Jan/Feb 2010

There's only so much the government can do - and only for so long - to suppress mortgage rates for mortgage refinances and new home purchases.  We're at the 2 year mark for the prime rate being held so low.

In early February, there was talk of the Federal Reserve Bank raising the rate that it charges banks for emergency borrowing.  Many analysts have commented that this is the strongest step that the Fed has considered taking thus far in changing its policy of keeping money cheap so that it flows more freely through the economy.  Given the extraordinary measures that the Fed has gone through to maintain low interest rates, I fully expect upward adjustments to the prime rate in the late spring/early summer, which will have a gradual affect on interest rates for mortgages. 

Since higher rates will be coming, I suggest that you consider refinancing soon before it hits.  There are also several different government-sponsored programs to help qualifying homeowners refinance high-interest mortgages, as well as government-sponsored organizations to help troubled homeowners stay put.  If you know of someone that could benefit from these resources, please let them know. If you need further information, please contact me.

Sometime in March, the government will launch its latest initiative aimed at giving banks and lenders incentive to get distressed properties (such as short sales and bank-owned foreclosures) sold quickly and efficiently.  At the present, short sale properties can take many months to close and the process is often long, tedious and frustrating for all parties. 

One last reminder:  the tax credit bonus for first-time and move-up buyers will expire in June.  Buyers must have an accepted contract by April 30th that will close by June 30th to qualify for the credit.  Remember that when dealing with short sale properties, it may take several months from start to finish to get the purchase closed, so plan accordingly!