Hal's Mortgage Blog

The window of opportunity for low interest rates is slowly closing. Since November of 2008 the Federal Reserve has been buying mortgage-back securities in an attempt to keep mortgage rates low. It has worked! Experts say rates could easily be .5% higher today without the Government feeding $1.25 trillion into the market over that period of time.

 
Recently however, they have been winding down their purchases. In fact, as of April 1, 2010, they will cease buying mortgage bonds altogether. Remember the law of supply and demand from your economics class? Take the Government demand out of the equation and what happens? The bond market declines causing interest rates to go up.

 
How much they will increase is a guessing game, but don’t be surprised if rates are somewhere between 5.5% and 6% by the end of the year. To put that in terms for the average home buyer, .5% increase in interest rate means an increase in payment on a $100,000 home of roughly $30/mo.

 
If you would like more info on this, give me a call.

Hearing some great things about Rural Development, here is the latest bill that is going in front of Congress http://budurl.com/rdbill502

A survey released by Fannie Mae on April 6 says that 64% of the public thinks yes. Most of those polled also thought it would be tougher to get a loan today. My answer to that is – maybe.

 
It’s true that the marginal buyer may find it tougher. The subprime days of 100% financing with a 580 credit score are gone. Don’t hold your breath waiting for them to come back either. However Government loans such as VA, FHA and USDA/RD are still available (funds are running short for USDA but hopefully Congress will appropriate more).

 
If you have a minimum of 620 credit score and steady employment, Government loans may be your best bet. Guidelines have tightened up a little bit and lenders have been slapped with more compliance regulations but rates are still low.

And don't forget about all those bargain homes for sale. So the answer is yes, It’s a Great Time to Buy a Home!