At first glance, the loan industry in terms of real estate is one of its best times in the view of consumers. Because of the housing crisis the country has experienced, many houses are currently foreclosed even in major cities.

Prices of properties went down to record levels which has naturally triggered the increase of interest on houses that are for sale. Those who do not have any property today are now seriously considering in opting for home through mortgage rather than paying the monthly rent.

To make the deal even sweeter, financial institutions are even offering lowered interest rates. Instead of dealing with crippling interest rates, these are reduced to entice more homebuyers. Since financial institutions are concerned and might fear for the worst case scenario for the foreclosed properties, they opted in selling their prices as soon as possible.

But low interest rates and the almost frantic reaction of the financial institutions to improve the appeal of mortgage and other types of real estate related loans does not necessarily mean savings for those who are interested. They have lowered their interest rate not for the sake of losing billions of dollars but for the sake of enticing more customers while securing the company’s future.

The financial institutions may have lowered their interest rates but they are not offering this to everyone. In fact, the lowered interest rate may have affected a lot more people than giving them an advantage with the current program.

The reason for the increased disadvantage for many consumers is from the fact that the lowered interest rate now requires a higher credit score. The increased requirement for credit score has rippled on other interest rates as well. In the end, you will not have the interest rate you are hoping for and the payment terms are a lot more difficult.

Government Assistance

The approved stimulus package should be great news for the consumers. First time home buyers will be experiencing thousands of dollars in tax cuts which is being implemented to push more home buyers and improve the value of the properties. Billions of dollars have also been approved to assist those who are facing foreclosure. Although they will not be given money for free to get out of foreclosure, the payment terms with government assistance is lot easier today.

But this plan comes with a small disadvantage. The assistance of the government to those who own properties will be foreclosed and tax relief has triggered uncertainties and unpredictability of the real estate market. Although the assistance has been approved, the actual terms of assistance is a little it hazy. This has even increased the uncertainty in the real estate industry.

Because of this, financial industries will protect themselves as long as the clear cut assistance is not yet provided. The number of people who will be assisted is also not clear. Although the government assistance is provided for all the good reasons, the plan backfired a little bit which has placed a number of consumers in a bigger financial struggle.

Mortgage Transaction

This situation could easily get you frustrated. But you can avoid this frustration by seeking prequalification first. Although this will not provide any assistance in getting your hands on that lower interest rate offer, it will give you the real deal on what you can and cannot get.

It is always frustrating to approach a financial institution only to be denied with your application. Know your options first before applying for a mortgage loan. What you see right now in the offered interest rate may not be for you.