Advice, please

[ftwspursfan]

JD & all you other economic gurus,

I'm reading all the posts on the subprime thread and it has me concerned. I am in the process of selling my home and buying a slightly larger one so my MIL can move in w/us. She is on a fixed income and the retirement village is getting way too pricey! We just got approved for the mortgage and I need help on whether to lock-in now or wait it out a little. I'm watching bankrate.com's mortgage info. I have to pay 1 point to lock-in this far in advance. We won't close until mid-June or so. The mortgage co may or may not give me the money back at closing. We can pay the point no prob, but I'm wondering what you all think. Also, my MIL has quite a bit of svgs and my kids have a little also. Should I try to invest some of their money in silver or other commodities? I have a financial guy at church I really trust but I haven't talked w/him yet. Help me out a little, please!:thankyou2

[Tall Timbers]

My thoughts on this is that interest rates are headed down right now. I wouldn't pay to lock in what they're currently offering. There is always a risk to the decision you make, but if it were me I wouldn't pay to lock the rate. I'd lock it if they would waive the 1%, and since rates are more likely to go down than up right now.... they might just agree to that as it would most likely be in their interests.

May God bless you,

[denny272]

My thoughts on this is that interest rates are headed down right now. I wouldn't pay to lock in what they're currently offering. There is always a risk to the decision you make, but if it were me I wouldn't pay to lock the rate. I'd lock it if they would waive the 1%, and since rates are more likely to go down than up right now.... they might just agree to that as it would most likely be in their interests.

May God bless you,

I agree, if you will be making the transaction in the next month or two the rates will either hold or go down more. I wouldn't lock in at this time. Highly unlikely the rates will go up.

[cbressler1976]

We are buying a house now too! Our closing date is the 14th of next month....the house that we bought is 100,000 less then it would have sold for last year.....(this is in south florida).....I noticed that the interest rates went down from last month....I thank God that we didn't lock in the rates then....:faint....

[ftwspursfan]

We are buying a house now too! Our closing date is the 14th of next month....the house that we bought is 100,000 less then it would have sold for last year.....(this is in south florida).....I noticed that the interest rates went down from last month....I thank God that we didn't lock in the rates then....:faint.... It's a buyers mkt, but the values in DFW have not dropped like FL, CO, & Cali. We're not closing until June so I'm watching rates very carefully. I'm worried that inflation may send rates up by late spring. I'm also trying to sell my current home. I'll lease it if I have to but obviously don't want to have that headache!:doh:pray

[can4christ]

It's a buyers mkt, but the values in DFW have not dropped like FL, CO, & Cali. We're not closing until June so I'm watching rates very carefully. I'm worried that inflation may send rates up by late spring. I'm also trying to sell my current home. I'll lease it if I have to but obviously don't want to have that headache!:doh:pray


Inflation per say will not push interest rates higher. It's the other way around, the fed cutting interest rates is pushing inflation higher. The fed is not going to be raising rates anytime soon, if anything they will continue to cut rates. They do not care about inflation.

Do not pay points, ever. All points are is pre paid interest. If your MIL is debt free investing in gold and silver would be a great idea. If she has any debt, have her pay that off first.

Here are some good sites for investing that I use.

http://www.kitco.com/ This is good to keep up on news about metals.
http://www.ajpm.com/htbin/gold.cgi These have good prices.
http://www.monex.com/liveprices
http://www.coinland.com/grading_system.asp This will help explain some of the lingo and grading of coins.

[jds6958]

JD & all you other economic gurus,

I'm reading all the posts on the subprime thread and it has me concerned. I am in the process of selling my home and buying a slightly larger one so my MIL can move in w/us. She is on a fixed income and the retirement village is getting way too pricey! We just got approved for the mortgage and I need help on whether to lock-in now or wait it out a little. I'm watching bankrate.com's mortgage info. I have to pay 1 point to lock-in this far in advance. We won't close until mid-June or so. The mortgage co may or may not give me the money back at closing. We can pay the point no prob, but I'm wondering what you all think. Also, my MIL has quite a bit of svgs and my kids have a little also. Should I try to invest some of their money in silver or other commodities? I have a financial guy at church I really trust but I haven't talked w/him yet. Help me out a little, please!:thankyou2

Well, predictions are not perfect but I will throw some thoughts out there. Given the volatility we are in now, constant news driven events, and the expected substantial increase in market volatility in the upcoming months/years any decision now, or even a lack thereof, will likely have a huge impact on ones future.

