As discussed in this article from the New York Times, the government’s goal to eliminate Fannie Mae and Freddie Mac may end up making the 30 year mortgage a thing of the past. Because the government assumes the risk associated with the mortgages that have long been provided to the middle class by Fannie Mae and Freddie Mac, the recent mortgage crisis has resulted in a loss to the taxpayers of over $135 Million. With the economy in shaky condition, the politicians are all scrambling to remove this risk from the federal balance sheets, and that means more reliance on the market forces to provide mortgage money. The end result will most likely be mortgage scarcity, variable rate loans, higher loan fees, higher discount “points”, a demand for higher credit scores before people can get mortgages, and a lot of other results that all mean that the middle class person will find mortgages harder to get and more costly.
What does this mean to the average person? == It’s time to buy before they take away the ability to get a loan!