Despite improvement in the housing market, mortgage lenders are still wary. By Pat Mertz Esswein, Associate Editor December 3, 2012 The 30-year fixed-rate mortgage stayed below 4% all through 2012, hitting a record low of 3.36% in October, while the 15-year rate sank to 2.7%, according to Freddie Mac. That’s probably as low as rates will go, says Michael Fratantoni, of the Mortgage Bankers Association. He predicts that the 30-year rate will stay below 4% until the end of 2013, when a stronger economy will likely boost demand for credit.SEE OUR SPECIAL REPORT: Buying and Selling a Home in 2013 Home buyers and homeowners who want to refinance into low rates must jump hurdles imposed by mortgage lenders, who are still skittish about making loans. Even the biggest banks, now enjoying record profits, worry about the prospect of having to buy back failing loans from loan guarantors Fannie Mae and Freddie Mac and mortgage insurer FHA. They are also holding back until new lending rules required by the Dodd-Frank financial-reform law are issued. In many cases, lenders have imposed their own, stiffer lending requirements. The result? In September 2012, the average FICO credit score of homeowners who landed a mortgage was 750 (on a scale of 850), the average loan-to-value ratio was 78% (meaning the borrower had 22% equity), and the ratio of monthly housing debt to gross monthly income was 23% (the upper limit is usually 28%). Lenders often make multiple requests for documentation as they check, recheck and triple-check the paperwork. Advertisement USE OUR TOOL: Search Home and Condo Prices in Your City Lower-than-expected appraisals may also be a problem. Homeowners still overestimate their home's market value when they apply to refinance, and the sales price in some purchases is higher than the appraisal. Even if home prices where you live have bottomed or are rising, your home's value may be weighed down by lower prices for comparable properties, including distressed sales. Neither you nor your lender can pick the appraiser, but some lenders work with smaller, local appraisal management companies that tend to pay more and attract more experienced appraisers—boosting the chances of an accurate appraisal. This article first appeared in Kiplinger's Personal Finance magazine. For more help with your personal finances and investments, please subscribe to the magazine. It might be the best investment you ever make.