Wednesday, September 5, 2012

Mortgage News for Fountain Hills Home Buyers

What goes down, must come up! Due to recent pricing changes by Freddie Mac and Fannie Mae, mortgage interest rates may tick upwards after October 1, 2012. The government-sponsored mortgage monoliths are increasing the fees they charge to mortgage lenders by 10 basis points, which will increase costs for home buyers.

The motive behind the change is to even the playing field for investors and private capital. Since the housing crisis began, private money fled the mortgage market, leaving Freddie and Fannie guaranteeing the majority of residential mortgages. Now that housing is in recovery, it makes sense to get private capital back into the game. This spreads around the risks of mortgage financing and should reduce the odds of tax-funded bailouts in the future.

Naturally, any increase in lending costs will be passed along to the borrower. According to Bloomberg, the increase of 10 basis points will cost home buyers $4,000 over the life of a $200,000 mortgage. It will be largely transparent to the home buyer, as the increase will be in the form of slightly higher interest rates.

Given that median home prices in Fountain Hills and the greater Phoenix-Scottsdale area are hovering just under $200,000, the mortgage pricing changes should not disrupt anyone's home buying plans. After all, residential mortgage interest is tax-deductible, and the monthly payment impact in Bloomberg's example would be about $11.

Where the concern comes in, is that this pricing change is independent of market factors or economic policies. We have enjoyed low mortgage interest rates and affordable home prices for so long, that it's easy to take these conditions for granted - but they won't last forever. Now is the time to explore the beautiful Fountain Hills homes we have on the market!

As your Accredited Buyer Representative, I provide tremendous experience and local expertise to guide you through our fast-changing Fountain Hills real estate market. If you are ready to enjoy the splendor of panoramic, desert views from your own home, let me show you how to get started. Contact me today and find out more about home buying in Fountain Hills!

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