With the Bill still on the Hill, the markets are in a tizzy. Nobody knows where it will land come Thursday, when the recess is over after the Jewish Holidays. (Great timing, Uncle Sol!) So until then, banks seem to be running out of dough.  Refer to my entry yesterday on supply and demand.

 

Although the stock market went up almost as much as it went down yesterday, it is not helping the credit market.  Companies, municipalities and others need to borrow money to operate day to day.  Without lines of credit, companies might not have the money to pay for utilities, payroll and the rent due on the 1^st! Doesn’t anybody listen to Suzie Orman!! Geez, she tells everyone to have 6 months of expenses on hand.

 

So, interest rates for residential mortgages went up three times today at most lenders, some places had four increases.  This does not mean that interest rates are suddenly 8%.  It does not mean that you cannot get a loan anywhere….as the media claims.  This is a short term pop in the rates based on uncertainty and volatility in the credit markets.

 

What do you do?  Do not panic (easy for me to say), do not lock and do not jump.  In times like this, the consumer must be clear headed and think rationally. Please review:

 

If you need a mortgage go to a mortgage broker that can shop your loan around

• Make sure you have a commitment letter from more than one bank
• Figure out when you are closing and when you have to lock in
• If you are closing Friday, better lock in (sorry)
• If you are not closing for two weeks or so, wait
• Make sure your Butt is covered

I am not a fan of this Bill and cannot believe that a house of cards can collapse so quickly. I think a lot of this is fanfare, political BS and bleeding the taxpayers. However, for some reason we wait with baited breath!  So, when the Bill is approved and Paulson gets his checkbook, the credit markets with breath and open up again.  Money will flow and the interest will go down.

Until then, save your pennies!  

– Dale Robyn Siegel