Pretty tumultuous past few days... Lehman Brothers goes under, Merrill Lynch gets absorbed, AIG gets bailed out, and to cap it all off? The Fed leaves rates alone.
After much speculation that it would cut rates, the Fed surprised most by, in what appears to be a plea to stay calm, leaves the federal funds rate at 2%. The Fed asserted that the rate is already low enough to spur economic growth. Despite investors disappointment, the market rallied late anyway.
While the Fed's rate has no direct impact on mortgage rates, when lowered it does pump money into the economy, heightening confidence and generally loosening the money clips of most mortgage investors.
On the bright side, lenders are seeing (for the first time in quite a while) a renewed influx of existing borrowers looking to refinance as rates have already dipped to enticing levels; perhaps the fed knows what its doing after all???
With the financial markets seemingly coming apart at the seams, many are burying their heads in the sand, fearing the worst and opting to horde cash rather than look for opportunities. This short sightedness is unfortunate given most investors do quite well in times of uncertainty, assuming they know where to look.
Bottom line: The environment is ripe to purchase. Inventories are still high and rates are coming down. Do not be scared that 130 year old institutions are closing their doors. Rather, capitalize on the opportunities that present themselves. Real Estate is as stable a vehicle as there is. Be smart... here are three important keys to real estate investment:
1. Manage your resources
2. Manage your expectations
3. GET IN!!
