Practical Mortgage Advice For Borrowers Following Recent Events

After an extremely volatile week the financial markets are being capped with incredible events especially coming from government announcements and intervention. With the news coming so quickly here is a recap of the recent events and how they impact mortgage borrowers:

1.  Fear about the safety of money on deposit with banks folding or going on brink of collapse. This loss of confidence has caused bonds to lose some or all of their value in certain cases. This news has resulted in money quickly pouring out of stocks and bonds and into U S treasuries.

Impact to borrowers: preventing “lockdown of the markets” with government involvement. Currently people are willing to pay money not to lose principal or basis in their investments…not even worrying about a return on their investment. With the government rushing to back investments and restore trust this means lower rates for borrowers.

2.  Government guarantee of market funds. Treasury Secretary Hank Paulson announced the US Government will guarantee money market funds.This action is helping settle the markets and as a result stocks were up last yesterday and rallying again today.

3.  Fed makes a decision to support currently unsellable mortgage debt. The mortgage mess has so much uncertainty that investors do not want to buy the investments regardless of the performance level. The government has stepped in as a buyer providing liquidity to investment groups that are holding these securities and keeping them afloat while they to recover.

Are these the last changes we will see in the mortgage market?

If the last few years have taught us anything it is that there are more changes to come. At Trusted Mortgage Advice we believe that ultimately the financial markets will determine their own outcome – and that common sense will ultimately prevail.

We see a return to mortgage basics – borrowers will need good credit, a bit of money saved and will need to invest in their own homes.

But at the end of the day government intervention is going to be a necessity here. Why?

1. Too much at stake. With the size of the financial institutions that are failing keeping them afloat may be worth the investment of taxpayer dollars.

2. Media coverage. With so much coverage of this financial turmoil politicians and regulators will be under tremendous pressure to do something about it.

3. Mortgage lending still makes sense. So much of today’s problems have been caused by a lack of good judgment shown by both lenders and borrowers over the last few years. At the end of the day American homeownership will survive and credit worthy, responsible borrowers will be able to obtain credit.

4. The possibility of a recession is still out there and regulators will do everything they can to avoid letting that happen on their watch.

Looking for Advice on Your Mortgage Situation?

With all of the turmoil we recommend making a thorough financial check up including:

1. Talk to your banker: check the rates on checking and savings accounts to ensure you get the best pricing.

2. Talk to your financial advisor: Make sure your investment strategy doesn’t need to change based on current events.

3. Talk to your insurance agent: It never hurts to ask if you can save money on home, auto or health insurance.

4. Talk to Trusted Mortgage Advice: Don’t let a mortgage company convince you to take a deal that doesn’t feel right. We will help you evaluate your loan and make sure you are getting the best deal possible.