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Several years back, the American economy hit a recession that tightened the belts of home mortgage lenders across the country. Only in the last year or so have we begun to see things turn upward in the home buying market and lenders loosening their tight lending guidelines with simpler rules and applicant steps. Now, in the beginning of 2013, we are seeing approvals and home purchases really begin to skyrocket in the home buying market.
Approval Rates on the Rise
Ellie Mae, one of America’s top home loan origination software providers, handles over 2 million mortgage applications in one year. In November of 2012, Ellie Mae reported that over half of those who applied for mortgage funding received it, resulting in the third straight month where the amount of approvals where more than mortgage lending denials. With the last quarter of 2012 doing so well regarding home mortgage approvals, we expect to see it continuing to rise and upturn in 2013’s remaining quarters.
Approvals Through to Completion
Also in November of 2012, Ellie Mae found that over 52% of those who applied for home loans made it to the settlement process and through to completion. This percentage is fairly high, especially considering that it was the second highest tally in the one year time frame that the data began being tracked.
Including all home mortgage loan types that were approved and went to closing, the month of November saw 60.8% going towards purchasing a home (up 55.2 from the year previous) and 48% to refinancing. 19% of those completion/closed loan stats were for FHA Mortgages and Ellie May reported that in the month of November, one out of every five transactions were for FHA mortgages.
Of the home loans approved and closed in November, 68% were for mortgage refinancing. A short six months previous to this the percentages were at 54%, resulting in more homeowners wishing to take advantage of lower interest rates and receive lower monthly payments. In fact, the current mortgage rates are lower than they have been in over 65 years and with programs such as the Home Affordable Refinance Program (HARP,) we expect to see these refinancing numbers continually rise. Amongst the rising national refinancing, we’ve also seen a boom in both FHA Streamline Refinances and VA home loan Streamline Refinance programs. The VA recently closed its 20 millionth loan a few months ago and it is believed that their numbers and those of all refinancing options will continue to rise in 2013.
Climbing For the Coming Year
With the lowest interest rates in years as well as better lending guidelines, we may finally be seeing the housing and lending markets come back to where they were before the recession. Home mortgage loan and refinancing approvals are set to continue climbing for 2013 and we expect to see more satisfied homebuyers as well as happy mortgage lenders.