Fears in the market.... ?? Are you hiding because of such fears in today's market place? I think many of us were scared 6 months to a year ago. The media was talking about how bad it was out there. We had the so-called mortgage meltdown. But was it really that bad? I think it all comes down to how sure of yourself, that you feel comfortable in buying, when it comes to purchasing a new home. May you be a first time hombuyer, someone moving up, or an investor. I have said this many of times, but you need to speak to a mortgage professional and a real estate professional, those that are looking out for your best interests. If these people don't take the time in understanding your needs and wants, actually help you make a plan, and walk you through that plan, then seek someone else.
Rich Sweum wrote this post the other day titled, At What Cost another 50 basis point Rate Cut? I truly believe that we can't keep cutting the Fed Rates. There will be some people that will disagree with this. Rich received an e-mail from a realtor talking about the economy, that it could hurt her commissions, and that we need to help and make it work now. (you can read this in Rich's comments) Basically, robbing Peter now to pay Paul later. Better yet, robbing from our own selves now, and pay us back later..... if that theory truly would work, life would be a bed of roses. It's a huge gamble and not a gamble that I am willing to take now. Why? Too many unknowns still out there, that if we keep digging deeper, how long will it take us to dig out of this mess. The biggest concern that could set us back, foreclosures. Another fear, jobless claims. Just today, the jobless figures came out and the stock market responded negatively at first, but is positive now. This will continue for the next several months. The investors are just not sure and pull money from here and dump it there. Basically a sea saw effect.
Summary : I gave a brief description in regards to the difference between the mortgage interest rates and the Fed Rate. This is what I stated.... "When the Fed rates adjust, it basically increases or decreases the amount of money circulating within the economy. The Fed is acting as the throttle and the break for economic growth and inflationary control. If the Fed can keep interest rates low, there will be more money in the economy. This type of control allows banks to either lend more money when rates are low because credit is cheaper or lend less money because the cost of credit is high." In my honest opinion, this can act as a band aide for now. The media and Wall Street are trying to curb fears in the market place now, because of fear of a recession, another post in itself. We need to allow the market to work itself out. There are still plenty of people out there that can buy and want to by. But because of the media sometimes, they get scared. Hence why speaking to a mortgage professional that is knowledgeable not only with mortgage products, with the market, but understands your goals and understands how to help you plan, is the key in being successful.
Overall, rates are low and home values are low. People, rates were even low the last 2 months. A very good mortgage planner can help you curb your fears if you lay it all on the table. Giving you more insight than sometimes found on the internet or even from someone local that just wants your business. Don't forget, the lowest rate offered on paper when shopping doesn't always exist. And you won't always get good service from someone that just offers that piece of paper without properly explaining it. When you get a chance, please read Mortgages & Homes -- Best time to buy is now !!!!!!
Jeff - Good synopsis of all the commotion over Fed Rate cuts. A good & ethical Mortgage Professional is worth their weight in gold.