Listen....Do You Want to Know a Secret?

By
Services for Real Estate Pros with Nobility Partners, LLC

I'm not gonna go on and on here and I'm not going to take out a magnifying glass and wax eloquent on the intricacies of mortgage backed securities.  I just want to give you all a little corner of the information that mortgage people like myself use to help forecast the future of our markets.  I'm going to work through this deductively and from a very general perspective.  So please resist the urge to nit pick me to death if you know of exceptions to what I'm saying. 


1) More people buy and refinance houses when rates are low.  (I think we can agree on that.)


2) Rates tend to drop when the economy is doing poorly.  Take, for example, the post-9/11 real estate boom that was the result of record lows in rates.  And, take the 80s, as a decade, as an illustration of the opposite effect of the same rule.  When Americans are spending lots of money, rates can be higher because we can afford to pay them.  When we are not traveling, consuming, and splurging as often, rates are lowered in order to help us out a bit. 


3) Based on what you think the economy is going to be doing in December (or whenever), you can make a decent guess as to where rates are going to be and whether or not you should be locking in your purchases now, or waiting for rates to drop a bit. 


I'm not claiming that this is an exact science, but you should consider these things when you're purchasing properties.  Especially those of us that do more "buy and hold" stuff and could be at risk of needing a refi in 3-5 years.  It may be better to lock into a relatively "high" interest rate of 7% on a 30yr then to sign on a 6.25% loan that will become an 8.25% in 3 years.  As always, each transaction and buyer is different.  You need to do what's best for your situation, but it wouldn't hurt you to run your scenario through this filter and see what you come up with. 


If you have other questions about rates and the economy, I can answer them for you.  Shoot me an email or a comment and I'll get right back to you.  I just don't want to write anything long on here.  I, personally, tend to skip over the longer blogs and I assume that's the case with most of you. 


Leave me comments.  Let me know if this info was helpful.  Let me know what else you'd like to hear a blog on.  I'll write it for you.  Even if I have to do some homework beforehand.  Thanks everyone.


Abe 

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