It is amazing to me how much bad news continues to come out each day about everything from the economy to the housing market, and job market. Here's a bit of good news. The interest rates were supposed to be climbing along with gas prices by the beginning of summer, yet neither happened. In fact, the interest rates have dropped, and the Federal Reserve has promised to keep the Federal Funds rate at 0% for 2 more years. This means that most variable rate mortgages ( home equity lines of credit, commercial loans ) are going to stay low for at least 2 more years, too. Mortgage rates are not based on the Federal Reserve interest rates, but they are based on the sale of treasury bills, economic news, and other factors that effect the stock market, as well. With the mortgage rates at or near their historic lows, buyers and homeowners need to take advantage of them now. They will not stay this way for long. I have seen mortgage rates as high as 18%! Believe me, enjoy them while they last.
Abacus Regional Mortgage
484 695 5972
Sunday, August 21, 2011
Sunday, August 7, 2011
As I have kept you informed of changes within the mortgage industry, there have been some signs of easing with lending restrictions. This time I am glad to say that in the very near future there will no longer be a maximum debt ratio of 50% on all loans. More importantly, there will no longer be a minimum credit score requirement with FHA loans. Most of you don't know that there is no minimum FHA score required right now. FHA doesn't have nor ever had a minimum score. The problem we have all had in trying to get buyers approved is that the large institutional investors who buy an sell FHA loans are the ones who have imposed the minimum credit scores on FHAs. Most lenders are requiring minimum scores of 620 because they have to sell the loans to these institutional investors. If they can't sell them, the banks and mortgage companies are stuck holding the loans in their portfolio. With these investors removing the minimum credit scores, we will be able to grant more mortgages, sell more houses, grow the economy and the GDP. We have hit the bottom of the market and are ready to turn a corner slowly. It appears like we are almost in a normal market. For now, I'll take it!