iLander
Ideal_Rock
- Joined
- May 23, 2010
- Messages
- 6,731
The 30 year fixed rate mortgage- the most affordable way to buy a house- is being phased out. Because the plan is to phase out Fannie Mae and Freddie Mac, and let the banks determine mortgage rates, a mortgage may cost you quite a bit more within 2 years.
Banks don't actually like a fixed rate for such a long term, they prefer adjustable rates, because when inflation kicks up interest rates, they make more money. They're expecting inflation and a big payday in a couple of years. They also don't like a long term, because it takes too long to get their money.
Phasing out Fannie and Freddie is considered by BOTH parties in Congress as a way to get the taxpayer off the hook for unpaid mortgage loans. The plan is to finish this within 2 years. Article: http://www.businessweek.com/ap/financialnews/D9LM4UGO1.htm http://www.nytimes.com/2011/03/04/business/04housing.html?pagewanted=2&ref=realestate
But to me, it's just a way of shifting the $$$ out of your tax bill and onto your mortgage bill.
Also, without Fannie and Freddie guaranteeing loans, the banks will be less likely to make a loan if you don't have a fabulous, A+++, credit score. The banks also won't want to make a loan unless you have a big down payment.
If you want to own a house someday, this directly affects your pocketbook.
My suggestion? Start looking and buying houses now, because this bill could add 20% to your mortgage bill later. Housing prices have stabilized in the best neighborhoods throughout the country (lower quality housing in "subprime" neighborhoods is still sliding and is dragging down the averages), and is starting to tick up in prime areas.
This might be the best time to buy a house that you'll ever have.
PS I'm not a realtor, just passing this on to all my friends, because frankly this is happening so quietly, that it scares me.
Banks don't actually like a fixed rate for such a long term, they prefer adjustable rates, because when inflation kicks up interest rates, they make more money. They're expecting inflation and a big payday in a couple of years. They also don't like a long term, because it takes too long to get their money.
Phasing out Fannie and Freddie is considered by BOTH parties in Congress as a way to get the taxpayer off the hook for unpaid mortgage loans. The plan is to finish this within 2 years. Article: http://www.businessweek.com/ap/financialnews/D9LM4UGO1.htm http://www.nytimes.com/2011/03/04/business/04housing.html?pagewanted=2&ref=realestate
But to me, it's just a way of shifting the $$$ out of your tax bill and onto your mortgage bill.
Also, without Fannie and Freddie guaranteeing loans, the banks will be less likely to make a loan if you don't have a fabulous, A+++, credit score. The banks also won't want to make a loan unless you have a big down payment.
If you want to own a house someday, this directly affects your pocketbook.
My suggestion? Start looking and buying houses now, because this bill could add 20% to your mortgage bill later. Housing prices have stabilized in the best neighborhoods throughout the country (lower quality housing in "subprime" neighborhoods is still sliding and is dragging down the averages), and is starting to tick up in prime areas.
This might be the best time to buy a house that you'll ever have.

PS I'm not a realtor, just passing this on to all my friends, because frankly this is happening so quietly, that it scares me.
