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Mortgage applications fall, as refinancing hits 20-year low

More than half of all homeowners with a mortgage today have rates below 4 percent, according to CoreLogic. Even those homeowners who want to tap some of the newfound equity in their home, given the sharp rise in home values, are more likely to take out a second loan rather than refinance to a higher interest rate. Home equity lines of credit are increasing as refinances decrease.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) decreased to 4.79 percent last week from 4.84 percent the previous week, with points decreasing to 0.41 from 0.42 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.

“Financial market volatility in response to continued worries about trade resulted in both lower mortgage rates and a drop in applications last week,” said Mike Fratantoni, chief economist at the MBA, adding that refinances saw one of the weakest readings in the last 20 years.

Lower interest rates are not doing much for homebuyers either. Mortgage applications to purchase a home rose 1 percent for the week but were 1.4 percent lower than the same week one year ago. The only gains were in FHA purchase applications. FHA loans are government-insured and offer lower down payment options to buyers with weaker credit scores.

Questions to expect from mortgage lenders

What works in your favor

Your monthly debt payments account for 36 percent or less of pretax income, and you haven’t made a major purchase (like a car) recently.

What complicates an application*

Your credit cards are maxed out or your monthly debt payments account for more than 36 percent of your pretax income. Savings and assets

How much money do you have in the bank?

How much do you have saved in 401(k), stocks, bonds, mutual funds and other investment accounts? (You will be asked to provide copies of brokerage statements.)

What works in your favor

You can show that, after closing, you will have at least two months’ worth of mortgage payments in the bank.

What complicates an application*

You will have little cash in the bank after the down payment and closing costs. Down payment

What is the size of the down payment?

Where does the down payment money come from — is it all from your savings, or did some of it come as a gift from family or a grant from a nonprofit? (You will have to document the source of your down payment by providing copies of several months of bank and brokerage statements, and letters from any gift-givers and grant makers.)

Is a mortgage broker or a financial advisor better when you want help getting a good mortgage deal?

We know how much we want and know we can afford it, we just want to go over the options and get a good deal, but I don't know who would have more options, be more honest, etc. We are in the UK.


The difference between a mortgage adviser and a financial adviser is the qualifications they hold.