Contrary to previous forecasts last year, appreciation is expected to hit 1-3% next year and 3-4% in 2013.  We’re still feeling the weight of the foreclosures and bank-owned properties.  Until this slows, it creates a drag on prices.

Another “silent killer” weighing in on all of this is the difficulty of obtaining a mortgage these days.  Credit standards have been ratcheted so tightly that it too has choked the purchase market, although most don’t realize this is going on behind the scenes.

It used to be that a 720 was considered an excellent credit score, however that’s no longer the case.  The new benchmark for excellent credit when it comes to mortgage rates is now a 740 or better.  When we obtain a credit report, we go off the middle score (not average) when there’s only one borrower, or the lower of the two middle scores when there’s a borrower and co-borrower.

We then look at the equity position.  Depending on the type of loan (rate/term refi, cash-out refi, or purchase), the rate can be higher or lower depending on the credit score and equity position.