If you have a FICO over 680, and your mortgage needs are less then $417,000, and you have document-able income, then you are in perfect shape to take advantage of dropping interest rates. Yes, rates are falling and they maybe going down even further. Thanks to the Labor report today, the Federal Reserve is no longer pretending that all is well with our economy. Despite what Lockert said this last week, the overall economy is in decline due to the ailing real estate market, and with the massive layoffs in the mortgage industry, this bad news will continue for some time.
So the Federal Reserve is combating it the only way they know how, and that's reduce rates! It's good for borrowers who normally can qualify for "vanilla" loans. What about sub-prime or alternative loans? The news is not so good for these loans. Perhaps a loosening of credit markets, which normally occur after the fed lowers rates, will stimulate the alt-A market, but don't bet on it.
One area also that will probably become hot is the FHA market. Our FHA resident expert at our company told us today that further modifications could be made to the new FHA program to bailout ARM and Option-ARM mortgagee's, and FHA is also thinking of raising maximum FHA limits in many regions. This of course will fuel new loan production and should help some of these ailing companies limp through the next year and a half.
So if your looking at buying now, perhaps it's finally time to jump back in the market and get yourself a great deal!
Example...One of our favorite wholesalers is offering 1.25 YSP for 6.25%, today it's paying 2.00 YSP for 6.25%. Don't be surprised to see mortgage companies offering 5.75% with 30 year terms.
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