Interest Rate Buy Downs, Longer Term Mortgages and More
Specialty Mortgage Products Promise Lower Rates and Fees — but Are They Safe? (Originally published on

Rapidly rising mortgage rates are changing how both buyers and lenders are approaching home loans.

Mortgage rates have nearly doubled since the first week of January, to today’s current average of 6.31%. Higher rates mean higher mortgage payments and fewer people who can afford to buy. As a result, lenders have seen a big drop in business. The number of new mortgage applications is hovering at the lowest level since 2000, according to the Mortgage Bankers Association.

“Business is down significantly for most lenders and buyers are feeling the pain of higher rates,” says Craig Garcia, president of Capital Partners Mortgage Services in Florida. “If you can help customers with that challenge, maybe you have the opportunity to do some business.”

Lenders are bringing back specialty loan products — such as interest only loans and no closing cost loans — to address the challenges posed by higher rates. Many of these products have not been popular (or in some cases even available) since the housing market crash of 2008, which can bring up unpleasant memories of housing bubbles and market crashes..

These new lender options aren’t the same as they were — you’ll find more stringent qualification requirements and safeguards that can keep borrowers from getting in over their heads.

However, these loans come with risks. It’s important to understand the pros and cons associated with each loan type and to work with a lender that can assess your particular situation and recommend the right product for you.

Read the entire article at