Mortgage Topics

Mortgage rates on conforming loans (up to $417,000) and high balance conforming loans ($between $417,000 and $625,500) started declining last week and are now in the mid 5% range. These are the lowest rates have been in the last 5 years. If you have a mortgage rate of 6% or higher, this is the time to take advantage of a refinance and save money.

The Wall Street Journal reported on December 3^rd that the U.S. Treasury Department is mulling over a plan to jump start the U.S. housing market, seen as the underlying reason for the current recession, by dropping mortgage interest rates further. Under the plan, the government would purchase billions of dollars worth of mortgage backed securities issued by mortgage giants Fannie Mae and Freddie Mac who guarantee a large portion of all the new mortgages, as well as those guaranteed by the Federal Housing Administration.

If this plan were to come to fruition, it would provide tremendous help to people considering buying a home and to current home owners trying to save more money on their home payments.

As a note of caution, the plan is only being considered and nothing has been finalized as yet. Homeowners currently working on a refinance to lower their payments should continue forth on their transaction.

It is important to remember that we now live in a world of very stringent lending guidelines and not as many people will be able to refinance either due to strict income and asset requirements, higher credit scores, a substantial drop in values or a combination of other factors.

ACTION STEP FOR HOMEOWNERS: It is highly advised that you proactively in contact your trusted mortgage advisor immediately to see if and what rate you qualify for.

Our experience shows that when rates drop significantly, they do so for only a day or two. To take advantage of these lower rates, it is imperative that you provide your latest income, asset and employment information to your mortgage broker. He/she will be able to perform the proper due diligence in advance to ensure you qualify for lower rates now or in the future. Only 3 out of every 10 borrowers wanting to lower their payment is qualifying for a refinance under the newer lending guidelines. Your prompt action now will ensure you are one of few to lower your rate and save money.