The real estate blog.

The last 24 hours on Wall Street have been a crazy mess. Ben Bernanke handed Wall Street trick or treaters a “sweet” rate cut of .25% and like overstuffed children, the Dow promptly threw up yesterday’s 137 point gain with a drop of over 360 points.

The 10 year bond saw a huge gain yesterday (good for investors, bad for borrowers) and also saw a dramatic reversal of 12 basis points today. Oil is up, the dollar is down and the Fed just injected an amount of money into the financial system not seen since 9/11.

As a homeowner or prospective homeowner, how can you make the best mortgage decision in today’s volatile market?

Good sales people have a philosophy called SWAT. Sell what’s available today. It means that as a salesperson, you will probably never have the same customer, same needs, same product, same pricing available like you have now. So take advantage of it.

This same philosophy applies to the current real estate market. Worries about pricing, rates and credit availability have sent many prospective homeowners to the sidelines. I suggested recently that rates seemed to be going down, so people should wait to buy or refinance unless they have to. The fact is, I don’t know this for a fact. Indeed, rates have gone down, but the bond market that determines fixed mortgage rates has been all over the place.

I am going to reverse course here a bit and suggest prospective homeowners look at what’s available today and act accordingly. We’re not in the situation we were in a few years ago when getting a mortgage consisted of being able to fog a mirror. With house values fluctuating, lending standards changing and rates moving all over the place, the smartest move is to evaluate what’s available today and stop speculating on what may be available tomorrow.

Prudence should rule your decision. I don’t care if your ultimate decision is to remain on the sidelines. I’m not a real estate cheerleader. Real estate happens to have been profitable to me. Over the long run, real estate has been profitable for many. In today’s market, one must absolutely consider rates, price and availability of financing when purchasing a home.

For those who already own, I must reiterate fixing your rate is the best bet. Do this as soon as possible, even if your rate isn’t due to reset for a while. Unless you plan to sell soon, this is the safest strategy I can think of. If rates continue to slide down, you may be able to refinance again. If they go the other way, you’ll be kicking yourself for not acting sooner.

It’s a crazy world out there and nobody knows what’s going to happen. If you own, or want to own, you can protect yourself a little by choosing a home and a loan you can afford, selecting a fixed rate loan and making sure you have savings established in case things go wrong.