Todays interest rates are still extremely low compared to interest rates of 10 years ago. Depending on where you live, you can look into a State Bond program. If you review my other posting, I keep bringing up State Bond program because they are the best program for low to moderate income families and first time home buyers. They are normally lower than traditional mortgage rates because they are subsidized by state issued bonds. There is MI involved, however if you look at the MI payment versus the 2ND loan payment, you might be surprised at the over all payment between the two. The more money you are able to put down, the cheaper your financing will cost you. Long Answer: In the early half ot the past century, buying a home was very difficult for the average American.

Lenders did not want to lend that much money to someone that may not pay them back.

That way if the borrower failed to pay as agreed, the lender could still get his money back from the property by selling it after foreclosure. 40,000 for a small home. The American government identified this problem and created a solution. FHA and get insurance that their loan would not default. The FHA is one of the best organized agencies in the United States Government. That means no tax dollars go to support this agency. The agency actually makes money for the United States Government. They charge borrowers for their services. FHA loan will pay an FHA fee with their mortgage. The borrower of course does not have to pay it up front, but it is included in their loan. They pay a funding fee at closing, then they also pay a monthly fee with their mortgage. With these fees and the profits from selling HUD homes the FHA makes money. Most PMI companies do not charge the initial funding fee, making many PMI loans sometimes cheaper than FHA loans. 200 a month depending on your credit rating. This is in addition to the Principal and Interest on your loan. 87 a month on that size mortgage. Nearly all lenders offer a My Community Mortgage, but you have to qualify for the program being under a certain median income for your state.

To avoid paying the FHA fees or the PMI fees, you can get two mortgages. This kind of loan has no mortgage insurance, but there still is an extra cost. The interest rate on your second mortgage will be much higher than that of your first mortgage. Lenders will pay your mortgage insurance for you. They, of course, charge a higher interest rate but then they will pay your mortgage insurance for you so you only have one loan and no mortgage insurance. Lenders like to see 2 years of rental history, and the history will be verified to see if you have paid on time. If you just got our of college, than they need a college transcript.

Can you afford a home. Here are some things to consider. When you Decide to buy, decide on how much you want to spend, if you want to escrow the taxes and insurance. Now you decided on the price range you are looking into. Just depends on your credit. It is up the Lender what they offer you. If you shop, your credit is pulled and that is considered a soft pull, for a 30 day period. Just like shopping for a auto, it is good for 30 days. Department Charge Card, Gasoline Card or make any major purchases, like a auto, etc. This will pull your credit down. The TIL will tell you the terms, rate associated with your loan. Cost associated with your loan. The seller can help you with up to 6 percent of closing cost.

So the title fee, lender fees, underwriting fees, flood cert, etc can be paid for my the seller. Check your good faith estimate that I mentioned above. Mortgage rates are more flexible today than ever, and the tax laws favor home ownership like no other tax shelter. Although no one can say if a specific home will appreciate in value, generally speaking, the odds favor the homeowner. Numerous unique tax advantages are available to homeowners. The thousands of dollars you pay in mortgage interest is deductible. Basement, check the foundation for cracks or water marks. Flush toilet and turn on both hot and cold water faucets at the same time to test. Ask what type pipes are installed and their age. If applicable, ask when the septic system was last inspected and cleaned. Stand near the tank to detect odor or soggy ground.

Determine if proper insulation has been used. Be alert for small accumulation of sawdust in the basement. This might indicate an insect problem. These are unconnected events, as painful as it is, except in a political sense.

The Fed deals primarily in short term interest rates. Those interest rates reflect only a narrow segment of the credit markets, albeit one of the most active. Mortgage interest rates are part of the long term market and while it is not immune to FED policy, those rates are much stickier and change much more slowly. Adjustable interest rate mortgages are a different case. Home Mortgage rates have been much higher than this in the past, well into the double digits at one point during the Volcker regime. You were fortunate to see a 10 percent rate.

The Bear didnt do home loans or anything else that affected ordinary people. Your argument on lower rates causing inflation and a weaker dollar are to a considerable degree incorrect as a cause of the problem today. But there is a linkage which Ill explain. The dollar has been dropping like a rock since early in the Bush administration. Fed rate policy and resulted by a deliberate policy of a weak dollar, which is traditional for modern era Republican administrations which have generated enormous deficits beginning with Richard Nixon. Nixon broke the fixed currency policy of Bretton Woods and floated the dollar rather than admit that his administration had destroyed its value.

He had to abolish the gold standard entirely because the world was awash in dollars. In order to finance the staggering expense of his war in Iraq, Bush has been resorting to selling US debt to other countries, most notably China. Fed to accommodate Bush has allowed M3, which is no longer officially calculated to go up like a rocket. Wars only have two certainties. Given that inflation is a form of taxation, its already here.

Deferred debt is also a tax.

Almost none of this has anything to do with our troops in Iraq. Theyre just getting screwed another way.

Bush pursued was a bit like the guy whos running out of gas who speeds up so hell get to the gas station sooner. The faster he goes, the bigger a leak becomes. What were looking at now is a real mess. Were been stimulating the economy with borrowed money.

Thats called stagflation and its a phenomena that happens rarely. Nixon was the last president to get us into that. There was concern that we would have difficulty getting out of it. When stagflation occurs,the Feds normal tools are less effective. The concern is that they could be completely neutered. That can happen if actual interest rates go below zero percent. Traditional stimulus doesnt work, people are already being paid to take money. The liquidity trap occurs in deflationary times which we havent seen in this mess. But there is a liquidity crisis. All those bad home loans and the collapse of housing prices in too many places is undercutting the American economy. This could get much worse before it gets better which is why youre seeing some panicked Washington officials. What is funny is that Bush has taken a conventional Keynesian approach in the past few weeks to deal with the slump, but with goodies for his friends.

The newest package of regulation and concern is long overdue. The irony is that the New Deal established a special home loan agency deal with a very similar liquidity problem in 1933. People were losing their homes and so many did that it destroyed the credit markets. FDR proposed a special organization which took over most of the troubled loans, wrote off some and renegotiated others. The deal in effect was that he saved the banks from themselves and saved the homes for homeowners being destroyed by incoherent credit markets. Oddly enough, the agency made a profit from the loans banks considered uncollectible. To sum up, we have had inflation and a collapsing dollar, but it previously was due entirely to Bush economic policies. Bernanke is deliberately taking a chance in lower interest rates at a time inflation is picking up and the dollar is reaching new lows.

This administration is not only incompetent.

It is a complete and utter disaster and we can only hope to find our way back to a fiscally sound government. It was only 8 years ago that we had what Greenspan called the Goldilocks economy and our biggest concern was possible deflation. Its going to destroy businesses like mine and thats just going to make it worse.