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A word on the finance side from Cherry Creek Mortgage Company

As of March 31 of 2010 the federal reserve will end their commitment to purchase mortgage backed securities on the bond market.  For the past year or so we have enjoyed really low interest rates due to the fact that the Fed had been purchasing these bonds in large quantities to keep the interest rates low.

Now that the purchasing by the Fed is going to end it is important to recognize where rates could be headed over the coming days, months, and years.

Short Term:

In the short term in the next few weeks and months we will most likely see interest rates increase.  The mortgage backed securities will be losing their largest investor (Fed) and this will put a lot of pressure on the bonds and you should have a lot of other investors sell off their shares as well.  This will most likely push the rates higher anywhere from 0.50% to 1.0%.

If the rate moves 1% that could have an impact on buyers.  What higher interest rates do is take away some of the buying power they have.  There are ways around this, but only a seasoned and very experienced loan officer will know how to adjust for these interest rate increases.

Long Term:

In order to keep things in perspective it is good to remind ourselves that interest rates are usually consistent with the type of market we are in.  As the economy recovers and the economy begins to grow, hire, and pay better wages, people will continue to purchase homes and upgrade their homes to something larger and more long term.  When the economy is firing on all cylinders usually investment rates, employment rates, and mortgage interest rates go higher.  Home values also grow during these time periods.

In contrast to today when the economy is down and struggling, so are businesses.  Employers are laying people off, incomes are down, which then pushes interest rates down so people can afford to borrow.  Low interest rates usually means the economy is not doing so good.

Perspective:

Don’t give up hope.  Keep a positive outlook and know that no matter what type of economy we are in there is business to be had.  Assemble an amazing team together. Develop relationships with the very best the industry has to offer.  These are the professionals that are the very best at what they do.  Why? Because people like to work with the very best, and be a part of the very best process.  Having a builder/contractor, Seasoned Home Designer with demonstrated expertise, and understanding of market trends, materials and costs (even for smaller homes), and a veteran and experienced loan officer working together can provide an amazing experience for the buyers.

We all know that the best referrals and best way to get business is to know that someone was referred by a former client.  The reason is your client already did all the selling for you.  That is why having the proper team in place is so important.  If one aspect fails, the whole team fails.  Our job is to be the best at what we do, to amaze our clients and force them to tell everyone they know about the amazing experience they just had.

Brady Peterson
Loan Officer
Cherry Creek Mortgage Company
1725 E. 1450 S. #120
Clearfield, UT 84015
Phone: 801-820-7620
Fax: 801-820-7621
Email: brady@thetimhawkesteam.com
Web: http://www.thetimhawkesteam.com

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