The federal government has taken over Fannie Mae and Freddie Mac. Why is this important? Fannie Mae and Freddie Mac currently finance over two-thirds of all loans originated in the U.S. Capital reserves had become dangerously low at both companies, endangering Fannie's and Freddie's ability to buy loans on the secondary mortgage market - and ensure the availability of loans. For those who want to learn more, NPR does a good job of explaining the Fannie and Freddie rescue program here.
The mortgage market has responded favorably to the rescue plan with lower rates. If you're thinking of buying your first home, you now have another good reason to start your home-buying plan right now. We recently covered the basics of the $7,500 first-time homebuyer tax credit. We also covered how sellers are more flexible this time of year when supply is high and demand is low.
You can start your home-buying plan by consulting with your lender. Take some time to learn about the financial implications of owning a home, how much home you can comfortably afford, and the mortgage application process. Once you and your lender have established a sound financing plan, then you'll have the foundation you need to begin the process of finding the right home for you.
For more information on the home-buying process, visit the Buying Real Estate page at DaneCountyMarket.com.
Tuesday, September 9, 2008
Mortgage rates fall upon announcement of Fannie Mae and Freddie Mac rescue plan
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2 comments:
Somebody says it's not so perfect your government took care of F.M & F.M. These institutions are ill, they have been doing wrong steps for a long time and now they are saved - by using your taxes. And also interest rate "magic" is dangerous. I believe low interest rates back in 2001 are those to blame for today's crisis. As a Toronto realtor I am a bit surprised, why Bank of Canada is still holding its rate despite falling sales on the market, however I believe if something is slowing down, it shouldn't be artificially obstructed!
Regards,
Jill
Hi Jill, I find it hard to disagree with your comments on Fannie and Freddie. They are certainly being bailed out at the expense of the U.S. taxpayer. For the last several years they have been buying loans that never should have been made in the first place. I think it's the change in lending standards which brought us to the point more so than low interest rates. Now that we are where we are, I think the best option was to save Fannie and Freddie. Otherwise the mortgage market may have dried up completely. Just my two cents! Dan.
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