Home Sales After Life Support

Home sales appear to be making a come back in some areas. Is the housing market now on the rebound, or do we still have reason for caution?

One major question about the sustainability of home sales is what happens after government stimulus programs are removed?

Home mortgage rates have remained low because the Federal Reserve has been buying mortgage-backed securities instead of relying on private and institutional investors. Once the Fed stops buying loans, mortgage rates are expected to rise, and higher rates could slow home sales.

The home buyer tax credit is another subsidy for stimulating home sales, which has recently been extended and expanded to include some previous homeowners in addition to first time home buyers. When the tax credit program ends, home sales could lose some recently gained momentum.

Loan modifications subsidized by the government have kept some borrowers from defaulting, however, a substantial number of these modified loans are re-defaulting, which prolongs the foreclosure process. Home sales may be affected when this program ends, as banks try to sell their growing inventory.

These subsidy programs seem to be helping the recovery process, but also raise speculation about the future of home sales once the housing market is taken off government life support.

Mortgage Loans

Buy a Home - Save on FHA Mortgage, Tax Credit, Cash Rebate

Buying a home may not cost as much as you thought. Here's a couple of ways you could save money when you buy a home:

1. An FHA mortgage only requires a 3.5% down payment, and seller concessions are allowed up to 6% with an FHA mortgage, which means you can negotiate with the seller to pay your closing costs.

2. Buy a home by the end of April 2010 and you could get a tax credit if you qualify under the new program.

3. In addition to an FHA mortgage and getting a tax credit, you could also save money by using a real estate agent who will rebate part of their commission to you. The seller usually pays around 3% commission to a buyer's agent, which you can negotiate as to how much to receive as a rebate before you buy a home.

FHA Mortgage

Mortgage Rates Remain Low for Now

Mortgage rates may rise about .5% when the Fed stops buying mortgages soon. In the meantime, conventional and FHA mortgage rates continue to remain low.

The housing market is still being influenced by government stimulus programs like the purchase of mortgages, home buyer tax credit, modifications, and bailout funds. How much mortgage rates will change depends heavily on investors moving into the market as the Fed exits.

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15 Year Mortgage - Low Rates and Benefits

With 15 year mortgage rates now below 4.5%, an opportunity exists for homeowners who can afford the payment to establish a financial plan to eventually pay off their mortgage.

What are the potential benefits of a 15 year mortgage?

• Provides a fixed rate payment to eliminate the mortgage over a reasonable term.

• Incorporates the retirement of the mortgage into an overall retirement plan.

• A 15 year mortgage rate guarantees a rate of return from the opportunity cost.

• Less financial stress comes with the security of paying off and owning a home.

• 15 year mortgage rates are usually a little lower than 30 year mortgage rates.

• Save a large amount of interest expense on a 15 year loan instead of 30 years.

Mortgage Loan Rates

Mortgage Rates

This week mortgage rates dropped, with 30 year fixed average mortgage rates falling below the 5% level, which is a low for the past 5 weeks, based on a Freddie Mac weekly survey of mortgage rates. 30 year fixed rates averaged 4.91% for the week, which is down from a 4.98% average last week. Lower mortgage rates continue to be a point of optimism with mixed news of home sales and foreclosures.

Home Mortgages

Cash Out Mortgage Refinance for Debt Consolidation

A mortgage refinance for debt consolidation is still available for some homeowners. Consolidating debts into one lower payment may be beneficial if you have sufficient equity for a cash out refinance.

Unsecured credit cards, or other debts, can be paid off using home equity to secure a low fixed rate, but a cash out refinance is limited by strict loan to value guidelines. A conventional mortgage refinance is typically limited to a maximum of 80% of value, while an FHA refinance has a maximum of 85%.

Consolidating credit card debt with a refinance can eliminate daily compounded interest, which accumulates more than a simple interest mortgage, especially if only the minimum payments are made.

Here's an example: An average rate of 15% on credit cards with a combined balance of $40,000 could have a monthly payment of about $560, over a 15 year term. A debt consolidation home loan with the same balance at 8% could have a payment of about $382 over the same term. A lower rate would of course result in more savings.

Mortgage refinancing may save money by eliminating high interest debt, a possible tax deduction, and if the monthly savings were applied to the payments, thousands of dollars in interest could be saved by reducing the term of the loan. 

Refinance Mortgage Rates

Fannie Mae Lease Back to Foreclosure Homes

Fannie Mae will now become a landlord to some people facing foreclosure by allowing them to lease back their homes for up to a year.

The Fannie Mae lease back program attempts to prevent more foreclosures from flooding an already weakened housing market, which could drive home prices down. The program is for borrowers heading into foreclosure who have exhausted other options, such as a loan modification.

The news came as Fannie Mae reported a net loss of $18.9 billion in the third quarter of 2009, compared with a $14.8-billion loss in the second quarter. The latest loss prompted Fannie Mae to request $15 billion from the Treasury.

Mortgage Loans

Mortgage News - Home Buyers Tax Credit

Current mortgage news includes the extension and expansion of the home buyers tax credit. The new program should stimulate home buying and mortgage loans for first time buyers, and some current home owners.

The vote also expands the home buyers tax credit to include many home buyers who already own their home, which should help the recovery of housing and boost mortgage loans.

Home buyers who have owned their current home for at least 5 years would now be eligible for a home buyer tax credit of up to $6,500. First time buyers, who have not owned a home in the last 3 years would get up to $8,000.

To qualify for the tax credit, home buyers have to sign a purchase agreement by April 30, and close by June 30 2010.

Information on Mortgage Loans and Home Mortgage Rates

Home Mortgage Rates

The Federal Reserves commitment to buy mortgage-backed securities in order to maintain low home mortgage rates is at a point where an exit strategy is in preparation. The big question is what will happen to mortgage rates without this market support? Previous mortgage forecasts indicated gradual increase, which may affect a speedy recovery for the real estate industry.

Get Home Mortgage Rates and Loan Information.