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Wednesday, August 10, 2011

US Credit Downgraded, Fed Holds the Line on Interest Rates

The S&P downgraded the US credit to AA+. It is a bump from the sterling AAA rating we used to enjoy and it could mean more costly mortgages. But the Fed said it will keep interest rates extraordinarily low until 2013. What does this mean? Well, it might turn out to be a wash. That is, the Fed might successfully counteract the effects of the S&P's downgrade from a consumer borrower's perspective. Mortgages may be getting harder to get as Fannie and Freddie feel a new pinch. Then, the programs available to teachers and other special mortgage programs may be more important. The goal will not be to get a great rate. Great rates will abound until 2013. The goal will simply to get a mortgage at all. Special teacher mortgage programs can help with availability. Search the site to see what your area offers.

Sunday, March 6, 2011

Is Teacher's Advantage Home Mortgage Loan Program worth it?

Home Finance of America offers a program called the Teacher's Advantage Home Mortgage Loan Program. The benefits seem pretty slim, so is ultimately worth it?

The benefits are a small fee reductions, a few $100 here a few $100 there, and the vague promise of future benefits, though no specifics are offered. So, the answer is, it is worth a few $100, but only if they are already offering the best rate. It would not make any sense to use them, get a worse rate and save a few dollars up front. The difference in rates would equal thousands of dollars over time. 

This program brings up an important theme in real estate deals or mortgage deals for teachers: go with the best rate. While this theme might seem obvious, it is natural and unfortunately common to be lured by "Free" deals or other gimmicks. If the gimmicks didn't work on someone, they wouldn't exist. Always calculate the numbers yourself and see what deal makes the most sense in the long run. 

While in general, the deals I highlight on this site are good deals, in some cases it makes sense to skip one deal to make the next one available. Or, more commonly, it makes sense to skip a deal to leave yourself in a more flexible position.

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