It was August 2007 when rates on jumbo loans disconnected from reality and skyrocketed. This was the beginning of the credit crisis, which to some extent has touched everybody on planet earth.
Since then we have been through trillion dollar bailouts, a near collapse of the banking and automotive industries, a stock market in freefall and house prices not too far behind. Stocks have recovered and in some places housing is showing some life as well. Most economic pundits believe we are out of the woods but caution that things could become worse before they get better.
The good news is that through actions from the Federal Reserve interest rates are historically very low, presenting an opportunity for many homeowners to receive a self-funded bailout by dramatically reducing the interest rate on their mortgage. The Fed continues to purchase $40 billion per month of mortgage-backed securities in an effort to keep rates low. Nobody knows for certain how long this will last. Saving money today makes a lot of sense in these difficult and uncertain times.
