Are you worried that the failure for Congress to pass the Federal bailout will create you to have a tougher time to get a home or auto loan? Well, you should be. The credit crisis has banks less willing to lend money to each other, which ultimately means it will be harder for borrowers to get the credit they need. But that doesn’t mean it’s impossible to borrow money for those in good credit standing. From a consumer standpoint, credit hasn’t “dried up” says Lonestar’s Sr. Mortgage Broker Shon Lorg. “If you’re somebody with excellent credit, you’re in a good position to borrow money.”

Maybe so, but you’ll have to shop smart to find the cash you need at a price you can afford. The key to consumer credit markets now is this: standards are back. Lenders are no longer throwing money at people who can’t prove they can comfortably pay it back. That means that the first step in the borrowing process is making sure your credit report is squeaky clean and your credit score is a minimum of 680 and preferrably 720. You can get a credit report for at freecreditreport.com or annualcreditreport.com for approximately $16.00.
 
If there are problems,then contact your mortgage broker for a preferred credit repair company and start correcting your credit prior to make application for a loan.

Ultimately the bailout bill should and will go back through the house and will be passed. It may not be in it’s entire original form or be any where near $700 Billion dollars but a traunch of the bill will be approved to tampen down the fears of wallstreet. Consumer confidence must be strengthened to ensure mass panic doesn’t insue and employment tumbles. The big bailout won’t prevent recession, according to many economists, so consumers who don’t have emergency funds and worry about their job security should think thrice before taking on new obligations. so when does a home equity or new loan make sense? A new loan makes a lot of sense for someone seeking to refinance a bad loan, buy their first house at a nice price, or get that fuel-efficient car they’ve been planning on for a while. And though interest rates have moved up slightly during the recent tumultuous weeks in the market, today’s rates may seem low compared to what they are predictted to look like in the future. Most economists are predicting interest rates to gradually start climbing and possible hitting a pinnacle in 24 months at an estimated 8% or higher.

Still not sure if the time is right for you? Whether it’s a home or auto loan, here’s how to find that cash now. Mortgages Conventional borrowers seeking less than $417,000 )Fannie Mae/Freddie Mac limit) in most housing markets—will not have trouble finding loans. Expect to pony up a down payment of at least 5 percent (20 is better) and prove that you can cover all of your monthly debt payments with about 40 percent of your pre-tax income. Big borrowers and commerical loans is where most borrowers will run into problems in the coming months. In short the market needs to correct itself and this will either take two years or five years depending on how much governement intervention this is in the coming years.

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We’ve all heard at some time or the other how great cash out refinances are.   At first glance they seem to offer more than one benefit; they roll all your debt into one thus allowing you to manage what you owe more easily; they generate extra cash that you can use for other much-needed expenses; and they also gain you lower interest rates. More than a good deal, wouldn’t you say? Hold your horses though, before you jump to conclusions and conclude that mortgage refinances can solve all your financial problems. They can’t, not if you’re not aware of the writing on the wall and do not abide by it. Refinances come with their own pitfalls, and here are some of the most common ones.

• A home that reduces in value: Your refinance may have seemed like a great idea when you realized your home’s value had increased and that you could use the equity to pay off your other debts and get some cash for other expenses by opting for a cash out refinance. But this decision may turn out to be costly in hindsight when the markets drop and takes your home’s value down with them. You’ll find that you owe more that what you have in terms of the value of your home.
• Additional efforts and costs: A new mortgage does not come free – it’s got all the hassles that your old mortgage had, from the trouble you had finding a good mortgage broker to the pesky extra fees you had to pay in the form of closing costs, property taxes (that are due on a home with a higher value) and whatnots. You also have to spend a considerable amount of time and effort on completing the paperwork and documentation satisfactorily.
• Unscrupulous lenders: Most of us are not financial geniuses and hence put our trust in mortgage brokers and lenders to guide us as we weigh the pros and cons of refinancing our mortgage. Unfortunately, there are some mortgage lenders who engage in the practice called churning where they encourage homeowners to go for a refinance even though it’s not favorable to them. Finding a good and scrupulous lender is a key aspect that’s important to the success of a mortgage refinance.
• Erratic and irresponsible spending: A refinance is an opportunity to put past habits behind you and start out on a clean slate. You must control your spending and not rack up more debts as you go forward after you refinance your mortgage or you’re in danger of ending up in a situation worse than when you started. You’re not even back at square one, you’re out of the playing board altogether, for now you have a huge debt on your home and additional debts like those on your credit card. In fact, you’re in danger of losing your home if you can’t make your monthly payments on your mortgage. 

This article is contributed by Sarah Scrafford, who regularly writes on the topic of luxury homes for sale in Canada. She invites your questions, comments and freelancing job inquiries at her email address: sarah.scrafford25@gmail.com 

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Fannie Mae and Freddie Mac sound like an aging aunt and uncle, but these are both “government-sponsored enterprises”. This means that they are privately owned, but receive support from the Federal Governement, and assume some public responsibilities. The recent mortgage crisis and fallout from sub-prime lending has gotten both Freddie & Fannie in dangerous waters and verging on bankrupcy called for the assistance or bail-out to speak candidly from the Federal government. Both of course are two gigantic government-sponsored enterprises that rank among our 10 largest financial institutions in the United States. Combined Freddie and Fannie provide over three quarters of all home mortgages and cumulatively hold about $5.5 trillion in mortgages and mortgage guarantees. So you can only imagine what type of impact their bankrupcies would have on the US Economy.

