The improvement of housing prices, coupled with steady low interest rates, is allowing delinquent homeowners to sell out of their mortgages and avoid foreclosure. Following the infamous housing bust of 2007, millions of families were hit hard due to unemployment rates skyrocketing and the amount of jobs available being nearly nonexistent. After years of housing market being jammed with foreclosed properties that forced down selling prices, things finally seem to be improving.
Proof of an upturn in the industry can be found within the mortgage monarchy. Fannie Mae reportedly made a profit of over 10 billion dollars in the second quarter, doubling the profit it made only one year ago. This is a much different scenario for the institute who had to have a government funded bailout of billions of dollars just to stay in business only 5 years ago. Fannie Mae predicts a lucrative future and the ability to pay taxes again very soon. “We had a strong second quarter,” stated their CEO “By Sept. 30 we will have paid $105 billion in dividends to the Treasury.”
With record low interest rates and a competitive housing market, home buyers are taking advantage and making that switch from rent to own. However, lenders are much more cautious with who they approve for these rates and loans. Only a potential home buyer with a stellar credit rating can hope to be approved of rates as low as 4.4% fixed on 30 year mortgages and 3.43% fixed on 15 year mortgages.
Although unemployment is down, the crippled economy is still only recovering at a slow pace. We hope that the market will stay profitable for buyers, but as we’ve learned the hard way, things can change at the drop of a hat. Now would be an opportune time to take advantage of these historically low rates.