Wouldn’t it be great if rates dropped to 0.00%? Shouldn’t that just kick the U.S. Housing market into high gear? Most experts say it wouldn’t.

Let’s just ignore the fact that it is improbable that rates would fall that low, ever. Banks would never be able to sell loans on the secondary market that were closed at 0.00% so they would have to hold them on their books until they were paid off.

The problem with rates continuing to creep lower and lower is that low rates are not enticing more people to get into the market. While people want to get loans for homes or even refinance the homes they have, there are three barriers that are continuing to stifle the U.S. Housing market. The inability of consumers to qualify for a mortgage, home values, and the inability of the market to clear out foreclosures is killing the housing recovery. Until those three items are fixed, we will continue to flounder where we are right now.

Qualifying for a Loan

It is no secret — it is tough to qualify for a loan right now. People with great credit can’t qualify for a loan for a number of reasons. While it is good that mortgage lenders are not giving money to anyone with a heart beat, some feel the pendulum has swung too far the other way. While underwriting standards should remain high, it is important that we return to common sense lending.

What does this mean to you? You need to keep your credit clean and monitor it annually to make sure there aren’t any mistakes. You need to pay your bills on time to keep your credit where it should be. I will be talking very soon about credit repair and how to improve your credit score without paying someone else to do it for you. Qualifying for a loan is possible and your probability for approval increases if you are working with a quality loan officer.

Home Values

Here is a challenge. Home values are so low right now that it is prohibiting most people who need to refinance from doing so. People who want to move are having to short sale their homes or just walk away. But the other side of the coin is that home values increased so much that they were absolutely out of control. There was no excuse for the increase in home values that we experienced during the housing bubble.

But forgiving people a portion of their mortgage is also problematic and would not be part of any viable solution. The only entity that would be able to absorb that type of loss or write-off would be the Federal Government. I don’t want to pay for that cost nor do I want my kids to pay the interest on that loan.

What does this mean for you? If you are looking to buy a home, you are in luck. If you are looking to refinance your home in Utah and you owe more than it is worth, there are programs available through Fannie to loan you up to 125% of the value of your home. You need to talk with a quality loan officer who knows the program to see if you would be eligible.

The Frozen Foreclosure Market

While I am not going to debate the decision to suspend foreclosures by many of the lenders across the country, I will state that the decision did hurt the timing of our economic recovery. By freezing the foreclosure process, banks delayed the timing of how long it was going to take for the foreclosures to flush themselves out of the system. I believe it was a good decision if there are problems with the quality of the document review process, and I won’t debate this decision with anyone. But, it did disrupt the timing of the recovery.

What does this mean to you? If you are buying a home you should carefully monitor home values in your area to determine when they start to improve. I would suggest once you see about a three month improvement, you can be fairly certain that the recovery for home values in your area have begun.

0.00% Loans

While this will never happen, know that there are other factors that have a bigger impact on the housing market. The recovery of the housing market is going to take years, but if you can qualify for a loan right now, it is a great time to buy a home. You can negotiate for great concessions with the right real estate agent and you can get a great rate on a loan. If you are looking for a loan officer or real estate agent, click here and fill this form out and I will have someone get in touch with your shortly.