A Nice Time to Get a Mortgage
What's bad for the economy could be good for homebuyers - and underwater homeowners.
The Federal Open Market Committee (FOMC) foresees continuing weakness in the economy, and has signaled its intention to pursue policies to counter that trend.
If you're not familiar with the Committee, it's part of the Federal Reserve, and has great sway over the financial direction of the country.
According to a recent forecast, the FOMC expects economic growth to remain between 1.
9 and 2.
4 percent through 2012, and stay low through 2014.
That has prompted the Fed to continue its policy of historically low interest rates through that period.
Since prices are also hovering near the bottom, it's a great time to buy.
For potential homebuyers who've been waiting on the sidelines, that should be enough to prompt them to action.
But it's also good news for those considering a refinance-including those who are underwater on their mortgages.
Normally, an upside-down mortgage is not eligible for a refinance, but the federal government's Home Affordable Refinance Program (HARP) has made it possible for thousands of underwater borrowers to take advantage of today's low interest rates.
The Federal Housing Finance Agency loosened the HARP requirements late in 2011.
As a result HARP refi's doubled in the first quarter of 2012, and continue to be a strong component of nationwide mortgage activity.
To qualify, borrowers must have loans owned or backed by Fannie Mae and Freddie Mac (which most mortgages today are).
They must be current, with a good payment history over the previous 12 months.
High loan-to-value is not an issue, and appraisals are often not required.
A major feature of the HARP program is its removal of the "Warrantees and Representations" requirement.
This is the provision in most loans that requires the originators to buy them back from their secondary purchasers if the mortgages don't live up to expectations.
In the wake of unexpected default levels in recent years, that issue has kept the mortgage market in near-paralysis.
Now, loan originators can issue new loans without that worry, which has already boosted the market considerably.
As the Mortgage Bankers Association of America put it, "Many borrowers with negative equity have been able to lower their payments, shorten their loan terms, or refinance into more stable mortgage products, thus putting their families into more sound financial positions.
" How to take advantage of these historic developments? Start by getting educated.
Then, get connected with a skilled professional to take the next step.
The Federal Open Market Committee (FOMC) foresees continuing weakness in the economy, and has signaled its intention to pursue policies to counter that trend.
If you're not familiar with the Committee, it's part of the Federal Reserve, and has great sway over the financial direction of the country.
According to a recent forecast, the FOMC expects economic growth to remain between 1.
9 and 2.
4 percent through 2012, and stay low through 2014.
That has prompted the Fed to continue its policy of historically low interest rates through that period.
Since prices are also hovering near the bottom, it's a great time to buy.
For potential homebuyers who've been waiting on the sidelines, that should be enough to prompt them to action.
But it's also good news for those considering a refinance-including those who are underwater on their mortgages.
Normally, an upside-down mortgage is not eligible for a refinance, but the federal government's Home Affordable Refinance Program (HARP) has made it possible for thousands of underwater borrowers to take advantage of today's low interest rates.
The Federal Housing Finance Agency loosened the HARP requirements late in 2011.
As a result HARP refi's doubled in the first quarter of 2012, and continue to be a strong component of nationwide mortgage activity.
To qualify, borrowers must have loans owned or backed by Fannie Mae and Freddie Mac (which most mortgages today are).
They must be current, with a good payment history over the previous 12 months.
High loan-to-value is not an issue, and appraisals are often not required.
A major feature of the HARP program is its removal of the "Warrantees and Representations" requirement.
This is the provision in most loans that requires the originators to buy them back from their secondary purchasers if the mortgages don't live up to expectations.
In the wake of unexpected default levels in recent years, that issue has kept the mortgage market in near-paralysis.
Now, loan originators can issue new loans without that worry, which has already boosted the market considerably.
As the Mortgage Bankers Association of America put it, "Many borrowers with negative equity have been able to lower their payments, shorten their loan terms, or refinance into more stable mortgage products, thus putting their families into more sound financial positions.
" How to take advantage of these historic developments? Start by getting educated.
Then, get connected with a skilled professional to take the next step.