Help please with Page 32 Be a Real Estate Millionaire?

o.k. Debbiejo, are you ready? here's what you need to know, you need to determine what the trend of interest rates are going to be (primerate), the web site you want to visit is www.HARPFINANCIAL.COM and look under prime rates by decade, if prime rate drops everything else usually follows suit. Then, you need to take a look at the TRENDS over say the past 5 years as you will see rates will tend to drop for like 2 years then stabilize for 6mos.-1 year,then they will start dropping, and so on. Right now rates have been dropping steadily since september of 07' from 8.25% in august to 7.75% in september to 7.50% in october, stabilized in november, then dropped again in december to 7.25%, DO YOU SEE THE TREND? rates usaully drop to a .25%-.50% at a time, right now in MARCH we are at 5.25%, so do the math, the market will be in a UPSWING soon, because rates have fallen steadily since september of 07'.CLASS DISMISSED.SULLY.

I have saved the web site you mentioned and I will surely take a look around it when I get settled after a HUGE day working.
From my previous research, over the last few days, I noticed that the interest rates had dropped steadily over the period that you mentioned. Do these and the Federal Reserve policy towards interest rates often/always run in parallel?
Thanks for your help. I appreciate it and I will make a comment when I read the site.
Deb

I have just read the home page statement on this web site and could you explain to me what "Home Equity lines based on the Prime Rate will benefit immediately
30 Year mortgage rates move at a different pace and do not always follow rate cuts." means?

Sorry I am so behind in this stuff but it is totally new to me and I am learning as fast as I can!
Thanks for your time and help.
Deb

Debbiejo listen, that just means that the rate does not immediately follow suit but, it's pretty close, you can almost bet, that home equity lines based off of PRIME RATE% WILL DROP IMMEDIATLY and 30 year MORTGAGE RATES MOVE @ A SLOWER PACE, meaning that if RATES drop it may take a little longer to affect MORTGAGE RATES. TRY NOT TO GET ALL COUGHT UP IN THIS,THE BOTTOM LINE IS RATES HAVE BEEN DROPPING FOR QUITE AWILE AND WILL CONTINUE TO DROP UNTIL THE MARKET HAS BEEN IN A UP SWING FOR AN EXTENDED PERIOD OF TIME. this is exactly why we as INVESTORS need to take advantage of the below market pricing before the UP SWING BECOMES EVIDENT.FOCUS ON WHAT'S IMPORTANT, THE TREND.YOUR HERO,SULLY.

Deb,

What you are talking about is basically the difference between short term and long term rates. The Fed can set short term rates. The banks' prime rate will mirror what the Fed does (ie if the Fed drops rates 1/4 point then banks will drop their prime rate by that same 1/4 point immediately.) This can affect loans such as car loans, home equity lines of credit (HELOCs), or adjustable rate 1st mortgages. It should also affect credit card rates, but they just seem to be immune to dropping.

Long term rates (such as 30 year mortgages) are NOT set by the Federal Reserve. They are determined by the bond market (ultimately when a home owner gets a mortgage, some investor provides the funds.)

Currently, the Fed is dropping short term rates VERY aggressively because the economy is very weak. The Fed is hoping that lower interest rates will prevent a recession or at least shorter its duration.

Hope this helps,

Mark

Thank you both so much for this information. I will keep up with you both and ask for advice when I get 'stuck'. I always tend to overthink everything and I want so much to make a go of this as I have a wonderful saint of a mother who is homeless and so very depressed and I want more than anything to buy her a home. I work in computers and I am learning screen writing, but they are going to take much more time than I can afford to wait so I am going at this with everything I can.
I really appreciate your help.
Best Regards
Deb

P.S - I am sure to have a zillion more questions as I work through the book! Hope you will still be there.....?