If you had $100,000, would you invest all of it in a CD (Certificate of Deposit)?
Your answer, undoubtedly, would be an emphatic "No." This is because of the fact that bank CDs have a relatively poor rate of return. For instance, right now you would be hard pressed to find a 1-year CD on which you would be paid more than 5.50%.
You might place a portion of your $100,000 in a CD to be conservative. But, on the majority of your money, you would most likely be looking for a much higher rate of return. It is a fact, for instance, that for every 10-year period since the inception of the Stock Market, the average rate of return has been right around 10%. For argument's sake, let's say that a 10% return on your money is too much to expect over a 10-year period. Let us use, instead, 8% as a more conservative estimate. Even at this rate of return, one would be far too conservative if he or she were to invest all of his or her money in a CD because, quite simply, the rates remain too low and do not fluctuate nearly enough for one to "buy low and sell high." Why? Think about. Banks simply do not want to pay a high rate of interest on your conservative investments.
This is precisely the reason that it is so advantageous to have your mortgage rate tied to the CODI (Cost of Deposit Index) offered by Wachovia. As mentioned before, the CODI is an average of the rate of return on 3-month Certificates of Deposit offered by all banks as published by the United States Federal Reserve. In a previous post, we have already established that CDs, while worthwhile, are by no means the most aggressive or volatile environment in which to invest your money.
Your index - and, therefore, any adjustments in your mortgage interest rate - will be tied dir
ectly to Federally Insured money on which there is virtually no volatility. This means that despite the fact that you will be in an adjustable rate mortgage, your rate will not move around nearly as much as if it were tied to another, more unstable index. Thus, you can sleep better at night knowing that your index (and your payments) will remain relatively stable.
Located in Rockland County, NY, The Mortgage Guys of Domus Mortgage are licensed in New York, New Jersey, Connecticut, and Florida. Please call us at 1-800-95-DOMUS or visit us on the Web at http://www.domusmortgage.com/ for a unique mortgage experience hearkening back to the days of yesteryear when business was conducted with a handshake and a smile. If you are interested in obtaining the best mortgage loan for you and your family with the highest quality costumer service, we hope to hear from you soon.
-----------------------------------------------------------------------------------------------------------------------------
First Rockland Financial is a division of Domus Mortgage Services, Inc., a Registered Mortgage Broker with the State of New York Banking Department, with a great reputation for honesty and customer service. Headquartered in Rockland County, First Rockland Financial has the express mission of catering to the needs of existing and potential homeowners in Rockland County, NY. First Rockland Financial has been formed to leverage the existing industry knowledge and contacts of the Company along with the experience it has gained while arranging in excess of $400 million in residential mortgage purchase and refinance loans to assist Rockland County residents in obtaining the best financing possible.
Moreover, as a lifelong resident, I, Steve Odierno, the President of the Firm, take great pride in our County. As such, all at First Rockland have been given the mandate to do their share to ensure that our Firm becomes part of the housing industry's solution instead of exacerbating the housing industry's existing problems in Rockland County. So, if you live (or are planning to live) or work in the County, we hope that you will give us the opportunity to earn your business. Should you be interested in purchasing a new home or refinancing an existing one in Rockland County, please contact us at 1-866-403-6687 or visit us on the Web at http://www.firstrockland.com/.
Insurance Quotes Online for Auto, Life, Health, Motorcycle and Home at www.insurancequotehero.com.
Comments(0)