The Appraisal Process is Being Sabotaged by Government Regulations Wasting Borrower's Time and Money

1. There is a fight, a tug-of-war if you will, between savers and customers in this country. Savers Lament On the saver's side, conditions are dreadful. Rate of interest on certificates of deposit (CD) have actually dropped significantly to the point where the average rate for a 1-year CD is 0.55% and simply 1.63% for a 5-y CD. Reflect on that for a bit ... your money locked-up for 5 milebrook financial consolidation program years making just 1.63%! Other cost savings automobiles are struggling too. For instance, a popular fund that contains corporate bonds from Wells Fargo, AT&T, Wal-Mart, and other blue-chip American business has a typical maturity of 12 years and currently yields about 3.75%. That's 3.75% of taxable interest income. Assuming your tax rate is 33%, you're left with an efficient, after-tax yield of 2.5% which, my friend, is less than the historic inflation average of 3%. So, while your bond financial investment is better than money in the bank and protects you to some extent versus inflation, you still wind up with 0.5% lower purchasing power every year. So savers can't be too happy about this. While Borrowers Rejoice Customers, on the other hand, are having the time of their lives. Last week, the average 30-year fixed-rate home loan struck its lowest level of 4.19%. The kicker here is that mortgage rates ought to in fact be more than 0.5% lower - in the 3.8% variety - based on their correlation with interest rates on Treasury bonds. Nevertheless, rates are unlikely to go much lower so here's a suggestion: If you are in the marketplace to refinance, waiting is probably not going to help you much. In addition, customers of mine are borrowing millions at 2.15% to money their organisation activities. Appears a Little Unfair Without taking a moral stance, it does appear a bit unfair that savers, who in a sense are the "good guys" building wealth for their future, contributing capital for economic development and conserving for a rainy day, are being penalized for the actions of reckless borrowers and greedy loan providers. Borrowers got in over their heads, didn't take affordable preventative measures, and are now getting loan adjustments and lowered rates on the cash

2. they owe. Banks experienced massive losses because of bad loaning practices and triggered this drop in rates to ultra-low levels. Nevertheless, this sort of discussion does not get us anywhere. What has actually occurred, has actually occurred - reasonable or unfair. So where do we go from here, and how do we benefit from all this? What Debtors Can Do Take a look at your finances from a customer's viewpoint. First: re-finance your home loan NOW if you can because rates most likely aren't going to fall much lower. Second: store, shop, purchase a much better rate on your credit card. Borrowing costs are dropping all around so why should you pay the usual high rate on your charge card? Find banks that are starving to lend you money such as smaller organizations and Credit Unions, and prevent mega-banks that typically have all the cash they need. Third: secure an organisation loan if you require the money. Banks are loosening up and making loans at fairly low rates that are extremely engaging despite the threat of slower service in this weak economy. However, use good sense and profundity as you handle more debt. Handle "excellent" debt that funds your home purchase or properties that appreciate in worth. Stay away from taking on "bad" debt for diminishing possessions you can ill afford such as a new vehicle or boat. If you must take on "bad" debt, make certain it is short term and pay it off very quickly. What Savers Can Do Now the difficult part: discovering offers as a saver. First: search for a longer-term CD that will change greater if rates rise. There is bit even worse than locking your money in a 5-year CD at 1.50% only to see rates rise to 5% two years from now. 2nd: think about buying corporate bonds with maturities of 5 years or less. These bonds still yield more than CDs, however make sure you understand what you are buying - if the corporation goes bankrupt, you might lose an excellent piece of your "safe" investment. Third: consider purchasing high dividend-paying blue-chip stocks. Warren Buffet recently said that stocks are cheaper than bonds today, and he's right. There are many strong companies out there whose dividend yields are above 3%. For example, Altria currently has a dividend yield of 6% and a solid history of constant dividend payouts. So ... it's up to you to be a winner or loser in the savings and loaning game. All you have to do is understand the truths, decide to act, get on the phone or in your vehicle, and start getting your affairs in order.