Thursday, January 31, 2013

The Music is slowing... Time to find a chair

With January coming to an end, we are seeing an increased frequency of indicator movement that suggest rates will rise near term.
Although the financial crisis was an event many would have preferred to forgo, it afforded many consumers great value in mortgage and consumer debt financing.
What I have found over the years is to keep a perspective relative to historical data.  Two cycles back the sustainable low 30 year mortgage rate was 6.25, the next was 5.25, and this cycle should have been 4.25.  The substantial monetary policy has artificially pushed rates into the 3 percent range.
A good way to correlate this is the 2000 – 2005 mortgage cycle should have flattened and consolidated in 2005; however, the secondary mortgage market wanted the boom to continue and artificially kept the run going with unsustainable products that gave consumers a false sense of security in making decisions related to real estate purchases due to the ease of mortgage credit.  We all know how this ended and the period between 2005 – 2008, 3 – years, is mysteriously close to the time frame it took the economy to get back on track.
My advice to consumers that need a new home, bigger home, smaller home, or can qualify to reduce their mortgage payment with current rates is to start the process now.  Although 4%, 5%, and 6% mortgage rates make sense given all boats rise with the tide, today’s artificial low rates is a generational opportunity to benefit from a by-product of the recession.  The music is slowing please find a chair….
New protection was created for consumers as a result of the financial crisis.  Use them!  Choose a Licensed Mortgage Loan Originator and choose a company that can close fast.  Your first interview question during your mortgage selection process should be “Have you passed the Nationwide Mortgage Licensing System Competency Test as provided by the S.A.F.E. Act and have you passed the State Competency Test for Mortgage Origination?”  This will ensure you have the protection set forth by your representatives in Washington.
+Cal Haupt, President and CEO, Southeast Mortgage of Georgia, Inc.

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