The Recession and Your Home Mortgage
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by: marciafreeman
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Word Count: 392
As inauguration festivities lingered in the air, many were hopeful that the new President would get the country back on track. People let go of their despair over the current economic woes and embraced the celebration in various ways. President Obama carries the weight of the state of the economy into week two of his administration. Unemployment rates are on the rise and families continue to struggle to make ends meet. The new administration not only pledges to rework the $700B Troubled Asset Relief Program offered to the financial sector, but also to help families and small businesses. It plans to offer low home mortgage rates in the hopes that it will help boost the ailing housing market. The promise of continued low home mortgage interest rates is the one bright light for consumers in this economic downturn. For those with good credit, now is the time to secure the lowest interest rates on a home mortgage the country has seen since the 1970s.
As the country greeted the New Year, the Fed maintained extremely low rates. When those rates are low, it means interest rates for consumer loans and mortgages will also be low. In spite of home mortgage rate cuts, banks have adopted much more restrictive lending practices. Lending institutions and banks do not want risky borrowers. They are requiring higher credit scores, bigger down payments and cleaner credit histories. That means that fewer consumers are eligible for the lowest home mortgage rates than were just a short year ago. Current homeowners who are considering refinancing a home mortgage will have to meet stricter guidelines too. In many areas of the country, homeowners have lost equity from a drop in values and are struggling to lower their home mortgage payments. That makes refinancing extremely difficult, since banks are now requiring that consumers have higher percentages of equity to qualify.
Many predict that inflation will make interest rates slowly creep back up. Consumers who have good credit scores and solid credit reports are not taking any chances and are seizing the opportunity to secure low home mortgage rates, particularly for refinancing. The savings accrued by lower monthly home mortgage payments can be enough to help many consumers weather the economic storm.
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