SOURCE: Approved Mortgage

August 12, 2013 05:00 ET

Approved Mortgage: The Death of the 30-Year Mortgage

ORANGE CITY, FL--(Marketwired - Aug 12, 2013) - For many potential homeowners, a 30-year, fixed-rate mortgage is the product of choice, according to Approved Mortgage, an Orange City Fla. based lender. But changes in the way loans are guaranteed could make 30-year loans a thing of the past; a growing concern for potential homebuyers.

Currently, there are two major reforms being considered: the Housing Finance Reform and Taxpayer Protection Act of 2013 -- also known as the Corker-Warner Plan -- and the Protecting American Taxpayers and Homeowners Act (PATH Act).

While the plans differ in several ways, a similar component of both is winding down Fannie Mae and Freddie Mac. Both Fannie and Freddie guarantee loans, often with federal funds, and have been a source of controversy since the housing bust of 2008.

Eliminating Fannie and Freddie would mean that conventional loans, like the 30-year mortgage, would no longer be guaranteed. What that means for consumers is that long-term, fixed-rate loans would become too expensive to be an option. And with traditional, fixed-rate mortgages comprising the majority of the market, a loss of guarantee could be disastrous.

According Bill Gross, founder and co-CIO of PIMCO, government guarantees keep interest rates about three percent lower than they would be otherwise; a small number that can add up to thousands of extra dollars for homebuyers.

At the moment, both plans are still up for discussion and any changes that may be implemented are still years away. For now, potential homebuyers can take advantage of lower interest rates and long-term, fixed-rate mortgages while they are still available.

Consumers interested in buying homes should choose a lender that is up-to-date with the seemingly daily changes in the mortgage industry. Approved Mortgage has over thirty years of experience in mortgages from fixed-rate and adjustable loans, to HARP loans and popular reverse mortgages. Their new website, designed by First in Results, also has an option for potential homebuyers to apply online.

While mortgage reform can drastically alter the industry in the future, potential homebuyers still have access to well-known options today; proving that there really is no time like the present.

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