Mortgage rates are low… but people see them beginning to rise. The fear of higher rates will force potential buyers to make purchases. This surge of sales could allow homebuilders to drastically beat earnings estimates in 2011. Optimism, is beginning to surge among those whom have been waiting, and waiting for a great entry point into the housing market.

Having looked at a mortgage rate chart dating back to the early 1900’s housing is the most affordable it’s ever been.

Overview of Home Affordability Modification Guidelines

Raleigh Homeowners take note of the loan modification guidelines. North Carolinians have not been impacted as much as other areas of the United States. With the current unemployment rate exceeding 11% in the state some owners are in distress. The Raleigh home market is recovering and we seem to have bottomed. Loan modification guidelines as below.

•Loans must have originated on or before January 1, 2000.
•Mortgages must be for a single-family residence with a loan balance no greater than $729,750.
•Loans can only be modified once beginning March 4, 2009 through December 31, 2012.
•Home cannot be vacant or condemned and must be a primary residence—not investor owned.
•Interest rate can be lowered to as low as 2 per cent and the term of the mortgage can be extended to a maximum of 40 years in order to maximize the reduction in loan payment.
•Borrowers will need to provide an “affidavit of financial hardship”, their most recent tax return, and two recent pay stubs.
•Service providers will be required to follow a sequence of steps that modify the loan in order to reduce the monthly loan payment to no more than 31% of gross monthly income.
•Homeowners who make their payments on time are eligible for up to $1,000 of principal reduction payments each year for up to five years

Many wonder what may transpire over the next few months or years with long term rates. Inevitably it’s inflate or die or worse stagflation. Much as the unwinding of Japan’s economy in the late 80’s we ponder if the US is heading down a similiar path.

The economic models however, are somewhat uncertain, however many theorists indicate were heading for inflation and it won’t be pretty. Mortgage Rates have bottomed and have headed higher for the past several weeks. If and when the Fed begins to raise short term rates long term will certainly follow. So, if you have an ARM about to reset don’t wait longer refinance ! It is said that rates are like a boat floating atop the sea of inflation as inflation rises, so will home loan rates. Call your lender to catch today’s still low loan rates.

Jeff D