Mortgage interest rates are so crazy low that it seems like lenders are practically begging you to come and take their money to buy a home. Interest rates are hovering at levels that rival the lowest rates over the past 50 years. All indications from the powers that be (the Federal Reserve) indicate that rates probably won’t be jumping anytime too soon either? If this is the case then, why is the housing market still so lousy?

It is true that mortgage lenders really do want to loan you their money for a new home, they are just being really picky about it! The housing crash shed light on bad lending practices that brought down behemoth Wall Street banks and now the few left standing are being really careful. So how can you actually qualify for these fantastically low rates? Review this quick checklist:

You’re not alone. I’ve heard from hundreds of people about their interest rates coming up for adjustment on their 3, 5, 7 or 15 year interest only loans. The lower mortgage payments on these loans made them oh so tempting back when you were signing the note and deed on your home, but now the payment is about to, or already has, get or gotten really ugly. If you’ve tried to refinance in the past couple of years you’ve probably come across a problem or two, which leaves you unqualified for a much-needed refinance.

I’m sure a short sale or strategic foreclosure has crossed your mind but these should be done at an absolutely last resort. You may want to see if you can qualify for protection under the Housing and Mortgage Protection Act (HAMP). It’s a bit of a long shot but worth the try. If you qualify you could have a principle reduction or temporary lower mortgage payment applied to your mortgage. More than likely you are facing a lack of equity in your home or an ugly credit score.

Most of the recent legislation offering help to homeowners has applied to those with FHA home loans. With a conventional loan you are left out in the cold and facing a harder time qualifying for a refinance. You’re credit score as well as your credit history is two of the top few requirements to qualifying you for a refinance. Lenders are bumping their requirements on minimum credit scores thanks to incredibly low interest rates. It’s time to do everything you can to boost that score in the realm of the 700’s.

What to do:

1. Make all of your monthly mortgage payments on time - These types of late payments will not be received well by prospective lenders and are weighted more heavily than other types of late payments. If you are considering a short sale or foreclosure, WAIT! Let’s exhaust all other options first.

Let’s look at the positives; at least you’re not trying to refinance a conventional mortgage! FHA loans have been made more easy to qualify for than they were a few years ago thanks to recent legislation. Typically one of the largest disqualifying factors is the homeowners credit score. The Federal Housing Administration (FHA) requires a minimum credit score of 620 but good luck finding a lender willing to extend you a loan. Currently you’ll need a score anywhere north of 640.

In the past a low credit score plainly meant that you’d need to pay a higher interest rate, but these days it could mean facing the possibility of losing your home. If you find yourself struggling or unable to make your monthly mortgage, there is help out there. There are a handful of programs for struggling FHA homeowners. Check out www.HUD.gov for a comprehensive list as well as pertinent information.

By improving your credit rating you could qualify for a streamline refinance of your home. Yes, it is called a streamline because it is way more simplistic than a conventional refinance. It would be in your best interest to speak with a licensed mortgage professional to have your credit analyzed within the framework of the mortgage world. One piece of advice, avoid missing your mortgage payments if at all possible.

When refinancing, consider the various loan options available:

Fixed Rate Mortgages – The interest rate will never changed no matter what