“I can’t change the direction of the wind, but I can adjust my sails to always reach my destination.” Jimmy Dean
Listening to the financial news during the day sometimes reminds me of being out in a sailboat when storms are approaching. You have to pay attention, with one hand on the tiller and the other ready to adjust the sail to ensure you don’t end up being blown into the drink.
The Federal Reserve has been buying billions of dollars in mortgage-backed securities. This committed action by the Fed has been artificially keeping mortgage rates low. The Fed has hinted that they may taper off on this activity sooner rather than later, which would pressure mortgage rates higher. No one knows when the winds will turn, though. Currently, rates are still hanging around the 2’s and 3’s, generally speaking.
No matter which way the wind is blowing, most financial gurus tout in their publications and podcasts that increasing your income or reducing your debt or both will build a stable infrastructure financially. Thanks to a perfect storm, we now have insanely low mortgage rates and an unprecedented rise in home values.
How are some of my savvy mortgage clients handling their boats in the windstorm?
1. Reduce debt at a cheaper, stable, fixed interest rate.
“Money’s cheap. You might as well borrow it,” said Dessie Danforth (not her real name.) Dessie explored a couple of refinance options to reduce the interest rate she was paying on her mortgage and lower the interest cost on other debt by rolling the other debt into her new mortgage. This refinance scenario saved Dessie several hundred dollars per month in overall debt that she committed to using to make extra payments to get rid of all of her debt sooner.
2. Buy a house. Start building personal wealth.
Byron’s lease was about to expire on the apartment, and his neighbors had already told him to get ready for a hefty rent increase.
“Not this time,” Byron vowed. He got his real estate team of professionals together to get preapproved for the mortgage to give him the terms he wanted. His realtor worked with him, and we put together some winning strategies so his home purchase offer would sail on through to acceptance
3. Use a cash-out refinance to upgrade and modify the home.
The Franklin’s decided it would save a lot of money to bring her mother home to live with them. The cash out to a low fixed-rate mortgage gave them the funds they needed to modify the home so her mother and the Franklins could live together but enjoy the privacy of their own space.
Some of the best clients we can have as real estate professionals are those clients who know what they want and why they want it. These customers have consulted with their financial advisors, and they have a vision for the life they want to achieve.
When we asked the right questions, these clients tell us what we need to know. We can use our knowledge and resources to help them get the house and the financing terms that will put them on course to the life they want.
