New home loan products open purchase possibilities

Buyers face more loan options than ever before

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Lenders now offer mortgage products that were unheard of a decade ago. It used to be that if you wanted a 30-year fixed-rate mortgage, you had to be able to qualify to make a 30-year fixed-rate mortgage payment. That has changed, at least with some lenders. In mid-November, interest rates hovered around 6.5 percent for 30-year fixed-rate mortgages. While this is still low in historical terms, 30-year fixed-rate financing was available for about 5.6 percent a year ago. Until recently, most home buyers opted for a hybrid adjustable-rate mortgage (ARM). With a hybrid ARM, the initial interest rate is fixed. Before short-term rates started to climb, buyers were able to get a hybrid ARM with an initial rate well below the rate charged on a conventional 30-year fixed-rate mortgage. The lower monthly payment made it easier to qualify for a larger mortgage. As home prices escalated, hybrid ARMs became popular because they expanded a buyer's purchasing power in the face of rising home prices....