New House Risk Benefits

CheckPoint: A New House – Risks and Benefits

The Federal Reserve is the governmental agency that the has the potentially the most control over what affects the housing market.   The Fed makes the decisions regarding the rise and fall of the interest rates, by adjusting the banking discount rate.   If the Fed lower the discount rate, the rate at which banks can borrow from the Fed, this can cause the banking industry to lower the rate it charges consumers.   The decline in consumer interest rate makes it more desirable and affordable for consumers to enter in the housing market.   During this most recent economic crisis involving the banking industry and home mortgages the United States Department of Treasury provided a way that made it more affordable for consumers. Then there was the Home Affordable Refinance program for Freddie Mac and Fannie Mae mortgagee.   This program allowed those homeowners to refinance at much lower interest rate or obtain a fixed rate mortgage verse an adjustable rate.

There are many items to take into consideration when evaluating the purchase of a home.   After reviewing several items that include the National Outlook - A monthly U.S. Housing Overview and   the Housing and Interest Rate Forecast   provided by the National Association of Home Builders, my recommendation is to wait through the end of 2010 calendar year before purchasing a home.   This recommendation is based on the weakened United States and Global economy and takes into account that projections indicate that a turn around in the economy is like to beginning in early 2011.   At the beginning of the 2011 calendar year re-evaluate the circumstances and determine if the United States and the Global economy have begun enough of a turn around to warrant the long-term investment of purchasing a house.