Well, let’s assume for a moment that you’re right. We’ll assume that the housing crisis is over, and that the signs we’ve been seeing in some places are representative of a deeply recovering market. That may be a stretch of the imagination, but let’s at least play the optimism game for a few minutes. If indeed the housing crunch is ending, what happens to home loans?

Well, for starters, it’s important to assess where you’re at right now. If you’re still in your home after all of this, that’s one thing. If you’re renting and ready to move back into a home, that’s another thing altogether.

Existing homeowners

The best time for existing homeowners to do something with their mortgage is probably now. We’ll assume that the market has bottomed out, which means that the interest rates on home loans are probably as low as they’re going to get in the foreseeable future.

If you haven’t refinanced yet, now’s a generally safe time to do so. There’s a caveat, however.

The thing is this: with the market bottoming out, home values have dropped significantly. Let’s say you purchased a home before the crisis for $150,000. You now, after several years of paying on your mortgage, owe $125,000. The problem is that your home’s value has dropped 20 percent, down to below $120,000. Unless you’ve got stellar credit, you aren’t going to be able to borrow enough to refinance your home.

New home buyers

It’s also a good time for new home buyers to get into a home loan. Interest rates are low for new homes as they are for refinancing. In addition, there are many home loan programs out there today that are designed to get you into a home. If you haven’t owned a home over the past three years, you may qualify for up to $8,500 in tax credits, as well, just for buying a new home.

No one can be sure what the market is going to do. We can guess, with reasonable certainty, that home prices are as low as they are going to get, and so are interest rates. If they dip lower from here, it’s probably not likely to be too much lower.

Photo via Team Traveller