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Whose Advice Do You Take When Getting a Mortgage?

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It never ceases to amaze me how people listen to everyone but who theyAre you really getting good mortgage advice? should be to determine which mortgage is best for them.  They listen to the media, their neighbors, friends, family members, and even realtors to find which mortgage is best.  But are they helping or hurting in the long run?

Now, a few of these individuals do have the knowledge necessary to make a good decision on the borrower’s behalf, but the vast majority are simply throwing out suggestions, blind to the facts, and more importantly, not knowing the borrower’s overall financial picture. 

Compounding the problem, most mortgage professionals seek the money more than taking the time to find the best solution for their clients.  Let’s face it, it is easy to get a 30-year fixed rate mortgage to anyone these days because that is what the borrowers have been told is the best thing for them right now (just read the news).  But is it really?

Believe it or not, the Option ARM, yes those dreaded, "evil" loan programs that place homeowners in foreclosure while making mortgage brokers rich, are actually the best solution in a "perfect world".  But alas, we are not in a perfect world.  As Americans, we tend to do things we shouldn’t, such as use our house as an ATM machine.

How are we to find the best mortgage program for ourselves?  Friends, family, realtors, mortgage brokers?  Not likely.  We are really on our own if we want to find the best solution.  We must do our own research and find the "advisor" that will help us determine the best solution. 

What should that advisor be like?  It depends on you.  Certainly they should show their level of expertise.  Certainly they should show themselves to be trustworthy.  Certainly they should offer more than one solution.  Beyond that, it depends on you, and no one else can make the final determination of which advisor you should choose.

Now, be careful as you decide though.  Asch’s Conformity Experiment can prove deadly in your decision making process.  You see, that experiment proves that while you clearly know the correct answer, being surrounded by those answering incorrectly may lead you to answer incorrectly as well.  A mistake on your mortgage, however, can prove very costly.

So, as you move forward in your decision on which mortgage to use, keep an open mind.  The best solution may be the complete opposite of what you are thinking right now.

Writer for national real estate opinion column AgentGenius.com, focusing on the improvement of the real estate industry by educating peers about technology, real estate legislation, ethics, practices and brokerage with the end result being that consumers have a better experience.

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9 Comments

9 Comments

  1. Jeff Brown

    December 27, 2007 at 3:04 pm

    So, if most folks tell me the world is flat, they could all be wrong?

    How many folks would be in a better financial position today, if they’d done business with you when choosing their loan?

    Stellar.

  2. Robert D. Ashby

    December 27, 2007 at 3:15 pm

    Jeff – I am not saying to do business with me, rather calling people to do their research and find the professional, and there are many blogging daily such as Brian Brady, that best “fits” what they need.

    The reality is I am actually thinking of closing shop and focusing on other endeavors. I have been thinking along those lines ever since the beginning of last year. I am torn between two “loves” and flying is still the winner at the moment.

  3. Robert D. Ashby

    December 27, 2007 at 3:20 pm

    PS – I guess I should throw in a little ego trip and say that I have created a lot of wealth down here over the years, not to mention placed many families in better financial health overall.

    Sorry, I will deflate my head now.

  4. Jeff Brown

    December 27, 2007 at 3:21 pm

    Whatever your decision, we all want you to be smiling. Good luck.

  5. Robert D. Ashby

    December 27, 2007 at 3:27 pm

    Thanks, I appreciate the support. Rest assured that blogging will remain a part of my “fun time”.

  6. Brian Brady

    December 27, 2007 at 9:19 pm

    “Sorry, I will deflate my head now.”

    Why? It ain’t bragging if you can back it up.

  7. Robert D. Ashby

    December 28, 2007 at 11:03 am

    Brian…good point, but my head is big enough already, lol.

    Everyone…Let me clarify my previous statement about closing shop. It is a long way away if it even happens, which I don’t want it to. I am still working on a “balance” of everything on my plate and hope all things balance out.

  8. PeterT

    December 31, 2007 at 9:38 am

    Hi Robert, just a comment on option ARMs. If people used them as a method of building wealth, investing the payment difference in a side fund and followed through religiously, you are right they are a great product. My experience is that most people, even when they know what they are supposed to do, don’t. They work well for sophisticated investors, but too many people will just make the minimum payment and spend the difference.

  9. Robert D. Ashby

    December 31, 2007 at 5:41 pm

    Peter…You hit the nail on the head as to why we do not live in a “perfect world”.

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Economic News

Is the real estate industry endorsing Carson’s nomination to HUD?

(BUSINESS NEWS) Ben Carson’s initial appointment to HUD was controversial given his lack of experience in housing, but what is the pulse now?

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NAR strongly backs Dr. Carson’s nomination

When President-Elect Donald Trump put forth Dr. Ben Carson’s name as the nominee for Secretary of Housing and Urban Development, NAR President William E. Brown said, “While we’ve made great strides in recent years, far more can be done to put the dream of homeownership in reach for more Americans.”

At the time of nomination, the National Association of Realtors (the largest trade organization in the nation) offered a positive tone regarding Dr. Carson and said the industry looks forward to working with him. But does that hold true today?

