Mortgage Advice for a Sluggish Housing Market

Housing markets tend to slump from time to time. When this occurs the power is usually in the hands of the buyer and it's important to know some tricks that could save lots of money on your mortgage (or even get your house sold).

The first thing to be aware of is mortgage buydowns. A mortgage buydown is where a portion of the interest is paid in advance in order to lower the monthly period for a specific amount of time. A typical mortgage buydown is a 3-2-1. This is where the interest rate is bought down 3 points and increases one point every year until it reaches its fixed rate.

Now that you know what a mortgage buydown is it's time to make it work in your favor. In a slow housing market sellers can be convinced to buydown a buyers mortgage for purchasing the home. The seller benefits because the home is sold and the buyer benefits because their payment is lowered for the first three years.

The next thing to keep in mind is the FHA (Federal Housing Administration). The FHA was created to speed up slow housing markets during The Great Depression. Whenever home sales stall the FHA loosens its requirements on the mortgages it will insure (they don't actually lend money). In turn, this eliminates default risk on the lender's end and allows them to loosen their requirements as well. If you didn't think you qualified for a mortgage during a slow housing market, you might want to think again.

FHA Express-The quick way to get an FHA loan!