Thanksgiving means more than turkeys, sweet potatoes, and
pumpkin pie. It's the time to express gratitude for all the
blessings in your life. Here are six things in the mortgage
industry to be grateful for.
Low mortgage rates
. The news media says it on a daily basis - mortgage rates are the
lowest that they've been in 50 years. Baby boomers, who were buying
their first homes in the 1980s, remember double-digit mortgage
rates, and know that current interest rates are the deal of a
lifetime. Anyone who has good credit can refinance or buy a new
home and be grateful for the opportunity to lock in an incredible
deal at a fixed rate for 30 years.
. Even though they were partially responsible for the mortgage
meltdown by enabling homeowners to purchase homes with no money
down, second mortgages are also serving as lifelines during this
period of financial challenges. Second mortgages come in two forms
- the fixed rate, fixed term home equity loan, and the
adjustable-rate home equity line of credit (HELOC). The latter has
served as an emergency fund for homeowners who needed quick cash
during this period when banks have been tightening their lending
The Federal Housing Administration (FHA)
. This government agency provides mortgage insurance to lenders
throughout the U.S., and enables borrowers who aren't flush in cash
or high in credit ratings to purchase homes.
Fannie Mae and Freddie Mac
. The mission of these government-chartered agencies is to provide
liquidity, stability, and affordability to the U.S. housing market.
They buy loans from approved mortgage sellers, thus providing more
cash for banks to continually fund mortgages.
The Veteran's Administration (VA)
. Military members who have served the country receive help in
becoming homeowners through the VA Loan program. Since these loans
have less stringent standards than traditional mortgages, eligible
veterans can buy a home with no money down, even if they wouldn't
qualify for a conventional mortgage.
. Homeowners have the ability to restructure their debt, or take
advantage of lower interest rates, through the process of a
mortgage refinance. Although closing fees can be steep, they can be
added to the mortgage balance. It's such a powerful tool, that many
homeowners are tempted to abuse the process by doing it over and
over again. But if you're careful, you can use it when you need it
to manage your debt.
. Many banks allow borrowers to prepay all or a part of their
mortgage without financial penalty. This allows homeowners to
either prepay their principal balance over the course off the loan,
shaving thousands of dollars off their total interest paid, or take
advantage of a mortgage refinance when interest rates are low.
This Thanksgiving, while you're feasting with friends and family
around a table flush with delicious edibles, take a minute to look
at your environment. Don't forget to give a huge thank you for the
mortgage that's helped keep the roof over the heads of your loved