August is going to be crucial month for the real estate business in the country. Many reports that provide key indicators for the upward or downward trends in the mortgage rates are due in this month. That makes mortgage rates August 2008 special and they are going to be in news for quite some time. Reports that will be affecting these mortgage rates include
• Jobs Report
• Retail Sales
• PPI Report
• CPI Report
• Existing Home Sales
• New Home Sales
Before we talk about these reports let me explain to you legislation that president Bush signed into law, last month. Aim of this legislation is to provide a booster to housing market. It also aims at providing much needed aid to Fannie Mae as well as Freddie Mac. It will take some time to sort out the details and implications of this legislation. Salient features of the legislation are:
There is a substantial increase in FHA Lending. Now FHA will be able to insure to the tune of $300 billion. Scheme will be for 30 year fixed rate mortgage. Foreclosure may result in the loss of primary residence of the owner. Catch is that the current lender should agree for writing down loan balance equal to the 90 percent of the present appraisal value. Government will support this program from the fee from Fannie and Freddie.
Another welcome news is the increase in conforming loan size. Conforming loan limit has been increased to 115 percent of the median home price at the local level. Its limit has been raised up to $625,000. Implication is, many people will be able to purchase or refinance their homes with out the help of Jumbo mortgage money option. It will result in savings as jumbo rates are at present 1.5 to 2 percent higher.
New regulator will be established for Fannie and Freddie. New regulator will have greater say in the functioning of these enterprises.
Seller paid down payment assistance program will be terminated. Some loan programs used to have option that allowed sellers to help by contributing in the down payment on behalf of the buyer.
There is an increase in the minimum down payment for FHA. Earlier this down payment stood at 3.0 percent. It has been increased and now onwards it will be 3.5 percent.
There is good news for first time home buyers. Now onwards they will be able to claim tax refunds. Limit for the tax refund will be $7,500. It will be like an interest free loan, which will be paid back in equal installments over the time of 15 years.
Another interesting news is that States and Local Governments will be provided with grants. These grants will be used to buy foreclosed homes in their areas.
As more and more reports become public, we will inform you about the implications of those reports. Do visit our site for latest on Mortgage Rates August 2008