The confirmation hearings yesterday were far less controversial than one would expect, especially in light of how many initially reacted to his nomination. Given his lack of experience in housing, questions seemed to often center around protecting the LGBT community and veterans, both of which he pledged to support.

In fact, Dr. Carson said the Fair Housing Act is “one of the best pieces of legislation we’ve ever had in this country,” promising to issue a “world-class plan” for housing upon his confirmation…

>>>>>Click to continue reading…<<<<<

#CarsonHUD

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Economic News

Job openings hit 14-year high, signaling economic improvement

The volume of job openings is improving, but not across all industries. The overall economy is improving, but not evenly across all career paths.

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Job openings hit a high point

To understand the overall business climate, the U.S. Labor Department studies employment, today releasing data specific to job vacancies. According to the department’s Job Openings and Labor Turnover Survey (JOLT) for April, job openings rose to 5.38 million, the highest seen since December 2000, and a significant jump from March’s 5.11 million vacancies. Although a lagging indicator, it shows strength in the labor market.

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The Labor Department reports that the number of hires in April fell to 5 million, which indicates a weak point in the strong report, and although the volume remains near recent highs, this indicates a talent gap and highlights the number of people who have left the labor market and given up on looking for a job.

Good news, bad news, depending on your profession

That said, another recent Department report notes that employers added 221,000 jobs in April and 280,000 in May, but the additions are not evenly spread across industries. Construction jobs rose in April, but dipped in professional and business services, hospitality, trade, and transportation utilities. In other words, white collar jobs are down, blue collar jobs are up, which is good or bad news depending on your profession.

Additionally, the volume of people quitting their jobs was 2.7 million in April compared to the seven-year high of 2.8 million in March. Economists follow this number as a metric for gauging employee confidence in finding their next job.

What’s next

If you’re in the market for a job, there are an increasing number of openings, so your chance of getting hired is improving, but there is a caveat – not all industries are enjoying improvement.

If you’re hiring talent, you’ll still get endless resumes, but there appears to be a growing talent gap for non-labor jobs, so you’re not alone in struggling to find the right candidate.

Economists suspect the jobs market will continue to improve as a whole, but this data does not pertain to every industry.

#JobOpenings

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Economic News

Gas prices are down, so are gas taxes about to go up?

Do low gas prices mean higher gas taxes are on the way? Budgeting for 2015 just got a bit more complicated, if some politicians have their way.

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Gas taxes and your bottom line

Many industries rely heavily on time in their vehicle, not just truck drivers and delivery trucks. Sales professionals hop in their vehicles throughout the day, as do many other types of professionals (service providers like plumbers, and so forth). For that reason, gas prices and taxes are a relevant line item that must be budgeted for 2015, but with politicians making the rounds to push for higher gas taxes, budgeting becomes more complicated.

Gas prices are down roughly 50 cents per gallon compared to a year ago, which some analysts say have contributed to more money in consumers’ pockets. Some believe that this will improve holiday sales, but others believe the timing is just right to increase federal taxes on gas. The current tax on gas is 18.40 cents per gallon, and on diesel are 24.40 cents per gallon.

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Supporters and opponents are polar opposites

Supporters argue as follows: gas prices are low, so it won’t hurt to increase federal gas taxes, in fact, those funds must go toward improving our infrastructure, which in the long run, saves Americans money because smoother roads mean better gas mileage and less congestion.

Gas taxes have long been a polarizing concept, and despite lowered gas prices, the controversial nature of the taxes have not diminished.

While some are pushing for complete abolition of federal gas taxes, others, like former Pennsylvania Governor, Ed Rendell (D) tell CNBC, “Say that cost the average driver $130 a year. They would get a return on that investment” in safer roads and increased quality of life, he added.

The Washington Post‘s Chris Mooney points out that federal gas taxes have been “stuck” at 18 cents for over 20 years, last raised when gas was barely a dollar a gallon and that the tax must increase not only to improve the infrastructure, but to “green” our behavior, and help our nation find tax reform compromise.

Is a gas tax politically plausible?

Mooney writes, “So, this is not an argument that a gas tax raise is politically plausible — any more than a economically efficient tax on carbon would be. It’s merely a suggestion that — ignoring politics — it might be a pretty good idea.”

Rendell noted, “The World Economic Forum, 10 years ago, rated us the best infrastructure in the world,” adding that we “need to do something for our infrastructure, not in a one or two year period, but over a decade.”

Others would note that this rating has not crumbled in just a few years, that despite many bridges and roads in need of repair, our infrastructure is still superior to even the most civilized nations.

Regardless of the reasons, most believe that Congress won’t touch this issue with a ten-foot pole, especially leading up to another Presidential campaign season starting next year.

“I think it’s too toxic and continues to be too toxic,” Steve LaTourette (the former Republican congressman best known for his close friendship with his fellow Ohioan, Speaker John Boehner) tells The Atlantic. “I see no political will to get this done.”

Whether the time is fortuitous or not, and regardless of the positive side effects, many point to a fear of voters’ retaliation against any politician siding with a gas hike, so this matter going any further than the proposal stage is unlikely.

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