The Federal Reserve has already started a “buyer beware” campaign to discourage people from buying homes they don’t currently own.
But now it’s giving new advice for people with mortgages who are interested in buying a dupx or two.
In a recent report, the Federal Reserve found that some of the most common types of mortgages are often more affordable than other types of loans.
“Many of the low-income borrowers in the current housing market would be better off getting a lower-priced mortgage, rather than a high-priced loan,” the Fed said.
But the Fed also said some of those borrowers are also often more financially secure, and therefore could qualify for a lower mortgage interest rate.
“Low-income and people with a lower income could qualify under the criteria for a reduced mortgage if they could repay their debt at a lower interest rate,” the report said.
The report was released just as the Trump administration announced its new plan to ease restrictions on the mortgage-lending industry.
The plan would require mortgage lenders to take on more risk on the loan, to hold down their rates and provide better customer service.
The government said that borrowers who are struggling could qualify with lower-interest loans.
So far, the Fed’s report has only focused on those with lower incomes.
But experts say many low- and moderate-income people with existing mortgage debt could qualify, too.
Some experts worry the Fed could be giving away too much information.
Many people with low-interest mortgages would be less likely to get an affordable loan than those with high-interest, or even high-quality, mortgages, said Laura Minton, director of the Consumer Finance Research Center at the University of Virginia.
She also questioned why the Fed would only consider loans for people who are “living in their parents’ basement.”
“We need to be very careful here, because the Fed has a lot of power, and they have been giving this advice for a long time, and there’s some people that really need help,” she said.
But many experts are confident that many low and moderate income people would benefit from a lower loan rate.
For example, a $200,000 home could be more affordable for many people, if they are making less than $100,000, said Dan Siegel, a professor at Washington University in St. Louis who specializes in mortgage lending.
For those who are working full-time and have a family, he said, that could be an additional boost to their household budget.
“For a family of three with two kids, they might be able to save up $500,000 on their mortgage, and it would be nice if that money was going toward a down payment on their first home,” Siegel said.
“But I don’t think that is going to happen.
Minton said she believes the Fed should be careful with its guidance.
As it stands now, a mortgage can cost anywhere from 20 percent to 45 percent more than a comparable loan from a bank.
And even if people do qualify for the lowest-rate mortgage, they could end up paying more in interest payments than if they had an equally qualified loan.
Siegel said the Fed needs to look at its guidance carefully, and also understand the financial stability of people who qualify for low-rate mortgages.
To be sure, the new Fed guidelines do not apply to everyone.
Some people who have mortgages with lower interest rates may not qualify for any of the other options, Minton said.
And some people with lower income may qualify for less favorable terms than those on the other end of the spectrum.
Still, Mizzou College of Law professor Matthew Nettleton said the new guidelines could help reduce the financial risk to low- income borrowers who don’t qualify for higher interest rates.
While the Fed says that those borrowers can still qualify for lower-cost mortgage loans, it also needs to consider other factors that can increase their chances of getting one.”
It would be great to have more people qualify for mortgages that are lower interest than they are now, but I don