An Educated Guess

Seymour and Irving, two elderly residents at the Senior Home, are sitting next to each other in the lounge. Suddenly, Seymour says to Irving, “I bet you can’t guess how old I am!”

“I bet I can,” replied Irving.

“Well, I’ll bet you can’t,” declared Seymour.

“You’re on,” says Irving with a smile. “Care to make this interesting?!”

The two seniors agree to wage $100 each, confident in their position.

Irving tells his friend, “Now please stand up so I can properly investigate you.”

Seymour does what he’s told. Irving looks him up and down.

“Now turn around,” says Irving.

Again, Seymour does what he is told so his friend can analyze him up and down.

“Now turn back around and jump up and down on one leg,” says Irving.

Again, Seymour complies while Irving carefully evaluates him up and down.

After much inspection, Irving confidently says, “You are 83 years old!”

Seymour was amazed and couldn’t believe what he had just heard.

“Wow, Irving,” he says, “you’re absolutely right! I am 83. How on earth did you work that out?!”

After receiving the prize money, Irving says, “You told me yesterday!”

Speaking of “told you so,” – I would like to go on record as ‘guessing’ and predicting that the Federal Reserve will be cutting rates very soon. I posted a survey on my social media accounts asking how many people think The Fed will cut rates in 2024. To my surprise, most said they would not. The fact that most people assume that The Fed won’t be cutting rates makes me concerned that many aren’t positioning themselves for success.

More than 60% of bond analysts predict a Fed cut as early as March. I don’t think we will see a cut in March, but I do believe we will see a potential 50 basis point cut in May. So, how can the average homeowner or homebuyer take advantage of this information? Knowing that the “cost of funds” for all debt will be lower a year from now should give everyone insights into how to operate now.

Many mistakenly believe they need to wait until lower rates present themselves to take action. This is a mistake. In fact, I have daily conversations with homeowners who lament the fact that they missed the boat regarding lower Home Equity (“Heloc”) rates. Anyone who thinks that is unaware of how home equity lines of credit work. Rates on HELOC loans are variable, and are not locked – ever.

This means that regardless of whether you took out that HELOC in 2020 when rates were below 3%, that loan is now at least 8.5% – just like for those who took out a loan last month. The same holds true for credit card debt and most other debt tied to the Fed Funds Rate, which is what the Federal Reserve will cut in 2024.

Some people whom I speak with are shocked when we have a consultation, and I give them my time, attention, and advice – and it does not have anything to do with getting a new mortgage. They appreciate my guidance and insights but feel bad for “wasting my time.”

The truth is, I would rather spend the time and effort now being proactive to help someone with their finances than to speak with them a year from now and regret the fact that they didn’t take action sooner. Take the guesswork out of your finances by reaching out to someone knowledgeable today!

Shmuel Shayowitz (NMLS#19871) is President and Chief Lending Officer at Approved Funding, a privately held local mortgage banker and direct lender. Approved Funding is a mortgage company offering competitive interest rates as well as specialty niche programs on all types of Residential and Commercial properties. Shmuel has over 20 years of industry experience, including licenses and certifications as a certified mortgage underwriter, residential review appraiser, licensed real estate agent, and direct FHA specialized underwriter. He can be reached via email at [email protected].

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