Categorized | Residential

Government Debt Crisis Could Lead to Higher Costs for New Homebuyers

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As the U.S. Government debt crisis continues to loom, many experts and homeowners alike are wondering how it will impact mortgage loans and the overall real-estate market.

Although various scenarios continue to be analyzed and evaluated, it is certainly looking more apparent that the U.S. debt crisis will indeed affect lending conditions and credit scores at both the government and individual levels. With the alarming news regarding the potential negative impact on credit scores, questions have surfaced as to how the real estate market will be affected.

Fortunately for those looking to buy a new home, even the worst-case scenarios have mortgage loan rates increasing only fractions of a percentage point. Such a miniscule increase won’t really affect the real estate market on a grand scale. In fact, fixed-rate mortgage loan holders won’t even notice a difference.

However, those looking to buy a new home, or secure a new mortgage loan may not be so lucky. Although the possible increase won’t be relatively small, it still could mean increased fees. These increased fees may cause a bit of surprise among new homebuyers, as they could lead to costs significantly higher than expected.

The small increases in mortgage loan rates could also cause refinancing to become considerably less attractive, which could also be harmful to both the lending, and real-estate industries.

The overall impact of the debt crisis varies widely on both the extent, and duration of interest rate increases. Although the real estate market will only seemingly face temporary difficulties, they may become far worse if the interest rates are long lastly.

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About Josh Johnson

Josh is the main writer for the Residential category. He also helps out on other categories when needed, mainly the International section.

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