With all of the negative press surrounding the housing and lending markets, I thought it was time to discuss a positive aspect of the lending market – FHA lending. The Federal Housing Administration (FHA) has long been offering these loans to consumers who have needed a little more help than borrowers who traditionally would fit into “agency” loans – either Fannie Mae or Freddie Mac.

FHA has become more attractive recently due to the fallout from the subprime crisis, and has opened doors for many consumers wanting to own a home. Here are a couple of program benefits of an FHA loan… flexible underwriting, higher ltv (loan to value) options – meaning lower down payments, competitive interest rates, guaranteed by FHA so they should be a viable option for years to come, allows for cosigners and allows “gift funds” to help with closing costs and down payments.

Flexible is a good word to describe the FHA program

So the fed did what we all thought they would do – lowering the Fed Funds Rate to 2% with the Consumer Prime Rate to follow down to 5% - with some positive reaction from the bond markets (we watch the 10 year treasury movement as an indicator of long term rate direction). Their message was fairly clear – “we think we’ve done enough for now so we’re going to digest things over the next couple of months”.

The Fed doesn’t meet again until June, so for now we’ll be watching quite a bit of economic data over the next six weeks or so. Things to look out for – how the economy is faring, unemployment, consumer confidence, housing starts, gas prices, etc.

And of course inflationary fears could be the other achilles heel – but from my perspective – I don’t think we’ve seen the last of the Fed cuts this year. Gas prices will continue to weigh on consumers and the economy – and that

Will This Be the Last Cut on The Fed’s Express Train?

The Federal Reserve meets again tomorrow to discuss the interest rate situation here in the US – it’s very likely (and the markets have already prepared) for a 25 basis point –or .25% reduction in interest rates. Long term rates (mortgage) will likely not be impacted too much as the market has already factored this in… but consumers will feel the benefit when their Home Equity, Credit Card and Auto rates get lowered again.

Here’s the real dilemma – nationally, the housing market is still neck high in mud – home prices and values are still dropping like bricks in many national markets – we’re still very fortunate here in the triangle, as it seems although houses are taking longer to sell these days, we’re not seeing the reductions in values to the extent that others are feeling nationwide. Consumer confidence levels released this morning continue

If you’re reading this, you’ve probably been absorbing all of the housing/mortgage data - delivered daily from the national media. Most of which can be very confusing and not necessarily applicable to homeowners here in the Triangle. Over the past few months, the housing picture has gotten so bad even Picasso wouldn’t want to paint it…

So… A fresh perspective has arrived for the Triangle reader when it comes to housing information. We’re going to be cutting through all of that oratory – all of housing media’s red tape – and simplifying information so that you can apply it to your home situation here in North Carolina.

For example – What does all of this financial data really mean to you the consumer when the Federal Reserve Bank – from here on out now known as “The Fed” – raises or lowers “rates”? And what exactly are these “rates” anyway - rates of interest