Getting prequalified for a home loan is an essential first step in the buying process. Find out exactly how much home you can afford based on your income, debt, and other factors. It can also help you lock in a good interest rate and it puts you in a stronger bargaining position with the seller once you find the home you want.
Here’s what’s happening and what it means to home loan rates:
What is happening and why? To put it bluntly, the passage of the payroll tax cut extension is being funded via a mandate to Fannie Mae and Freddie Mac (the nation’s largest providers of mortgage money) to increase their guarantee fees or “g-fee’s” by at least 10 basis points on the rate. So rather than giving a par rate of 4.00%, for example, the par rate is now increased by at least 10 basis points, or approximately 4.10%. But as you probably know…home loan rates are priced and offered in .125% increments, so this will most likely impact the consumer by .125% in rate. Whether you agree or not on the politics behind this cost being passed along to folks who are taking out mortgages, the Congressional Budget Office recently estimated that the increase will ultimately pay for about $35.7 Billion of the cost of the payroll tax extension.
In This Issue Last Week in Review:Consumers are feeling good, but how good was last week’s news?Forecast for the Week:It’s a holiday shortened week, but the economic calendar is full. News on manufacturing, inflation, and housing is ahead.View: Wondering what the housing trends for 2012 will be? Check out 11 trends we saw in 2011. [...]
