The Haven Team discussed with Ashok Ghildyal whether people should buy a home in the U.S. amidst the current economic climate.
About Ashok: Ashok Ghildyal has worked in financial advisory services for more than 42 years. After receiving a master’s degree in international finance and accounting from Thunderbird – The Garvin School of International Management, he spent 28 years as a financial advisor. For the past 14 years, he has been a mortgage advisor. He is currently employed at First Community Mortgage, “FCM,” and is regarded as a subject matter specialist on VA Mortgages (see our Q&A with Ashok from earlier this year on VA Jumbo Financing). He has made several appearances on the local Cincinnati, OH CBS affiliate regarding the importance of the VA Mortgage and the benefits that accrue to Veterans and Active Duty Members of the military. He has also been teaching a continuing education course at local realtor boards since 2013. His aim is to raise awareness among realtors about the VA Mortgage and the role it can play to “serve those who have served us.” He can be reached via phone at 513-600-4961 or via email at ashok.ghildyal@fcmhomeloans.com.
Haven Team: Ashok, Thank you for your time, and welcome back! A lot has changed since we talked a few months back.
Ashok: Indeed, and the discussions with my clients have also evolved.
Haven Team: There must be a lot of uncertainty – how do you guide future homebuyers during such a tumultuous and volatile time?
Ashok: If there ever was a time when buyers need to focus on that which they can “control,” it is now. Interest rates, inflation, Federal Reserve, war in Ukraine, midterm elections, oil prices, etcetera. These confounding variables only make a tough decision much tougher. I feel for my clients and the struggles they are facing. It is difficult enough for someone to make one of the biggest asset purchases in their lives without all these extraneous factors compounding their stress.
Haven Team: What do you do?
Ashok: Go back to the basics.
Haven Team: What does that look like in practical terms?
Ashok: For brevity’s sake, we will talk about purchase only. The biggest concern my clients have is regarding interest rates – what they will do? Where will they go? When? We have ideas on possible scenarios, but there is always uncertainty in predicting interest rates.
Haven Team: So anything could happen?
Ashok: Yes. The first step then is to quantify Maximum Purchase Price and monthly payment. This establishes what the buyer can afford and how much cash they will bring to the table in down payment and closing costs.
Haven Team: Isn’t that what you are always supposed to do?
Ashok: Exactly, correct. The clients have all the information they need to make an informed decision but that does not allay their fears and anxiety. Due to the current market forces, every client I work with is concerned with one question: “Am I making the right decision?”
Haven Team: And you think you are able to guide them to the right choice?
Ashok: Yes. Once price and payment have been established, we discuss three possible interest rate outcomes over the next two years:
1. Interest rates are substantially lower – The decision to buy was a good one and refinancing is a benefit.
2. Interest rates are substantially higher – The decision to buy was a good one. No action needs to be taken. By moving decisively on the purchase, additional hardship was averted.
3. Interest rates stay the same – The decision to buy was a good one. No action needs to be taken. The client is building wealth through price appreciation and normal amortization.
This may sound simple, but many people “freeze” and cannot get past the worst-case scenario!
Our job as advisors is to guide our clients through different outcomes so that they can make the most educated decision possible. A decision that is best for them, their families, and their futures. When volatility and uncertainty abound, our job is to provide a much-needed reality check. An unbiased point of view so that our clients can find a “signal through the noise.”
Haven Team: Thank you Ashok! Any final thoughts?
Ashok: Yes – if you have to buy or refinance, find a mortgage advisor that will present financial impact studies. You will know what to do now and in the future.
