FED DROPS RATE AGAIN AND BUYERS SWARM!

Vanessa:

Great!  I hope some of that traffic spreads down here.

I would just caution my colleagues on the realtor side of the fence to not mislead buyers that a Fed rate cut will dramatically lower their mortgage rates. Typically, the mortgage rates only drop at a trickling pace after a rate reduction. Buyers who receive skewed information (whether that is done intentionally- to boost the chance at a sale- or unintentionally- to give the marginal buyer some encouragement) may be in for a rude awakening when they start mortgage loan hunting. The rates may not be as low for them as they may have been led to believe, and ultimately they may start chasing after an elusive rate, thereby lowering their credit scores with excessive inquiries. Too, the focus of the customer drifts away from the end-goal of the home acquisition, and comes to bear almost entirely upon landing a loan that they might not qualify for.

I believe that a better approach is to inform the buyers that while the Fed rate has lowered, the effect on mortgage rates may not be as significantly lower than they hope for. This creates a more realistic buyer, and, should the rate come in at a better level than they expected, then they are surprised and happy with the outcome, and that pushes their motivation to close the deal quickly. Of course, it would also be of benefit to the realtor if they directed the buyers to a mortgage professional that has a long-term relationship with that realtor and has produced good loans at reasonable rates for other clients belonging to the realtor. A good mortgage broker or loan officer can often bolster a realtor's reputation simply by putting the power of networking in play.

I wish you continued success in your endeavors.

I know what you mean. It's so crazy down here that I don't have time to eat. You think it might let up for Christmas? I would like to take a few days off and go to the beach, maybe get a few rounds of golf in. As far as interest rates go, I always refer rate questions to my mortage experts. I know houses, they know mortgages, that's the way I like to keep it.