“Low” is the operative word
of the day.
According to the US Energy
Information Administration, U.S. weekly regular
gasoline retail prices averaged $2.78/gallon (gal) on December 1, the lowest
since October 4, 2010. U.S. regular gasoline retail prices are projected to
continue declining for the remainder of the year, and average $2.60/gal in
2015.
But wait, there’s more. Mortgage rates are
below 4% again, hovering around their lowest level since June 2013.They
started the year a little over 4.5 percent. A
15-year-loan is now averaging 3.1 percent as opposed to 3.9 percent for a
30-year loan, according to today’s Bankrate.com
averages
And
that’s not all. The Federal National Mortgage Association (“FNMA” or “Fannie Mae”), as of December 13, 2014,
and Federal Home Loan Mortgage Corporation (“FHLMC” or “Freddie Mac”) as of
March 23, 2015 will back
loans with 3 percent down payments for first-time home
buyers. Fannie Mae, Freddie Mac, the National Association of Realtors
(“NAR”) and other groups believe the “3% Down Payment Mortgages” could provide
a boost to first time home buyers with good credit, but little cash. Industry
surveys have shown that 40-45% of those who rent, do so because they cannot
afford a down payment.
Critics are concerned that the program
will just create more mortgage availability for customers who are more likely
to default. In a recent press release, Federal Housing Finance Agency Director
Mel Watt disagreed with the critics, stating that the program “provides a
responsible approach to improving access to credit while ensuring safe and
sound lending practices.”
Among the safeguards and other
requirements to qualify for a 3% Down Payment Loan are:
“First
Time Home Buyer” (Not having owned a home in the last 3 years)
·
“Primary
Residence” (Not for vacation homes or investment property)
·
Minimum
Credit Scores (FannieMae-620; Freddie Mac- 660)
·
Documentation
of income, assets and employment
·
Credit
Counseling
·
Private
Mortgage Insurance (but may be canceled once mortgage balance drops below 80%
of home’s value)
Whether or not the 3% Down Payment Loan opens the flood gates
for first time home buyers, or clutters foreclosure dockets, one thing is
clear: It is good time to borrow again. We may not see gasoline prices and
mortgage rates this low and incentives this high again, without a
time-traveling DeLorean.
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