Mortgage Wars

The word is that at some point today President Obama will, by executive order, direct the Federal Housing Administration to lower the monthly mortgage insurance premium on FHA mortgage loans to 0.8% from the current 1.35% to be effective by the end of this month.  On a $200,000 purchase with a maximum $193,000 loan the monthly cost savings to the borrower will be $80.42.  Assuming a current interest rate of 3.625% on a 3o year loan our example borrower could conceivably purchase a $216,000 house under the new guidelines and have the same net payment. This comes on the heals of last months announcement of the availability of 3% down conventional mortgage loan programs from Fannie Mae and Freddie Mac. Both moves are undoubtedly in response to the continuing downward trend of first time buyers as a percentage of the total buyer pool which the National Associations of Realtors reports is at its lowest level in 27 years.  It remains to be seen if these moves will provide anything close to the bump in activity that we saw in 2009 – 2010 based on the big first time home buyer tax credits. Its hard to imagine that it was less than two years ago that the FDIC and HUD were proposing, under the guidelines of the 2010 Dodd-Frank Act, a 20% down-payment requirement on qualified mortgage loans in the interest of promoting a more stable housing market.  With the pendulum now having swung back towards the looser mortgage lending standards of the mid 2000’s let’s hope that words bubble and foreclosure do not once again make their way into the headlines.  Remember whether buying or selling, moving up or downsizing, Lincoln or Omaha, the Vaccaros; Paul & Susan, stand ready to assist you, your family, friends and co-workers. Call or email us today! Lincoln (402)817-0355 , Omaha (402)577-0820, (Paul & Susan Vaccaro – CBSHome Real Estate 15950 W Dodge Road, Suite 200, Omaha, NE 68118 – Woods Bros Realty 3737 S 27th Street, Lincoln, NE 68502. 

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