Ok, you’ve probably heard about the “Mortgage Crisis”…but what does that mean exactly? Up until recently the mortgage industry had been enjoying a freedom never before experienced. In greatly appreciating markets across the U.S., banks and mortgage companies offered various types of home financing options which required less income and asset verification, as well as reduced credit requirements for borrowers. The banks reasoned that they were somewhat protected against any losses due to the increasing value of the homes. These creative loans were comprised of adjustable rate mortgages, interest only, negative amortization, or no/low money down. So, when the ARM rate changed, or the negative amortization was called due, or a buyer went to sell and there was no equity in the home, borrowers found themselves in a pickle. Coupled with many markets now depreciating, which was not expected, it was a disaster!

So, what’s the good news? The Fed is stepping in to help folks in some of these “bad” loans refinance into government backed, fixed, low interest rate loans. These loans are also available for purchases, which will replace the subprime loans of the recent past. The underwriting guidelines are tightening and will be more common sense, preventing someone from getting into a home that they truly cannot afford. Rates remain at all time lows and are expected to drop further over the course of the next six months. And many folks in the mortgage and real estate industry who were unethical or practiced bad business have been turned out on their ears.

If you surround yourself with trusted professionals, it is a wonderful time to buy, sell, or refinance your home!