90% of possible finance decisions can be expected to hurt one's fiscal position considerably, maybe 7% may be able to preserve purchasing power, and 3% of decisions may be able to enhance one's position. Identifying the 7% and 3% decision opportunities are difficult for most given the complexity of our economic environment and the amount of dis-information or agenda saturated information that exists.

Here are my thoughts:

The retirement village is going to become more expensive near term. Long term it is hard to say what will happen. Retirement will less of an option for most and retirement centers are likely to lose clients. Rather than attempt to survive in such an increasing and seemingly client poor market, bankruptcy and business closings are likely. Therefore, imho, your MIL leaving now is just fastracking the inevitable and should give your family a better opportunity to adjust instead of just being thrown into this situation. I expect our family to consolidate living environments mid to long term pending certain economic or geopolitical events.

About the mortgage rates, I would not pay 1 point to lock in now, that is unlikely to be worth the investment. Rate cuts by the Fed should continue. The odd thing is that even though the Fed cut rates in Jan, mortgage rates went up as an immediate effect. This has to do with banks creating new business models for shareholders piece of mind, and less to do with the Fed. By June I would expect rates of low or sub 5%. This is all assuming that an economic 9/11 has not happened and took the USD down to the deepest trenches of the ocean floor. Should that happen, interest rates will climb and mortgage rates will skyrocket. At one point in 1923 Germany, interest rates were 90%, which was still a good deal given the fact inflation was like 10,000%. Keep an eye on the news. If an event causes the Fed to lose control consider locking in rate the same day. Check this forum often to keep updated.

I am not sure what type of savings your MIL has, regardless, I have little faith in most investment vehicles right now. That may change someday, but it is risk abound for many different reasons in many different ways. Options are few to stay above inflation right now and it will only become more difficult. Not only that, most investment vehicles at the moment come with packaged time bombs threatening to take the principle along with it or lock it up in litigation through various insurance programs. In short, I do recommend physical bullion 1 oz coin silver or gold, preferably gold. I would not worry about pricing on gold at the moment. Near term it is about to become very volatile either up or down. However, if it does go down, it will follow with parabolic swings to the upside. I recommend not waiting for "buying opportunities"

My recommendations are based on what I would do given my own DD and research. It is a complicated environment that even most experts do not comprehend. I am by no means an expert, and although I do have confidence and piece of mind by my own preparations and positions, I could very well be wrong.

[ftwspursfan]

:thankyouThanks, c4C, my MIL is debt-free and the main point of her moving in w/us is so my wife can help her hang on to the money she has and grow it if possible. Plus having her near the kids. So, I'm going to talk w/my financial friend @ church and look over these websites. I thought what the Fed is doing does not affect the 30 yr bond much? I know the last time oil and gold were this high (Carter admin), then interest rates went thru the roof. I don't want to pay any points but I'd like to be under 6% on this loan also. I'll keep watching and praying.:pray

[jds6958]

:thankyouThanks, c4C, my MIL is debt-free and the main point of her moving in w/us is so my wife can help her hang on to the money she has and grow it if possible. Plus having her near the kids. So, I'm going to talk w/my financial friend @ church and look over these websites. I thought what the Fed is doing does not affect the 30 yr bond much? I know the last time oil and gold were this high (Carter admin), then interest rates went thru the roof. I don't want to pay any points but I'd like to be under 6% on this loan also. I'll keep watching and praying.:pray

Interest rates went up with Carter because they needed to attack inflation to make the USD more attractive on the currency front. The Fed can not do that at the moment without risking locking up the whole economic system by means of killing all financial entities needing low rates for survival. In the 70's that was not the case.

[ftwspursfan]

:thankyou JDS!! I think I'll look into gold for MIL and I may get a little silver for my kids. I appreciate all the advice from everyone! It came quick like I thought I would get from RR members! I love this board & I'll keep watching these economic threads for addtl info. Mods, you can close this if you like! Thanks!