Friday, July 15, 2011

GOODBYE ALREADY, FANNIE AND FREDDIE.


Farewell To Fannie and Freddie?

14JUL
While it may be just talk, the conversation to eliminate Fannie Mae and Freddie Mac is enough to get middle-income home buyers worried.
The two huge, government-run corporations that have kept costs low for middle-class homeowners by guaranteeing home loans paved the way for many; but the massive defaults by homeowners, along with plenty of accounting scandals at Fannie and Freddie, are costing us hundreds of billions of dollars.
While changes will probably be put in place, plans for Freddie and Fannie would almost certainly be phased in slowly.
However, the bigger picture is what happens to the low-cost path to owning your own home?
Today, 80% of all mortgages are fixed-rate, “conventional” loans. The government guarantees conventional mortgages and many are subsidized. So without the government guarantee, long-term, fixed-rate mortgages will still be around, but they’ll be higher priced, and there’d be less of them.
Best Time to get a Mortgage is Now
Some potential homebuyers are still waiting for the best deal but how much better could it get? Back in the 1920s potential homebuyers had to put 40% down on a home and mortgages had worse terms.
The typical mortgage loan of the 1920′s had a term of five years or less with no payments toward the principal until the loan matured and then a large balloon payment was due. However, instead of making the balloon payment, many of these loans were just rolled over and refinanced.
Look Familiar? Unemployed Workers, Foreclosures and Inept Programs to save the industry
When the FHA and Fannie Mae were created, the housing industry was in severe crisis:
• Two million construction workers had lost their jobs.
• Approximately one-half of urban houses with an outstanding mortgage were in default
• Terms were very difficult to meet for homebuyers seeking mortgages.
So, if Freddie Mac and Fannie Mae do bid adieu what will this all mean for Homebuyers?
These changes will decrease the supply of mortgage loans. Every credit rating will have to be stellar, fees will increase and a higher down-payment will be required from the borrower.
The bottom line is – anyone with dreams to become a homeowner should be forging a plan now because it’s going to get harder to land a mortgage, unless you can meet strict requirements including a big down payment.
About the Author:  Millie Gil has been a successful Licensed Real Estate agent for over 25 years in Florida.  Millie is Vice President of Bold Real EstateGroup, a boutique agency committed to concierge personalized service for discerning buyers, sellers and renters of residential and commercial properties.  For more information please forward your request to communityinfo@comcast.net
Servicing:  Port St. Lucie, Palm City, Jensen Beach, Stuart, Vero Beach,Hutchinson Island, Fort Pierce, Palm Beach, Jacksonville, Jacksonville Beach,Ponte Vedra BeachPalm CoastNeptune BeachAmelia Island, Atlantic Beach,Fernandina Beach, Saint Johns, Saint Augustine, Daytona Beach, Fleming Islandand New York real estate.

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