I found the following in an Associated Press article on March 18, 2009. Let’s look at it and break it down a little….

WASHINGTON - If you’ve got a good job, solid credit and your home’s value hasn’t fallen dramatically, you’re likely to benefit from the Federal Reserve’s extraordinary action Wednesday to help drive mortgage rates to historic lows and revive the U.S. housing market.

The Fed’s plan to buy up to $300 billion of long-term government bonds and $750 billion in additional mortgage-backed securities guaranteed by Fannie Mae and Freddie Mac, should benefit many — but not all — borrowers.

It’s likely to produce a big drop in mortgage rates. Analysts expect rates will fall 0.25 to 0.5 percentage points as soon as Thursday.

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If you have a good job, solid credit and your home’s value hasn’t fallen dramatically…..

Unfortunately, a lot of people are not so lucky with the increasing unemployment numbers and financial hardships that many are going through. Even the value of the home, once thought to always increase at various rates, has fallen due to local foreclosures, among other things.

The Fed’s plan… should benefit many - but not all - borrowers.

For those in foreclosure, it may be too late. For those who have faithfully been paying their mortgage, but have delinquent credit cards and other obligations may have (will have) poor credit scores that could prevent a refinance.

Analysts expect rates will fall 0.25 to 0.5 percentage points as soon as Thursday.

On Wednesday, as I write this, the rates have decreased anywhere from .125% to .25% during the day. It would be foolish to think that the lenders would allow rates to drop too low. I say this for two reasons…

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Scott Swinford, your Northwest Indiana Loan Guy

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