to shop around. contact one of’s pre-screened refinance partners for a free, no-obligation mortgage quote.

  1. Find the right loan program
    • Underwater Homeowners- There are a variety of loans and loan programs available. Underwater borrowers need to look at HARP loans and FHA and VA streamline refinance programs.
    • Homeowners with equity- Refinance to lower your interest rate and the size of your monthly payment or to pay off your loan sooner and at a lower over all cost. If your home value is above 80% loan-to-value, but not by much, weigh the pros and cons of refinancing now and paying private mortgage insurance (PMI) compared to what you would pay at a higher interest rate but no PMI.
    • Looking to buy a home- When there are low interest rates and the housing market starts to heat up, there can be heavy competition for the home you want to buy. Be prepared to face a bidding war. It pays to get pre-approved for a loan, before you start shopping for a home, so you know what you can afford and can move quickly, if you find a home you want.
  2. Assess your debt- High debt can disqualify you from a refinance loan. It can also prevent a home purchase or restrict the amount you can borrow, requiring you to buy a less expensive home than you desire.
Quick tip #2:

If you won't qualify for a refinance or purchase mortgage because your debt is out of control, you can get a no-cost analysis of your debt relief options from a pre-screened debt relief provider.

  1. Monitor your credit- Your credit score is another key component lenders will examine. Check your credit report regularly. Dispute any inaccurate information. Follow the basic steps to improve your credit score, if necessary.

Mortgage Regulations May Change

If you are looking to refinance or take out a mortgage loan in late 2012, acting fast may be smart. The biggest reason is that interest rates are historic lows.

Another reason to act now is that major changes in the mortgage industry are due to take place in early 2013. In an attempt to prevent unqualified borrowers from getting loans (which was a big problem in the mortgage meltdown), the government will be instituting new regulations that could restrict the number of loans available to refinance borrowers with 20% equity or purchase loans to borrowers with a 20% down-payment.

Serious restrictions that could reduce the number of eligible borrowers will be opposed by the mortgage industry. It is unclear what rules will be put in place and the results of the 2012 Presidential Election will pay a part in how things develop. No matter who wins, it will be no great surprise if the government ends up doing nothing and pushes the issue down the road.

The Latest on Mortgage Rates

Mortgage rate fluctuations should come as no surprise. If you are buying a home or refinancing your existing mortgage, it is important to stay informed about the current mortgage rates.

Mortgage rates April 10, 2024
According to Freddie Mac, the 30-year mortgage rate for the week of April 10, 2024 stands at 6.88%. This reflects a 6 basis points increase from the previous week's rate.
Note: A basis point is equal to one-hundredth of one percent (0.01%). In numerical terms, if the mortgage rate changes by 20 basis points, it means the rate has changed by 0.20%.
Additionally, Freddie Mac reports that the 15-year mortgage rate for April 10, 2024 is 6.16%, indicating a 10 basis points increase from last week’s rates.

Understanding the impact of mortgage rates on your finances
When it comes to determining your monthly payment, mortgage rates are a key factor to consider. Here are the avergage interest rates (APR) for April 14, 2024 based on Zillow data for borrowers with a high credit score (680-740) in the United States:

  • 30-year conventional loan is 7.09%
  • 15-year conventional loan is 6.29%
    Based on the provided rates, a $279,082 30-year mortgage would result in a monthly payment of $1,874. Alternatively, a 15-year mortgage would require a monthly payment of around $2,399.

Simplify your mortgage journey: Shop around and get pre-approved today!
To make the home-buying or refinancing process a breeze, we highly recommend shopping around for mortgages and getting pre-approved. So, why not Check Out mortgage rates now for the best options available.