Florida's #1 Mortgage Planner

I am glad to see that there are many more mortgage professionals taking a step out there and providing mortgage market commentary. While many are simply rehashing what they receive in scripts emailed to them, some have managed to truly demonstrate expertise and provide their own insights, something I have been doing for over two years now, though I bet most of you didn't know that because it was designed as a service for my clients, not other real estate and mortgage professionals.

Not to toot my own horn, but I think that a large part of the reason there are more mortgage professionals doing this is that they have seen what I have been writing on Lenderama, with my weekly Mortgage Market Updates there thanks to the invitation by Todd Carpenter. Todd had asked if I wanted to write the weekly update because he had been reading what I had been writing on Florida Mortgage Daily, my running mortgage market commentary. Some mortgage and real estate professionals also follow Florida Mortgage Daily on a regular basis, maybe even you have.

Whether or not you are following my mortgage blogging, you should know what is going on with mortgage rates on a regular basis, whether you are a real estate agent or any other related professional, and certainly if you are a mortgage professional. There are a multitude of factors that go into that whole "lock or float" question, but most times the direction of mortgage rates can be forecast with a high degree of accuracy. Nobody will ever get it right 100% of the time because of today's "information age", as news can change the picture in nanoseconds, but there are ways to be accurate 80-90% of the time, and you can certainly protect your clients quickly if news does change the picture.

So, just how much importance is there on working with a mortgage professional that understands the market, even puts out regular guidance on locking or floating rates?

That depends on the quality of the information, but it could save you thousands, or more. However, it could cost hundreds if not thousands as well if the information is bad. So, it really comes down to you and what you want to do, as with any other mortgage transaction. Do your research and find the mortgage professional that you think is best for you. Feel free to follow my market commentary as well, it is free of charge after all.

Florida Mortgage Rates have reached the lowest they have ever been on a 30-year fixed rate mortgage, as mortgage rates have dipped to just 4.5%, falling below even the lowest rates seen in 2003. Now, more than ever, homeowners should be rushing to refinance or purchase homes as these rates may never be seen again.

OK, hopefully you have already realized that the above paragraph isn’t true, at least not yet. However, the lunacy of our Treasury Secretary (Henry Paulson) and Federal Reserve chief (Ben Bernanke) may yet make that paragraph a reality. Treasury Secretary Paulson openly admitted he wants mortgage rates to be as low as 4.5% in an effort to boost the real estate and mortgage industries, not to mention getting homeowners to start using their homes like ATM machines again since that is what was propping our economy up before.

Since mortgage rates are derived from mortgage backed securities (aka mortgage bonds or MBS), Paulson and Bernanke are willing to be the buyer of mortgage bonds in order to drive those prices up, which then drives mortgage rates lower. They publicly announced their intent last week, Tuesday to be exact, which is why mortgage rates are down to about 5.5% right now. Paulson then said yesterday that his goal was 4.5%. Make no mistake, they want to save the world no matter the cost.

Where does the money to buy mortgage backed securities come from?

You guessed it. Taxpayers like you and I. With the latest bailout bill successfully passed under the disguise of the “TARP” (Troubled Asset Relief Program), Bernanke and Paulson were given blank checks that could amount to $700 billion. Of course, Paulson came out and said he had no intent to use all of the money, like we were supposed to believe that. Paulson announced his intent to ask for the remainder of that $700 billion this week, and likely he will ask for more.

In the meantime, Bernanke and gang are playing their part by extending the term facilities. You know, all those acronyms that have amounts that keep growing almost daily, like the TAF, TSLF, etc. The combination just keeps flooding the economy with “new money”, begging the question as to where it comes from.

Have no fear, since the Treasury is in charge of our money supply, they can just print more. I know there are limits, but let’s get realistic. With the current state of the economy and the determination of Paulson and Bernanke, along with our current (and future) political spectrum, you can count on money being printed in their efforts to save America from economic ruin.

Now, let’s look at the history of government interventions. rather than go into great detail again about how they merely prolong the problems, if not exaggerate them, please go back and read this post…Should the Government Clean Up the Mortgage Mess?

Taking a look at the costs involved, one can only realize that it will be the taxpayers whom ultimately pay the price. Sure, the government has made those promises that they will make every effort to protect the taxpayer and make sure they get their money back, even saying the government is “investing” in companies that they are bailing out. One only needs to look at what Paulson is doing with the $700 billion TARP to realize that is a load of crap.

The good news is that mortgage rates may indeed go down to 4.5%. That is certainly good news because you will need to get all of the cash you can out of your home so you can pay the taxes required to fix the government’s “solutions.”

Ever notice how Obamanation, a term being thrown around a lot, sounds eerily similar to abomination? OK, we won't dwell on that, but let's look at Barack Obama's past and how his actions speak for him more than his words. Then we will relate them to how that equates to an increased need for using a genuine mortgage planner.

Barack Obama promised tax cuts to "95% of Americans", and then started defining that as those making less than $250,000. If you could cut 'BS' with a knife, his words allow for plenty of cutting as it didn't take long before that 95% became those making less than $200,000, then those making as little as $150,000. So, you see, he is clearly making it up as he goes along or is basing his promises on crappy research and we know that got Bush in huge trouble in Iraq.

