About Government Refinance and Home Purchase Programs

The financial world was certain that the Federal Reserve would announce that it will begin tapering the $85 billion per month it is pouring in to the US economy. But the Fed had other plans. The announcement just came out that the Fed will not taper yet. That means we will see a dip in mortgage interest rates for the next little while.

Here is a comment from the Fed’s press release today:

Household spending and business fixed investment advanced, and the housing sector has been strengthening, but mortgage rates have risen further and fiscal policy is restraining economic growth. … the Committee decided to await more evidence that progress will be sustained before adjusting the pace of its purchases. Accordingly, the Committee decided to continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month and longer-term Treasury securities at a pace of $45 billion per month.

It remains likely that the Fed will decide to begin the tapering process later this year, but for now rates should improve. That means now is the time to get a refinance or home purchase started. Contact us in the sidebar immediately to learn more and to get the ball rolling on a government refinance or home purchase loan.

The federal government is enacting several new mortgage rules starting in January of 2014. Many of the new regulations will not be discernible to borrowers, like changes to the good faith estimate form. But some changes will make a noticeable difference to consumers.

First, the government is considering lowering the loan size limits on mortgages backed by Fannie Mae and Freddie Mac as well as FHA loans. No final decision has been made on that front yet.

Second, the debt to income ratios (DTI) for most loans are scheduled to be reduced and fixed starting this coming January. Currently there is some leeway in DTI ratios and folks with solid assets and credit scores can be approved with debt to income ratios of more that 50%. The new rules set the maximum DTI at 43%. While this will help ensure borrowers don’t get in over their heads, it also means that borrowers will be not qualify for as much money as they currently can.

Third, interest rates are likely to rise. Rates are currently still at very low levels by historical standards but most pundits are expecting them to continue to rise for the next year or two.

The good news is that this Autumn is a marvelous time to purchase a home or refinance. Housing values are still low but moving higher so anyone who purchases a home this fall is likely to get a low rate and likely see the value of their new home rise over time. Likewise, with rates still very low refinancing is an excellent idea for millions of American homeowners.

Contact us today to learn more about available programs and to get started on the process.

A new jobs report came out this morning and it revealed that the economy added fewer jobs in August than expected. While that is not good news overall it may prove to be useful to mortgage interest rates over the next several months.

The Federal Reserve has been pouring 85 billion dollars per month into the US economy in an effort to spur economic growth. As the economy has shown signs of improvement this year there has been a growing consensus that the Fed will taper that money flow as early as this month. Mortgage interest rates have risen since May in anticipation of the Fed taking its foot off the gas.

Today’s jobs news in conjunction with other signs that the economy is still struggling could mean the Fed will wait longer before it pulls back on its quantitative easing program. Some experts are now predicting the Fed will now wait until December before it starts tapering the QE2 program.

If that is the case it means we will have a window this fall where rates will stop increasing. That means now is the time to start the process of seeking a refinance or a home purchase loan. Most mortgages take several weeks to fund from start to finish so starting the process in early September normally would mean a closing in mid October.

Fill in the contact form in the sidebar right away to get more information on the available government mortgage programs. This fall may be an excellent time to benefit from the record low rates we have seen in recent years due to the Fed’s interest rate compression efforts.

Home values have been rising steadily in most U.S. markets for the last 1-2 years. While rising home prices are obviously good for folks looking to refinance or sell their homes, steadily increasing home values are also good for home buyers. While higher home prices may seem like a bad thing for buyers in the short run, the upward trend in housing values helps home buyers tremendously in the long run. If a buyer pays $200,000 for a home in 2013 and home values increase at a rate of 5% per year over the next 10 years, that home will be worth more than $300,000 in 2023. Even if home prices increase more slowly than that the fact is that steady increases in housing values means the home will be worth more in the future than it is worth now. That is one of the major benefits of owning a home rather than renting.

Owning a home is not for everyone, but home ownership does make a lot of sense for a lot of Americans. If you are currently renting, now is a good time to look into buying. And if you already own a home and would like to move, now might be a good time to look into selling and perhaps buying again. Housing values are rising but they are not overheated like they were 7-9 years ago. And mortgage interest rates are still very low by any historical measure. Contact us in the form in the sidebar to learn more about the available purchase programs such as the FHA, VA, USDA, or Fannie/Freddie home purchase programs.