The Federal Reserve minutes in mid-August narrowed speculation regarding how soon the Fed would begin "tapering" $85 billion in monthly bond purchases. Policy makers were "broadly comfortable" with the plan if the economy continues to improve. All told, as the economy improves, home loan rates may continue to adjust further.
Prior to the announcement, stock prices had been consolidating and stalling.
Locking in the Value
The mid-August Existing Home Sales report was also released, reaching a four-year high, as borrowers jump to lock-in deals before rates rise and leave them behind. Sales of existing homes rose six percent from the month prior and a whopping 17 percent from the previous year.
There were also some recent changes to the Federal Housing Administration's policies and how it will view a borrower's derogatory credit history. Allowances will now be made if borrowers experienced an "Economic Event" which resulted in a decrease of income by 20 percent or more for at least six months, which resulted in serious derogatory credit, including a short sale, foreclosure or bankruptcy. Additional underwriting guidelines, effective October 15, 2013, have been amended in the area of outstanding or prior judgments
or collections, including the exclusion of unresolved medical collections from the underwriting decision process.
This bodes well for borrowers who may have been seriously impacted in recent years by economic conditions and are again seeking home ownership with an FHA home loan.
Home loan rates are still at historic lows. And with the recent changes to FHA policies, it's still a great time to think about purchasing and refinancing.
If you have any questions about your personal situation, or would like to inquire about a home loan purchase or refinance application, please don't hesitate to contact Gary Umholtz at (707) 343-9510.