Over the past year, there have been numerous failures in the banking and lending industries. Even the government tried with it's own feeble attempts to help borrowers with several failed programs such as Hope Now, FHASelect and the up and coming Recovery Act of 2008, But who would have thought that the government taking over Fannie Mae and Freddie Mac would actually be the first thing to help borrowers to begin to refinance and purchase a new home.
Since the takeover of Fannie and Freddie, interest rates have dropped near;y 3/4% in some instances. Today you can find, depending on your credit score, debt-to-income ratio and LTV, a 30 year fixed loan for around 5.50% That's nearly a 7/8% drop from rates just 3 weeks ago! A 15 year fixed rate for 5.25%.
Does this mean the housing market will now turn around? Hardly. No one knows what is going to happen in the future and in fact how well the governemnt will run Fannie and Freddie. Along with that, there are still billions of dollars worth of option arm loans that will be resetting in 2009 and 2010. If rates do not continue to stay steady or even go lower, we will be right back where we were before the takeover of Fannie and Freddie. To answer my own question about whether the takeover will help? Who knows, but it is a start.
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