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The Federal Reserve Bank is poised to pull the money off the table that has helped sustain the ailing real estate sector, $1.25 trillion to be exact, by March 31, 2010.
The Federal Reserve is currently winding down its purchase program of Mortgage Backed Securities that has been responsible for the recent streak of the lowest mortgage interest rates on record.
If you are considering a mortgage loan and you are on the fence about when to act, now could be the right time. Rates are not likely to be this low for much longer.
New mortgage documentation that took effect January 1st is aimed at helping consumers fully understand mortgage loan terms. The new good faith estimate format allows borrowers to more easily compare home mortgage loans offered between lenders and loan programs and encourages borrowers to comparison shop for a variety of required closing services instead of accepting a lender’s suggestions.
The new Good Faith Estimate ultimately gives borrowers an estimate of their settlement charges and loan terms. The first page shows how long the information is valid for, along with a summary of the loan characteristics. The second page summarizes the origination costs and settlement charges. The third page shows which charges can increase at settlement, as well as which ones can increase by only 10%. Read more about the new Good Faith Estimate.
According to CNNMoney.com, time is running out if you want to refinance your mortgage into a home loan with an interest rate below 5%. Your window of opportunity is closing fast. During the week of Jan. 7, the average 30-year, fixed-rate loan closed at 5.09%, according to mortgage giant Freddie Mac. That is significantly higher than the 4.71% it averaged at the beginning of the month, and experts say rates are heading higher.
A big reason for the climb is that a government program that has kept rates very low is coming to a close. The Federal Reserve has been purchasing mortgage-backed securities since early 2009, buying up a whopping $1.25 trillion worth.
But the Fed’s program lapses on March 31, which leaves the buying to private investors, who will almost surely demand higher rates. The Fed has already been slowing its purchasing, and that has corresponded with the recent rate increases. Read More
