what's the reality.....

[Kristie]

if Fannie Mae and Freddie Mac go under? Anyone know?

[Amanda]

I've been reading a lot of articles on this topic. Nick and I are especially interested since we want to buy a house soon.

This is from one of the articles:

If Fannie and Freddie were to fail, analysts say mortgage rates would soar, mortgage lending would grind to a halt and borrowers of all kinds would pay higher rates — sinking the economy into an even deeper downturn.

That's why most analysts believe the government would never let it happen.

"Both Fannie Mae and Freddie Mac play such a vital role in the mortgage market," said Greg McBride, a senior financial analyst for Bankrate.com. "They are essentially too big to fail."
Government officials tried to shore up confidence in Fannie and Freddie. Sen. Chris Dodd, D-Conn., says there is no crisis and no bailout is necessary. "These institutions are in sound shape," he said. "The economics are fine in these institutions, and people need to know that."

[roz]

From tomorrow's Washington Post--a very interesting article:
Freddie Mac's Next Hurdle: Raise Cash - washingtonpost.com

[Mistress Trista]

Truthfully, of course they're going to say everything is fine. They don't want a panic after all. I guess the next few days will tell.

[roz]

Here's the latest plan:

US spells out Fannie-Freddie backstop plan - Yahoo! News

[Mistress Trista]

I heard the word 'depression' this morning on the news, if fannie or freddie goes under. It's getting damn scary out there.

[oppita]

This is maybe so much related to the original thread...but I ´m kind of wondering how average mortgage looks like in States...
In Spain, we are currently up in around 5% for variable rate and 6 % for fixed rate..and average mortgage is taken under let say 30 years ( although banks are currently offering 40 and 50 years..depending how old are you)...

We are also on house haunt...but thinking about waiting at least for 6 months..because right now, prices are actually getting back to normal.
( 60 square m new condo with one bedroom in Madrid= from 300 000 to 400 000 $).. I´m just dreading the moment to have a such huuuge mortgage:-)

[Amanda]

We were quote 6.75% but we only went to one mortgage guy and we haven't shopped around. We might put off our search and continue to rent for a while longer...

[TheWife]

Everything is so uncertain right now, I think it's a good idea to hold off on buying. People that bought houses in my neighborhood last year, and are trying to sell, are in big trouble because the value dropped about $10K from what they paid. On the other hand, if you think you'll be in a place for a LONG time, you may want to get in quick, you should be able to get a mortgage at 6% w/ good credit and a down payment on a full doc loan. If you know you are going to sit tight and you are pretty sure you can make the payment even if furloughs and other things come your way, then you may get a much better interest rate now than you will next year, and you should be able to get a pretty low price. I know people that are offering $40K below asking and the sellers are taking the deals, when last year they would have laughed at them and said no way.

[Amanda]

Originally Posted by TheWife

Everything is so uncertain right now, I think it's a good idea to hold off on buying. People that bought houses in my neighborhood last year, and are trying to sell, are in big trouble because the value dropped about $10K from what they paid. On the other hand, if you think you'll be in a place for a LONG time, you may want to get in quick, you should be able to get a mortgage at 6% w/ good credit and a down payment on a full doc loan. If you know you are going to sit tight and you are pretty sure you can make the payment even if furloughs and other things come your way, then you may get a much better interest rate now than you will next year, and you should be able to get a pretty low price. I know people that are offering $40K below asking and the sellers are taking the deals, when last year they would have laughed at them and said no way.

We found out that credit scores don't have a huge bearing on the rate you get. Nick and I are both in the 800's which is exceptional. Unfortunately we don't have a big down payment, unless I sell the AZ townhouse (which I'm not doing!). We have no idea how long we'll be in the PA house because I really want to have a baby here in PA before we move away. Long term we'll be heading to The Woodlands in TX where we get twice the house for half the money!

We found out the owners of the rental we're in want to sell by the end of the year. We may put an offer on it since heck, we save money on moving costs!