Buying a Home to Get More Expensive. Again.

I received this email from a buyer client last week:

Obama report on Fannie, Freddie plan may boost mortgage rates

The Obama administration wants to raise fees for borrowers and require larger down payments for home loans as part of a long-term effort to restructure the nation’s housing market. But it warned that these measures could boost mortgage rates and make it harder for home buyers to secure the 30-year fixed-rate mortgage, a mainstay of American home buying for decades.

My first reads/reactions?

– Cash buyers will be far better than borrowing buyers
Government’s not going to get out of the mortgage business.
Can’t live with ’em, can’t live without ’em
Calculated Risk likes Option 2

More at the WSJ:

“The cost of mortgages is probably going to go up, and homeownership is probably going to go down,” said Daniel Mudd, the former chief executive of Fannie Mae who is now CEO of Fortress Investment Group. “Both of those things arguably could be a good thing.”

The administration said it would support allowing maximum loan limits to fall to $625,500 from $729,750 as scheduled on Oct 1. It also said it would push to increase minimum down payments to 10% on loans eligible for purchase by Fannie and Freddie. Insurance premiums charged on new loans backed by the Federal Housing Administration could also go up.

As I tell anyone who asks, the best part of being an informed and active real estate agent is that every day brings new opportunities to learn. This is yet another one.

And not often do you read stories about any real estate market that starts with the line, If you’re into bottom-fishing, now may be the time to start trolling for real estate. At least that’s the advice of Michael Corbett, author of “Before You Buy: The Homebuyer’s Handbook for Today’s Market.”

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2 Comments

  1. Ditech Home Loans April 26, 2011 at 22:24

    The new mortgage reforms will definitely have a significant impact on the housing market because many prospective homeowners will not be able to meet the stringent income to mortgage payment ratio of 28% and heftier payments. As a result we will see more renters.

    Reply

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