Advice, Community & Common Sense

Which is normally good news, but currently one of those 'things' is....Inflation!  Couple it with rising unemployment and increasing oil and gas prices, and the near-term outlook is uncertain, at best.  Increasing inflation, even the worry of it, is the enemy of bonds, and therefore mortgage rates.  Treasury Secretary Paulson and even some Fed Officials have been trying to prop up the dollar through speeches, but growing inflation risks abroad (Germany, the EU, England) may bring increased rates there, and as the old adage goes, "money goes where it's treated best".  Those investors seeking higher yields with relatively the same risk, will sell some US holdings and move money to those 'almost-as-safe' countries, earning more yield and perhaps some currency exchange gains, to boot.

Why does this interest me and you?  Because with all signs pointing to increased inflation risks, for those who have long-term plans for paying off their homes, NOW is the time to look at finally moving off that ARM loan, even if you have a year or two left on the low start rate.  Any temporary pain from adjusting your budget now may be worth many restful nights several years from now, when rates are higher, lending guidelines tighter, and --possibly -- home values lower.

Additionally, check your balances on your home equity line of credit ("HELOC"), and its margin and index.  As inflation heats up, the Fed raises rates, and Prime goes up, too!  Before home values slip any further, double check with us about combining your mortgage and HELOC -- it might make sense for the long-term.

I have begun mailing out (yes, via good old fashioned real USPS mail!) quarterly updates to all of my clients who have closed loans with me in the last 3 years, so you will know where you stand against the current market.  Please email me in the meantime if you prefer not to wait for the mailing.

I still have yet to meet anyone with a 100% accurate crystal ball.  Playing it safe may sound dull, but fiscally dull usually leads to stable -- which is what a home should be for the long term.  We're here to help!