Looking to buy? Your mortgage loan might be smaller than ever

Filed in archive finding the right loan on May 13, 2009

If you've been on the fence about purchasing your first home, the news that U.S. housing prices fell by the largest margin ever during the first quarter of this year might make your decision easier.

Simply put, housing is more affordable today — even in the most desirable locations in the United States — than it's been in years. And this means that many buyers will be taking out smaller mortgage loans in order to purchase these homes.

Bloomberg reported that the nation's median housing price fell 14 percent in the first quarter to $169,000. The National Association of Realtors says that housing prices dropped in 134 of 152 metropolitan areas. The biggest declines came in Cape Coral and Ft. Myers, Fla. San Francisco and San Jose followed.

So if you're thinking of buying in Florida or California, now is a pretty good time.

Mortgage interest rates also remain low, with Bankrate.com reporting that the average interest rate on a 30-year fixed-rate mortgage this morning stood at 5.03 percent.

Of course, the news is not all good for buyers. If you have to sell your own house before buying, that's still a major challenge. And with housing prices falling so significantly, you pretty much have to accept that you're not going to get top dollar when selling today.

And qualifying for a mortgage loan today is more difficult, as lenders, stung by the subprime lending crisis, are doing everything they can to avoid passing out mortgage money to borrowers who may not be able to make their monthly payments.

But, if you're a first-time buyer with good credit and solid income, this is a great time to buy a home and take on a mortgage loan.