Guest blogger
Brian Cumpton, Loan officer with Wells Fargo RWF Home Mortgage, sent me this synopsis early last week of the reality of the 4.5% interest rate for mortgage financing.

My Loan Toolbox information service provided me a great piece for where Mortgage Rates are going – which they have trended downward here in Chicago the past few weeks. Below is a snap shot of what is going on provided by Loan Toolbox:
"While the mortgage market continues to generate a lot of chatter in both the media and in Washington, interest rates are currently near or at all-time lows here in Chicago. Lately there has been talk about the 4.5% 30-year fixed rate mortgage. Will it become a reality though? Right now, no one really knows. Homeowners who could benefit from a lower interest rate need to know that even if 4.5% becomes a reality from Washington's actions, it would only be available to home buyers, not homeowners seeking to better their rate. If you need to refinance, you will be left out."
"You also may have heard about Hope for Homeowners, which is a program approved by legislators to help distressed homeowners. However, regardless of its best intentions, the program has not been embraced by investors, and it is not available to many it could help. The bottom line is, the Fed announced recently that they are going to buy up to $600 billion in mortgage-backed securities. This has already driven rates to historical lows. In January, the SEC is meeting and information may be released that could have a significant bearing on rates, potentially for the worse."
"Waiting to obtain the best rate is only possible for those with loan applications already in process. Interest rates are incredibly volatile and fluctuations that used to take months are now occurring in just days or even hours. If you don't have an application in process, you could lose out. We are already seeing lender backlog due to low interest rates. In 2003, with rates at these same low levels, we saw some lenders taking up to 90 days to close a loan. Home loan rates are currently in the mid- to low-5% range. Home values are currently at 2003-2004 levels, coming down significantly from their high point. "
With low rates, low prices and a first time home buyer tax credit of up to $7,500 from the federal government the conditions can be favorable and affordable to purchase a home.