Putting that aside, let's look at Obama's track record when it comes to voting for tax cuts at anytime, even recent history...

read the rest and get links to the facts over at the Florida Mortgage Report...

The "F-bomb" is all over the internet and even being played up by the media today. No, I am not talking about that one, rather the "FEAR" factor. You cannot hardly turn on the TV, radio, or even computer without getting hit by news that the DOW is down over 700 points for the 8th straight day. CNBC, CNN, ABC, CBS, blogs, etc. all are adding to that fear factor and even the so-called financial gurus like Suze Orman are playing off those fears, telling everyone that "cannot sleep at night" to get out of the markets.

And then we wonder why the markets have collapsed as much as they have?

The media is in it for money. You can't tell me that there aren't people making a fortune off the stocks collapse and the fact ALL markets are tanking. I guarantee there are a lot of people making a killing off it, the media included in all likelihood.

Now, is that reason to get out of the markets right now? NO. Should you transfer funds or even change strategies? Not likely. Have your really "lost money?" Not unless you react as you cannot realize a loss unless you sell, just ask the IRS that question.

What should you do?

NOTHING, except maybe stop watching the news if it drives you crazy. Emotions are running the markets and fear is a very strong emotion. Once traders become rational in their thoughts again, and fears subside, the markets will return to normal, the DOW will eventually climb even higher than it was, and the world be acting completely different. It just takes time!!!

Look at history since it tends to repeat itself. Does it really matter if we go through another "Great Depression?" Maybe, depending on your financial situation, but as a whole, probably not.

Ever stop and think that maybe we need a crash in the markets to return to normalcy? I remember that in 2001, noone wanted to even mention recession, that is until 9/11 happened. Once a recession was announced, what happened? The markets tanked, then recovered.

What is so different now? Well, we have TMF that has finally been uncovered. What is TMF? Total mismanagement of funds. This doesn't just include the banking executives which are now falling left and right (though exiting with millions). No, it comes down to even the homeowner whom used their home as an ATM machine, bought more house than they should have, or mismanaged their finances some other way. Look at it closely and we can blame just about everyone in some way or another, but what does that accomplish?

Now, is government intervention the best solution? Not likely as history shows that while it may minimize the "valley", it also makes that valley last longer, so we can expect that the pain will continue so long as the government keeps up their actions. That being said, we will come out of this and the economy will return, as will the housing market, and even access to credit.

The best thing we all can do is stop reacting to our emotions and take back control. Once the fundamentals are reestablished, the markets will be able to recover. In the long run, nothing will have changed as the cycle will complete itself and things will look much better. When exactly will that happen? A large part of that is up to us.

These days, all you have to do is read the paper or turn on your TV and you will think that your money, especially your investments, are rapidly becoming worthless. Even many of the so-called financial gurus, such as Suze Orman, are telling you to get out of the markets, especially if you "feel" afraid of where they might be headed. Before you act on your emotions, think about it with your emotions removed.

Leaving your emotions out of your decision making, especially when it comes to finances, is very hard to do. However, making financial decisions using your emotions virtually guarantees that decision will be the wrong one. Fear is the biggest emotion that gets people to make stupid financial decisions. Love is the other big one.

Studies have shown that keeping your money in the stock market for the long run will yield a decent rate of return. If you take any 20 year span of the S&P 500 and look at the rate of return, you will end up with over 10%, even in today's crashing environment. However, studies also show that if you miss just a few of those best performing days, namely the top 5, your rate of return becomes negative. That's right, if you miss just the top 5 trading days, you will no longer have that 10% rate of return, instead you will be losing money.

So, why would you take your money out after the market crashes? Why would you change your investment plan. In fact, you should actually be acting opposite of what your emotions are telling you and start investing more money as the market crashes. Now, whether or not you invest when the market is down will depend on your strategy as well, but it does present a good opportunity.

In the current state of the economy, chances are we will see the Dow Jones Industrial Average drop significantly further. In fact, in the traders psyche, I feel the Dow needs to get at least below 10,000 before we can get back to a bull market (one where we see the Dow making significant gains long term).

To use myself as an example, I have not changed any of my investments around even when I knew that the market was going to tank. Since I also run a mortgage planning business, I have been following the ramifications for a long time and even forecasting some of what we have seen. You can check out my Florida Mortgage Report for more on that if you want. What I do is continue to contribute the same amount to my 401k and leave the rest alone since I know the market will recover in due time.

What should you do? Chances are you should be doing the same is me...nothing. If you have some extra discretionary money, you may even want to invest it at this time. Everything runs in cycles, including the market. That means that even if the market tanks significantly more, it will recover and climb higher as well, all in due time. Remember, you do not actually "lose" money until you sell it or transfer between funds. Knowing that will help you maintain your focus as well.

In these troubled times, it is more important than ever to maintain your investment strategies, even adding money to them, and keeping your emotions out of your decisions. Make sure you have an emergency fund, cash available easily that is not in a HELOC (Home Equity Line of Credit) or other credit vehicle, and a financial plan in place. Keep moving toward those financial goals and dreams and stay the course, which will likely make financial freedom a reality for you.