Florida Mortgage Blog

April 17, 2010  

For those of us who love to follow the mortgage markets, the last two weeks have been most interesting and surely so will the next two. About two weeks ago our government reached its target of purchasing 1.25 trillion in American Mortgage Backed Securities. This program has does wonders for restoring stability, keeping rates low and allowing consumers to refinance, lowering payments $200-$500 each month. When we reached the end of the road of this purchase program nervousness set in and our rates jumped .25% in five days. Then the free market seemed to step in and we were helped with some good news for rates like Goldman Sachs being sued for fraud.

The next two weeks offer a similar test because we are nearing the end of the governments other brain child, the $8000 tax credit for first time home buyers. I have seen the positive effects of this program with more phone calls and inquiries to my web site but this stimulus could be tapped out. So many customers call looking for the money up front rather than a tax credit. Once the details are spelled out the conversation quickly comes to an end because few have adequate savings.

It will be interesting to see if the government chooses to extend the $8000 tax credit which I think it won’t and whether or not it will have an adverse effect on our housing recovery which I think it won’t.

Whenever I speak with future homeowners I stress that the most important thing is the job. Secondly we can always build credit or repair credit. Thirdly a right minded individual can always save 3.5% or get a gift of 5% for FHA. Recently, when Chairman Ben Bernanke talked about constraints to our economy, he pointed out that 44% of the unemployed have been unemployed for 6 months or more. Long term unemployment destroys savings, stops consumer spending and will slow mortgage applications up to two years after that person gains employment. All the tax incentives in the world will not help people without jobs.

Now that we have refinanced all of America and have helped stimulate existing homeowners, why don’t we redirect incentive programs like the $8000 tax credit, cash for clunkers or cash for appliances and turn it towards an up front $8000 student loan or job training credit.