This current talk of financial bailout suggests that as a result mortgage rates will fall allowing a surge in home buying especially for first time buyers.  Still one must wonder how long this will last but also what are the long-term impacts for the housing market?  Right now it feels like the lending industry is distressed but this may not be true for very long.  The banks at risk of failing just need to time to recover and it will actually be consumer confidence that drive the economy back to being fruitful again.

There just seems to be a lot flux in the market, organizations don't know if they are coming or going.  This is a period of acquisition and consolidation.  Lehman Brother's is on the auction block, AIG's failure has brought the issue of bailout into the limelight and Bank of America, of course, will remain standing, buying up new pieces for their vast umbrella like Merrill Lynch.  This week has been historic and shocking for the experts even to say, they don't know what should happen.  That's tough.  While so many people grasp this concept, many are putting their ducks in row and wonder if this is a right time to even think about buying a home or new car.  I believe people are hesitant this week but this will change once there is direction and leadership toward resolution.  This is what some experts have to say about the future of home buying:

How does the latest fallout from Wall Street influence mortgage lending rates?  Well, let's take a look.  We can only hope.  In the interim rates will more than likely go down because there is a lot shuffling going as the dust settles and investors look for safety nets in this uncertain market.  Upon many experts advise, this is a time to put our money in real estate investment or income property.  As of last week the 10-year notes went down which means that the yield also decrease but this makes for new opportunities.  Experts expect mortgage rates to follow this trend because historically they usually follow suit.  Expect rates to drop further as more news brakes.  Just within the last week Bankrate.com commented that the 30-year fixed rate was 5.78% down from 6.08% of the previous week.  Just to compare, this rate was 6.5% in August.

Still this could be a trend that is only short lived.  Even as talk of the country's largest bailout made its rounds, the rates were already responding by increasing again. 

What does this mean for the homebuyer?  Is this a good time or bad time to be out there looking for a home?  Now while in most areas of the country it is indeed a buyer's market, the answer to these questions really comes down to the FICO score of the buyer.  Ok, let's get real, home buying, unless you're going to pay cash out right is about a number of different factors that must balance out in order for the deal to work.  Since the collapse of the subprime market, this has reduced lending options for both the buyer and the bank offering such products.  Let's face it, not everyone's credit is perfect or even in the upper 600s due to a change in the scoring system.  If you have blemished credit, this will mean a larger down payment anywhere for 10% to 20% (for non-owner occupied), no longer is there 0% down options.  In the long run, a high credit score will determine the rate you qualify for and how much interest you will pay over the life of the loan.  These factors should be considered carefully has home values drop and many face foreclosure.

The answer is yes, if you can get passed these barriers mainly because a home is your greatest investment and reflection of wealth.  It builds wealth for you and security in unsure times.  It is important to have a clear understanding of what you are getting into and whom you are creating financial relationships with.  Make sure they are going to be around after the Bailout is completed because so many of them have disappeared over the last year.  Always kind in mind that the deal is not done until you are at the closing table and have a plan b in order just in case something goes south.

It used to be that Freddie Mac and Fannie Mae were the go to kids of the mortgage industry as far as aiding borrowers through the process and offering fair rates.  The federal bailout of these organizations will insure these channels are still available.  In respond to the aid, of course, rates drops and only time will tell if the complete picture will impact this segment.

While people are in shock, others are asking, what happens now?  Should they wait for rates to drop further or jump on the bandwagon?  It is clearly a wait and see situation.  If the stock market responds favorably, then maybe we will see a leveling off the rates as investors become more confident again.  It is hard to tell right now.  Of course, there are other aspects to consider like the election, overall health of the economy, inflation, and cost of living because all these items have influence upon rates.  Still at this rate, lowering the Federal rate would not have the impact we would hope for mortgage lending.  The housing market needs to recover first as housing values rebound and foreclosures decline again.  When this will happen, it is hard to say, maybe in 2010 and forward.