July 05, 2011

Fannie Mae and Freddie Who?

Posted to Brad & Liz Sears, Buyers, First Time Home Buyers, Owners

Who are they and what are they doing with my mortgage?

We so often hear the names Fannie Mae and Freddie Mac in connection with real estate and home mortgages. Who are they? Do they have any effect on my mortgage? How do I find out if my current mortgage is owned by Fannie Mae or Freddie Mac?

1. Who is Fannie Mae?

In 1938, following the Great Depression, Franklin Delano Roosevelt developed a plan known as The New Deal. It included the National Housing Act. As an amendment to this act, the Federal National Mortgage Association was established. This new association was given the nick-name of Fannie Mae.

Fannie Mae was created to provide local banks with federal money to finance home mortgages in order to make home ownership available to more Americans. Through the years, Fannie Mae has been a giant presence in the financial history of our nation. Some of it good; enabling millions of people to buy a home and some of it not so good; mismanagement, illegal political contributions resulting in gigantic fines, takeovers… you get the picture. Fannie Mae itself has split and there have been many splinter groups. Freddie Mac is one of them.

2. Who is Freddie Mac?

Freddie Mac is the nick-name of the Federal Home Loan Mortgage Corporation formed in 1970. This corporation was created in order to provide a secondary mortgage market.

3. What do they do?

Fannie Mae and Freddie Mac buy loans from approved mortgage sellers for cash or a mortgage backed security. The ‘mortgage company’ that you deal with such as Wells Fargo or Bank of America is actually only the ‘go between’ for you and your mortgage owner who is quite likely Fannie Mae or Freddie Mac.

4. How do I find out if my mortgage is owned by Fannie Mae or Freddie Mac?

It’s quite simple to determine if your mortgage is owned by one of these entities. Each of them has provided an internet site that allows you to find out if they own your mortgage. All you have to do is provide your address information and indicate that you are authorized to access this information. For Fannie Mae, go to www.fanniemae.com/loanlookup/. For Freddie Mac, go to https://ww3.freddiemac.com/corporate/.

5. What impact do Fannie Mae and Freddie Mac have on the economy?

Fannie Mae and Freddie Mac are big guns in the group called the GSE. The GSE is Government-Sponsored Enterprise. In 2008, the status of the GSE was threatening collapse. This was a primary cause of our current economic conditions. If they failed, the amount of money that could be lent to home buyers would have plummeted which would have severely limited the number of home buyers. The housing crash would have been much worse. Both Fannie Mae and Freddie Mac were placed into conservatorship of the FHFA (Federal Housing Finance Agency) to help prevent this from happening again.

6. What does this all mean to me?

This market has created some amazing opportunities for buyers. In any investment, it makes sense to ‘buy what’s on sale.’ Those who are selling their homes need buyers. Ask The Sears Team how you can ‘cash in’ and benefit from current market trends. This in turn will help local sellers sell their homes.

For all your real estate needs, contact your local real estate expert!

Posted by:  Brad & Liz Sears





June 20, 2011

Is It Better to Rent or to Buy?

Posted to First Time Home Buyers, Neighborhood Market Trends, Steve Randall

In today’s economy, is it better to rent or to buy?

This argument of rent vs. buy has again come to the forefront in Utah as home prices continue to decline and new lending standards make it more difficult for new home owners to qualify for a mortgage. For those of us who currently own have made a home purchase, and especially for some Seniors Citizens who now are using the equity they have built in their homes over their life time for retirement, owning a home has been a life-saver. However, for those first-time buyers in the market, renting may be the best option in order to save for a down payment and closing costs.

In a recent Deseret News articles published June 14, 2011, Lois Collins reports that the highest barriers to owning a home were as follows:

  • Saving for a down payment and closing cost 31%
  • Job uncertainty 21%
  • Your Credit Score 16%
  • Inability to get a loan 11%
  • Your current debt 9%
  • Concern if the home price will drop more 8%

Almost every pundit says that now is the time to buy. If you want to own your own home, the stars are still aligned. If you are an investor, then buying now is great, but also many will not buy for the reasons above and they will still need a home to live in. Great time for investors too. It certainly makes sense that owning a home will be the largest single asset when retirement approaches and remains a great investment. Renting is a great option while you save or prepare to choose a location in which to buy a home.

For more information on renting vs. buying please at anytime for comparisons.

Posted by:  Steve Randall





November 03, 2009

First Time Home Buyers Now Enjoying Incentives! What is the future of Interest Rates?

Posted to First Time Home Buyers, Steve Randall

This week we have two clients that are closing on their homes in Layton and Syracuse. These first time home buyers will be enjoying the benefits of low interest rates and the $8,000 tax credit. During the last two weeks they have been able to lock their loan rates in the low 5% range and obtain seller concessions to cover most of their closing costs. The absorption rate, which measures the rate at which homes are selling, have temporarily changed from a Buyer’s market to a Seller’s market in some cities in Davis County. This is a result of buyer pressure to use the tax incentives and low interest rates before the tax credit is set to expire at the end of this month. Interest rates have returned to their lows of earlier this year.

In today’s Wall Street Journal, the future of interest rates are discussed with the general consensus that interest rates will increase in the future, reducing the affordability of new homes. In general, lower interest rates caused by the government’s backing of security based bonds will not last forever. There will be a raising of the interest rates in the months ahead even thought it will be slow and gradual. In the past, low interest rates have been followed by steeper increases in rates. High unemployment numbers and a very fragile economy will keep the Federal Reserve conservative in these increases.

The point is this, first time home buyers should not delay their purchases but should take advantage of the $8,000 tax credit, which is likely to be extended into 2010, and low interest rates while they last. Homes have never been more affordable than right now and waiting will only add to the risks on increased mortgage costs. For more information on how fast homes are selling in you specific neighborhood, please contact me directly.

Posted By: Steve Randall