We have to be aware of what is called the affordability index-people’s ability to buy homes.  The affordability index is made up of three parts – price, income, and rates.  We have to stabilize foreclosures to keep prices from falling further and to keep the inventory from building further.  Lenders are doing more and more modifications which are helping to stem the tide and we are seeing some small increases in value.  We can’t increase people’s income, but economic circumstances have dropped rates really low.  Rates have dropped to 4.375% (apr 4.417% for a $200,000 mortgage at 80% loan to value).  Is that not incredible?

At  4.375% you can qualify for a mortgage 12% higher than you can at 5.375%-say from $353,000 to $396,000.  Don’t forget FNMA and FHLMC have special refinance programs for people who may owe as much as their house is worth.  If you have a second and your mortgage is with FHLMC they have no cap on the combined loan to value.  It could be 150%.  Even if you have a low rate you could refinance even lower, keep making the same payments and reduce your principal and mortgage term faster. Ask someone to analyze it for you.

What we all need to focus on in real estate is turning around the fear.  If we turn around the fear we will turn around the marketplace.  Fannie Mae actually started off as part of the government and then was spun off to become what is called a GSE or government sponsored entity.  Bringing it and its wayward brother Freddie Mac back home is a good thing—back to basics.  Mortgage rates went down when this happened.  The mortgage credit spigot has tightened but it hasn’t turned off, it is back to basics here too.

If you have been riding the fence about what to do, now really is the time to buy, low rates and low prices.  When the stock market doesn’t do well, investors start putting their money back into real estate.  Don’t wait too long, because the investors will beat you to it and prices will begin to rise—and in fact are.  And if you have problems, you are not alone there is help out there for you.  Don’t become a statistic.  Reach out.   Let’s stabilize the marketplace, and all we’ll have to fear is fear itself.