5 things to be thankful for this holiday season
Give thanks this holiday season
Despite another tough year for the housing market and the economy overall, it’s that time of year to forget about our struggles for a moment and focus on what we’re thankful for. The good news is, if you are planning to buy a home or refinance your mortgage this holiday season, you have several things for which to be to be thankful.
Cheap mortgage rates
The next few months will be critical ones for the housing market. As both homebuyers and refinancers gear up for what is bound to be a busy couple of months, mortgage rates will need to remain at current levels to foster buying and refinancing activity.
Luckily for both homebuyers and refinancers, mortgage rates remain at historic lows, and we expect them to remain that way through year’s end.
The fact that mortgage rates remain low and steady during the early months of HARP 2.0 is key. The expanded program desperately needs some early successes so that borrowers, both new homeowners and especially those who failed to previously get HARP refinances, are encouraged to come try to get the payment relief for which they have been waiting.
The recently announced expansion of the HARP program was music to underwater homeowners’ ears. Previous HARP rules put a limit on which underwater borrowers could participate in the refinance program.
Now with the underwater limits removed, as well as several other enhancements, including reduced fees, no appraisals, and reduced risk for lenders, millions more homeowners are expected to qualify under the expanded HARP refinance program, known as HARP 2.0.
The Federal Reserve
This time last year we said that, “No other government entity has been able to do more for the housing market than the Fed.” This year hasn’t been much different.
The Federal Reserve’s Operation Twist program has helped to keep the lid on mortgage rates. Economic ramifications from recent events overseas are one of the reasons why the Federal Reserve embarked on Operation Twist better than a month ago. Coupled with a new mortgage-backed securities money-recycling program, the effect so far seems to be keeping interest rates fairly stable amid what might have been wider swings.
Fannie Mae & Freddie Mac
Although Fannie Mae and Freddie Mac continue to struggle and remain under the control of the government, if they went out of business there would be virtually no mortgage market to speak of. If Fannie and Freddie ceased to exist, mortgage lending would grind to a screeching halt.
Love them or hate them, Fannie and Freddie have been a stabilizing force in some very rocky markets over the past couple of years.
The FHA program helps borrowers with small down payments and modest credit scores buy and refinance homes, and at fantastic rates. FHA loans only require a 3.5 percent down payment for borrowers with a credit score of 580 and above, but borrowers are more likely to be successful with a FICO score above 620. If you can get over that meager hurdle, current rates on FHA-backed loans are at 3.94 percent, well below conforming mortgage loans.
More help from HSH.com
Advantages of a FHA mortgage in 2017FHA loans have become more affordable in 2015, thanks to a drop in the annual mortgage insurance premium that the Federal Housing Administration charges.
Streamline Refinance Program to Replace HARPThe HARP refinance program for troubled or underwater homeowners will come to an end in 2017, but a new streamline refinance program will takes its place.
Flex Modification: An outline of HAMP's replacementThe Making Home Affordable Home Affordable Modification Program comes to an end on December 31, 2016, but is being replaced by a new Flex Modification program from Fannie Mae and Freddie Mac.
HSH.com’s yearly outlook: 2017 - Nine forecasts and outlooksAt the start of each year, HSH.com details the important factors we think are most likely to influence the mortgage and real estate markets in the coming year.
HSH.com on the latest move by the Federal ReserveThe Federal Reserve concluded a meeting today with no change to the federal funds rate and no changes to other monetary policy tools.