The biggest news this week is all about the housing market, as the Fed announced plans to keep interest rates low — a move that could keep mortgage rates low in tandem.
After signaling earlier this year that the Federal Reserve would being to unwind its current stimulus efforts, Chairman Ben Bernanke said Wednesday that plans have changed.
The Fed now plans to continue its policies of low interest rates and quantitative easing for the foreseeable future, and may even continue through January, when Bernanke plans to step down and a new Fed chair will need to be appointed.
“We have been overoptimistic,” Bernanke said Wednesday. The Fed, he said, is “avoiding a tightening until we can be comfortable that the economy is in fact growing the way that we want it to be growing.”
At the top of the Reserve’s mind is the possible budget battle facing Congress, as well as rapidly increasing mortgage rates.
Those new homeowners that were able to take advantage of record-low interest rates may now be wondering if they can take cash out of their home to make repairs or improvements. In fact, they pull cash out almost immediately, as mortgage professional Scott Sheldon explains.
The move is called a cash-out refinance and it allows you to take the equity you already have in your home, i.e. your down payment and any other payments to the principal you have already made. There are some restrictions as far as how much equity you can take out and whether you actually can qualify for this type of refinance based on your relationship with the previous owner. Read the article for full details.
While some Americans were able to buy at low rates, others are itching to jump into a hot market right now. However, bad credit could be holding them back from qualifying for a mortgage.
As we explain, old collection accounts on your credit report can be a black mark to lenders, but they don’t have to be. Most lenders will want you to resolve any unpaid collection accounts, but it ultimately comes down to making sure your credit score, even with the collections, is high enough to meet lending standards.