On August 12, mortgage modification interest rates for Fannie Mae and Freddie Mac hit the lowest level ever — again. The rates have fallen steadily since the beginning of the year, and have earned the title of “lowest ever” twice since March. According to HousingWire, the latest reduction puts the standard rate for modifications at 3.5 percent, a 0.125 percent drop from the previous rate.
A Series of Reductions
The new rate will not apply to those who utilize the Home Affordable Modification Program, but rather to those who seek a standard modification through Freddie Mac or Fannie Mae. The standard interest rate introduced when the program first started in 2012 was 4.625 percent, which brings the latest rate more than a full percent lower. Since November 2015, the federal mortgage servicers have continuously brought forth historic rates. November’s rate marked the first time interest for standard modifications dropped below 4 percent. It rose to 4 percent again in December, but quickly fell again in February 2016. Since then, the rate has continued to fall.
How the Rates Affect Foreclosures
While low interest rates are like magic to the ears of prospective homebuyers, there are some possible repercussions which need to be kept in mind. When rates fall so significantly, people tend to jump at the chance to own a home, especially in today’s market when home values are at an all-time high. Increased homeownership in and of itself is a wonderful thing, but what happens is that many people choose homes which they can barely afford or worse, cannot afford at all. These kinds of actions can prove detrimental if the market changes and the value of homes drop, in which case foreclosures are extremely common.
A real estate attorney in West Palm Beach can advise you on the best course of action in today’s hot market. As a law firm that handles both real estate and foreclosure related cases, our team can ensure that you make the best decisions today to secure a strong financial future tomorrow. Call us today for a consultation with one of our experts.