Mortgage Rate Alert: Federal Reserve Keeps Rates Low

On August 12, 2009, the Fed announced that once again it is keeping bank rates near zero, continuing the trend of historically low rates.  They stated that “economic activity is leveling out” and expressed optimism that there will be “a gradual resumption of sustainable growth.”

In addition, to provide support to mortgage lending and housing markets, the Federal Reserve will purchase up to $1.25 trillion of agency mortgage-backed securities by the end of the year.  They have committed they will “employ all available tools to promote economic recovery and to preserve price stability.”

This is outstanding news if you are in the market for a new home loan or have not yet joined the millions in refinancing your home loans to take advantage of these historically rates. 

The federal funds rate has stayed between 0% and 0.25% since December ‘08, resulting in the lowest mortgage rates we have seen in over 50 years, and this recent action is likely to extend these historically low rates at least in the short term. 

The modification and refinancing programs have helped many remain in their homes, but there are still millions who have not yet secured better rates.  Jared Bernstein, an economics adviser to vice president Biden states, "It's starting to reach more and more people, but we have to do better and make sure the program reaches the millions of folks we intended it to reach."

First-Time Home Buyers Get $8,000!

With prices plummeting and foreclosures spiking, it's a buyers' market if you’re one of the lucky ones that can enter the market.  And if you are a first-time home buyer (have not owned a home for 3 years) you still have time to take advantage of an $8,000 tax credit to buy your home.
Highlights of First Time Home Buyer Tax Credit:
  • The tax credit doesn't have to be repaid
  • The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $8,000
  • The credit is available for homes purchased on or after January 1, 2009 and before December 1, 2009
  • Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit.

Also if you live in California, you qualify for an especially generous $10,000 tax credit – and that’s for all homebuyers, not just first time homebuyers! So if you are in the market to refinance or get a new home or equity loan, now may be the time since these record low rates won’t last forever.   A low rate may save you thousands over the course of your loan.  Act now to find a lender and get free expert advice or mortgage quotes in your area!

Source: CNN.com, federalreserve.gov

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