Subsequently, they btoh became public companies, and their board and management ran them as such. But because they were created by Congress, bond investors came to believe that Congress would always honor the debt they’d issued. This implicit government guarantee means they’ve been able to borrow money for less even than AAA rates—despite the fact that their balance sheets would justify a much lower credit rating and thus higher interest charges. The relatively lower cost of their debt is passed through to borrowers in the form of lower interest rates. But about one third of that credit advantage, or about $10 billion a year, is retained for the benefit of the companies’ stockholders.

Fannie and Freddie have an equity cushion of slightly over $80 billion. It sounds like a lot, but not when compared with the roughly $5.5 trillion of mortgages they either own or guarantee. Even a small decline—say, 2 percent—of the value of those assets would be $110 billion and would wipe out the equity.

Is Fannie and Freddie to be blamed for our current mortgage crisis? No, not really as it is the subprime lenders that have triggered the crisis; the F&F guidelines require substantial higher down payments and carefully documented borrower income statements. It’s their balance sheet that’s the problem. The belief that the government would implicitly back their bonds enabled them to get by with too little equity capital to deal with a downturn. Now, a further loss of confidence in either Fannie or Freddie—that is, a belief that the government wouldn’t back them—would collapse their creditworthiness. Neither would be able to come up with anything like their current share of U.S. mortgages. Anybody with a room-temperature financial IQ knows these companies would be unable to raise the capital they need, either to cover their losses or to rebuild. Indeed, under all scenarios, there is a risk that they will be unable to roll over even the $463 billion of short-term debt they have on their books.

While most analyst still don’t see a true mortgage rebound occuring until early 2009, this Federal relief package should help stabilize the Texas home market and prevent further sliding of house prices across the state.  The long of the short of the Federal bailout is that it is a temporary fix that will only expand the life of this recession. To describe one economist opinion “It’s like giving a heroin addict a fix instead of rehabilitating him. It solves the short term problems, but does nothing to address the long term.”

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Nationally communities still reeling as foreclosure rates rise and as mortgage defaults and foreclosures continue to rise, the impact is spreading well beyond those who are losing their homes. Fortunately majority of Texas, especially the Austin & san Antonio markets, seem to not be feeling the sub-prime collapse as much as the rest of the nation. The Texas market diversed cities comprised of various industries, business climate and housing growth patterns points to Texas being less effected by the current housing market than any other state in the U.S. God Bless Texas!

In sub-divsions and communities across the nation, national news is reporting that local governments are coping with shrinking tax rolls, lenders are saddled with more foreclosed homes than they can sell and empty homes in many neighborhoods are being abandoned, stripped out, or even vandalized.

Like everything associated with the nation’s housing crisis, the fallout from foreclosures is very local, a fact confirmed by hundreds of e-mails from readers in msnbc.com’s Gut Check America. Some regions appear to have escaped relatively unscathed. But in hard-hit states like California, Arizona and Florida, readers report that some neighborhoods are becoming virtual ghost towns.

In Las Vegas, Nevada, “some subdivisions are three quarters vacant, and lots of homes have been abandoned by their owners, and many people are going into bankruptcy. Parts of California are reporting the same foreclosure rates.

Others report a different kind of isolation; many of those losing their home to foreclosure are reluctant to confide in family or friends until the process is complete. Some neighbors are unsure how to respond while others continue free lawn services on neighboring properties to do everything they can to hold property values.
In Mobile, Alabama, there are many reporting that neighborhoods was dotted with “growing weedy yards, windows with papers taped to them and broken. There are about five or six such homes in my post-World War II subdivision. And these are NOT expensive homes!”

With consumer confidence at a 15 year low there is little help on the horizon nationally, and Texas can only hope to ride out this mortgage crisis before feeling any severe reprecussions of the mortgage fallout. 

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Federal Reserve Chairman Ben Bernanke told Congress Thursday that America’s economic outlook has deteriorated and signaled that he was prepared to cut rates as needed to stimulate the econonmy.

Bernanke said the one-two punch of the housing and credit crises has put much pressure on our struggling economy. Hiring has slowed and people are likely to tighten their belts further, as they are pinched by high energy prices and watch the value of their homes.

Is a recession pending? The forecast for the economy has worsened in recent months, and the downside risks to growth have increased,” Bernanke said. “To date, the largest economic effects of the financial turmoil appear to have been on the housing market, which, as you know, has deteriorated significantly over the past two years or so.”

Unsold homes have piled up and foreclosures have climbed to record highs.
Given all the dangers facing the economy, the Fed “will act in a timely manner as needed to support growth and to provide adequate insurance against downside risks,” he said, indicating additional rate cuts were likely.

Bernanke appeared with Treasury Secretary Henry Paulson and Christopher Cox, chairman of the Security and Exchange Commission, amid increasing concerns that the economy may be drifting into recession.

The Federal Reserve, which started lowering a key interest rate in September, recently turned much more aggressive. Over the span of just eight days in January, it slashed rates by 1.25 percentage points — the biggest one-month rate reduction in a quarter-century. Economists and Wall Street investors believe the Fed will cut rates even more at its next meeting in March and probably again in April.

“Our economy is clearly in trouble,” said the committee’s chairman, Sen. Christopher Dodd, D-Conn. Restoring investor and consumer confidence, he said, is critical “if we are going to get back on our feet again.”

Bernanke said his forecast is for the economy to continue to endure a “period of sluggish growth.” That would be “followed by a somewhat stronger pace of growth starting later this year” as the effects of the Fed’s rate cuts and a newly enacted stimulus package begin to be felt. The $168 billion package, which includes rebates for people and tax breaks for businesses, was speedily passed by Congress last week and signed into law on Wednesday by President Bush. Analyst predict that will will continue to see Texas mortgage rates drop in the coming weeks and remain low for most of 2008.

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