The Mother of All Refinance Booms is Coming!

Posted on December 4, 2008
Filed Under Home Loans, Refinance | Leave a Comment

The Mother of All Refinance Booms is on it’s way… maybe.

We should know very soon if we will be seeing rates of 4.5% for a 30 year fixed rate loan.  If that happens it will help hundreds of thousands of homeowners struggling to make their payments if they are able to refinance into a much lower interest rate loan.

This news should be good for everyone who will qualify based on credit, loan to value and income guidelines.  Just think of how many thousands and thousands of adjustable rate mortgages are about to reset and the benefit this would be to those homeowners.

This of how many people will jump off the fence and lock in their chance to purchase a home whereas they could not previously afford one.  Or, how about those folks who need to refinance to pull cash out.

Financial lobbyists are requesting the Treasury Department to lower the interest rate to 4.5% and purchase mortgage backed securities from freddie mac and fannie mae.  This would be an unprecedented move and would spur a refinance boom across this country with a potentially tremendous impact on the housing industry.

The idea behind this is freeing up cash from homeowners who would have lower mortgage payments and more money left over to put back into the economy as well as impacting the housing market as new and used homes begin selling again.   By getting the housing market turned around it should have an overall positive impact on the economy as jobs would be created due to money pouring back into the cash registers.

Is this a long term solution?  Will this completely fix our economy?  No one really knows. The lending industry will not so quickly fall back into the past habits of sub-prime and easy credit so I don’t think we can look for what happened between 1998 and 2006 that led to the current housing bubble.

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