The Mortgage Man

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Archive for Hurricane Gustav

Tuesday September 2, 2008

So, what happened with mortgage rates while you were weathering Gustav?

Well, the long weekend is over.  Summer has officially ended.  And, we are back at work to see what gifts were left behind by our friend Gustav.  Those who made the mass exodus from New Orleans are probably mad and irritated that they left.  But, it is that kind of thinking that gets people killed when the storm is worse than expected rather than weaker than expected.

New Orleans survived the storm, and for the rest of us on either side, it definately could have been worse.  But the markets today are reacting to the lack of any affect on the offshore oil platforms.  As reports from all of the companies with assets in the Gulf begin to come in, we are seeing that the damage is mininal if at all, and the oil traders are running for the hills because of it.

So what does this have to do with mortgages and real estate?  Well, the sell off in oil is creating a run on the stock market.  A run on the stock market is causing bond traders to sell bonds and buy stocks.  As the bonds fall from a sell off, mortgage rates rise.  Because of this, today is a great day to lock in your rate ahead of losses that are sure to happen this afternoon or tomorrow in mortgage rates.

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Thursday August 28, 2008

Here is how the market is shaking out today.

Today, the preliminary Gross Domestic Product report came in at 3.3% above expectations of 2.7%, and well over the previously reported 1.9%.  The final number for this report is not due out until next month, but the preliminary reading has people exiting bonds and buying stocks today.

Because of this, you might want to lock your rate if you have a loan in processing.  Additional pressure on bonds is being created by oil prices trading above $120 per barrel again on fears of Hurricane Gustav and how it will affect the 3500 oil drilling platforms in the Gulf of Mexico.  if there is significant damage done to oil drilling operations from Hurricane Gustav, we may see a greater spike in oil next week, creating even more pressure on the bond market.

Lots of uncertainty on the horizon, but prudence may be the word of the day in my advice to lock in and protect from potential loss.

Gustav Threatens The Gulf Coast

Here we go again!

Well, we don’t get wildfires or mudslides or earthquakes, but we do stand in the way of nature’s fury in the way of tropical hurricanes.  Just as most of Florida is still wringing out their shorts from the deluge of rain in Fay, we are again squarely in the cross hairs of Hurricane Gustav.  Many didn’t take Fay seriously because it never reached hurricane status, and yet it set records for rain fall and is the only named storm in history to make landfall 4 times in the U.S.

Gustav, however, commands out respect from the start.  Already reaching hurricane status before it even gets into the gulf, Gustav threatens to be a category 3 before making landfall somewhere along the gulf coast early next week.

In keeping with the theme of this blog, we will focus on the potential implications of this storm as it relates to real estate and the economy.

If you are purchasing a home, make sure that you have your insurance in place immediately.  A Citizens policy (in Florida) will not write new coverage, increase coverage, or make any policy changes “when a Tropical Storm or Hurricane Watch or  Warning has been issued by the National Weather Service for any part of the State of Florida.”  Other insurance companies have a map of the Gulf of Mexico and draw a dotted line border around a certain geographic area called “The Box”.  If a named storm (tropical or hurricane) enters that box, they will not write new policies or make changes to existing policies until the storm hits land.  In some situations, this could delay closing for a week or more until the storm runs its course.

If you already own your home, now is the time to prepare.  Even with the number of hurricanes that we are exposed to on an annual basis, there are a shocking number of people that do not prepare.  Preparing your house means:

  • Check the trees around your house for dead limbs, these are the first to come down
  • Make sure that you have adequate protection for doors and windows.  Taping the windows is a waste of time.  Either board them up, or spend your time on other things.  Tape will not stop debris and it will not keep the glass from shattering.
  • Take photos of your property for insurance purposes.  If you happen to be the minority that keeps receipts for everything you own, this may be less important.  Be as specific as possible, and a video recording of everything is the preferred method.
  • Pack up anything that can not be easily replaced.  This would include family heirlooms, photos, jewelry, etc.  Also take insurance forms and important paperwork such as deeds and wills.
  • Assume that when you get back to your home, there will be no power and no water.  Fill a bath tub full of water to use for flushing toilets and possibly boil for drinking water.

There are many more resources on how to prepare your family and pets at NOAA.gov .