Record-low mortgage rates make fall a cool time to buy or refinance

House on sheet of bills

Fall is here, and it's never been cheaper to purchase or refinance a home.

But can you qualify for a home loan? Lenders are still being very demanding.

The average cost of every type of home loan we track fell to new record lows in the past few weeks. Click here to find the complete results of our most recent weekly mortgage rate survey.

Then see how affordable home loans in your area have become by searching our extensive database of the best mortgage rates from hundreds of lenders.

You’ll find lenders in most markets offering 30-year, fixed-rate home loans for as little as 4.00% with no points and application fees of less than $2,000.

The principal and interest payments on such a home loan would be $477 a month for every $100,000 borrowed.

Use our mortgage calculator to determine the monthly payments for any fixed-rate loan.

You can lower those payments even more if you opt for an adjustable-rate loan.

We're seeing 5/1 ARMs -- those are home loans where the interest rate is fixed for the first five years and then changes once a year after that -- for less than 3% in most markets.

But we know the majority of borrowers, something like 95% of you in the most recent studies we've seen, are opting for the safety and certainty of fixed-rate loans right now.

And why not?

Land one of these loans, and you've got the deal of the century on a home loan. You'll never have to worry about the interest rate going up, or refinancing your property, ever again.

Unfortunately, qualifying for one of these low interest rates is not easy.

"Lending guidelines are tighter, no doubt about it," says Denver mortgage broker Todd Huettner.

A study by the Wall Street Journal found the nation's 10 largest lenders denied 26.8% of loan applications in 2010, up from 23.5% in 2009.

The data analyzed by the Journal included loan applications filed by consumers who wanted to refinance existing loans as well as those planning to buy a home.

Among home buyers, lenders denied 19.9% of applications, up from 18.2% in the previous year, while 27.2% of refinance applications were denied, up from 24.4%.

Nothing we've seen indicates that lenders are relaxing the underwriting rules they use to determine who qualifies for a loan and who doesn't.

But lenders are back to following, and following in a very strict fashion, the underwriting standards they adhered to until the reckless lending of the real estate bubble in the early to mid-2000s.

"The rules haven't changed much," Huettner says. "We just dusted off the old rulebook and started using it. You've got people in the industry who didn't even know there was a rulebook."

That means it's not just a matter of having the income to justify a new home loan, but having a steady income that can be as fully documented with W2s and bank statements, as the underwriting rules require.

High-income borrowers who work for themselves and have complex financial lives can actually have a harder time winning approval than a middle-income family with a steady job and decent credit.

Families who have experienced a recent period of unemployment or a decline in their earnings also have a hard time meeting the strict underwriting rules now being followed.

You'll have the best chance of getting approved, with the least amount of hassle and the lowest possible interest rate, if you:

Have at least an average credit score. That's a FICO score of 720 to 730. If you have below-average credit, you should probably pursue an FHA or VA loan.

Meet the two affordability tests most lenders use. Here's where to learn more about the 30/36 rules.

Can fully document your income, assets and debts. Here's where to find out about questions you'll be asked on a mortgage application and all the paperwork you'll need.

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