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As Loan Rates Fall, Borrowers Seek 'Taste of the Bailout Pie'
A half-renovated Victorian for sale in Los Angeles. This week's drop in mortgage rates has pushed some prospective buyers to act fast.
(By Damian Dovarganes -- Associated Press)
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Walker has been fretting about his mortgage since his twins -- a boy and girl -- were born in August. He has an adjustable-rate mortgage that is due to reset in two years and he's yearning for the predictability of a fixed-rate mortgage.
He's not worried about his credit score, but he's not so sure about the value of his home.
"I've got to admit, I have no idea what my home is worth," Walker said. "It's really hit or miss. I'm fearful about that."
Would-be home buyers face additional limitations. "The reason many people are not buying homes is not that the cost of mortgage financing has gone up, but because the availability of credit has gone down," Larson said. If you can't qualify because you don't have strong credit or a big enough down payment, he said, "it doesn't matter if rates are 7 percent or 3 percent."
None of this has discouraged Tom Powell of Winchester, who has been shopping for a home in Leesburg for six months.
The area was too expensive for Powell and his wife, Carmen, a few years ago. But with home prices dropping, he thinks it's now within reach.
Powell has made not-so-serious offers on homes in the past. But Tuesday, when he got word of the interest rate drop, he made a "very serious" offer on a four-bedroom house.
"We hope we can get something done before the rates kick back up again," Powell said. "We're moving fast.'
Others were able to benefit from the lower rates with no effort at all. Mark Fegani of OlympiaWest Mortgage Group in Vienna said his office has been calling clients whose loans are already in the pipeline to tell them about the lower rates.
"Those calls are euphoric," Fegani said. "They love that, like: 'Wow, I don't have to do anything?' "
In the past few months, rates have swung wildly, sometimes within hours. Following the government's takeover of Fannie Mae and Freddie Mac in early September, rates fell, then climbed again. Some loan officers say this drop may be just as fleeting, while others say it may last a while.
It's the uncertainty that frustrates lenders and borrowers alike.
"I've got a whole slew of people on my wall here who told me: 'Call when it gets to 5.5 percent,' " said Brian FitzGerald, executive vice president of Presidential Bank in Bethesda. "So now I'm calling them, and they say: 'Do you think it's going to get any lower?' "
