It’s Monday – and if you’re looking for a cheap mortgage to buy a new home, today should be a good day.
That’s because today the 50-basis point premium cut from the Federal Housing Administration (FHA) went into effect.
So with practically nothing down, unless you consider 3.5% down something, you can get a cheap loan through the FHA, one of those government agencies that was supposed to be getting out of that business.
But here’s a tip. Don’t be in a rush today – or tomorrow, for that matter.
That’s because Fannie Mae and Freddie Mac, the two giant government-sponsored enterprises (GSEs) responsible for magnifying the credit crisis and mortgage meltdown, are going to try and do the FHA one better.
Without getting into the mechanics of how to get a cheap mortgage with the government’s helping hand, my tip is to wait and see what Fannie and Freddie are going to do for you.
You can’t go directly to either of them, but your friendly local mortgage broker or crack bank mortgage dealer will set your “desktop” Fannie or Freddie virtually auto-approved (if it makes it past the desktop) application in motion.
Basically, take a look at them all. Got it? You can play the government’s mortgage genies off each other to get the lowest mortgage possible.
Don’t bother wasting your time going to “private” lenders that don’t rinse your application through a government hose, because they can’t compete with organized crime at the government level.
I’m going to keep this short, really short, because No. 1) it’s late (I’m late on account of having to go to a bunch of stores and stand in long lines to stock up for the big storm heading my way). And No. 2) the same old No. 2 we all know about is still going on.
So this won’t take long to explain.
After the financial crisis of 2007-’08, Fannie and Freddie were insolvent and the government bailed them out.
The FHA played a slightly different game, so while it was in trouble, it could still be propped up to keep mortgage money flowing.
The whole No. 2 talk about getting the government (taxpayers) out of the mortgage business to “normalize” the industry once and for all – that never happened. It never was going to happen.
Big banks, the ones with all the money, weren’t going to lend out mortgage money, because they were making too much risk-free money playing the quantitative-easing (QE) game with the U.S. Federal Reserve.
So the government said, “We have to do what we can. We have to lend if the banks aren’t lending.”
And so, F&F are F-ing big as ever, and the FHA is the biggest it’s ever been. And there is no real “private” mortgage money to speak of.
I have to go now and help some friends finish putting a tarp on their roof. They probably won’t be staying over here when the thing blows off (the winds are already blowing gusts up to 34 mph, heading to 50+ mph).
But I just wanted to let you know that if you don’t hear from me, because my house got blown away or the roof caves in from three feet of snow, don’t worry.
It’s a great time to buy a house at inflated prices (who says there’s no inflation?) and pay for it with a government-wrung loan.
Wrung from you taxpayers, so thank you.