Mortgage Points to Ponder
- This is a home-buyer's market. However, many people are concerned about jumping in and buying a home, wondering if the real estate market has hit bottom. It is a legitimate question but it shouldn’t cause paralysis. First, it’s impossible to time any market perfectly. Second, home prices have dropped to historic lows already. Unless you think you might have to move again in a short period of time, why not consider jumping in now? You’ll be able to weather a further decline as long as you’re reasonably sure you will not need to sell in the short term, say two to three years.
- There has not been an opportunity like this to be a first-time home buyer in a long
time. Homes are now less expensive after months of declining values. Indeed, it’s sad that so many people must sell for less or have had to give up their homes to foreclosure, but those homes need new residents. The communities they sit in need new owners.
- The new federal $8,000 tax credit for first time home buyers is a tremendous incentive for consumers who qualify. Moreover, months of declining real estate prices present what may be a historic, once-in-a-lifetime opportunity for this group of potential home buyers.
- Interest rates are at historic lows. While we can’t predict the direction of interest rates, even at somewhat higher rates of late, interest rates remain low from a historic perspective.
- There is plenty of money available for qualified mortgage borrowers at traditional banks: fixed rate and adjustable, as well as jumbo loans. You can trust these institutions and know from whom you’re borrowing. The bank can also provide counseling and will give it to you straight, telling you what you can afford and what you cannot. Don’t fret if you cannot afford to own a home yet. You won’t be getting into financial trouble and your bank can help.
- If you are not quite ready for a home mortgage, your local bank can set up a savings plan to help you get there. Moreover, if you have less-than-perfect credit, your local bank can guide you through the process of improving your credit worthiness.
- The threshold for what is considered a jumbo loan has been raised in most areas ($465,750 in the metropolitan Boston area). Now, more consumers who live in high-cost housing areas will be able to receive lower interest rates. In addition to having money to lend to qualified borrowers, your local bank will in many cases keep your mortgage in its own portfolio or service the loan internally. If you have any questions or problems, you can come into the bank and speak to someone you know.
What if you are currently in a troubled mortgage or you can’t refinance? Over the last several years, the Massachusetts Bankers Association has been working with Federal and state lawmakers and regulators to help to reduce the impact of the mortgage crisis, even though the local banking industry was not the cause.
To contact a mortgage relief counselor call: 1-800-995-HOPE (4673) or visit: www.makinghomesaffordable.gov.
You can also download a list of counseling agencies in Massachusetts by visiting the Division of Banks web site at: www.mass.gov/dob.