The truth about Mortgage Interest Rates

Shopping around for a low mortgage interest rate?  Here are four simple questions most consumers don’t understand.

1.      What are mortgage interest rates based on?  Mortgage Backed Securities or Mortgage Bonds. (The 10-Year Treasury Note is a close benchmark but unfortunately, is not always a reliable indicator.)

2.      What causes interest rates to fluctuate? There are several factors that cause interest rates to shift periodically. Economic reports and events impact rates on a weekly basis and even a daily basis.  We are tied to a global economy and often political and economic factors outside of the US will move our securities.  Some products are more susceptible then others to fluctuations in rate so good communication with your Loan Officer is important.

3.      What does it mean when the federal government changes the rate? How does this affect mortgage interest rates? When the federal government changes the Federal Funds Rate or the Discount Rate, the change directly impacts credit cards, home equity credit lines, vehicle loans, etc. Mortgage rates typically move in the opposite direction as the rate change, usually the same day as the change. For a more in-depth explanation on how this could affect you, give me a call.

4.      Is it possible to track mortgage bond quotes in real time? The answer is yes. Market conditions are constantly changing, making it crucial to partner with a lender who is always watching for anything that could impact your bottom line.

We are at a historical time when rates have never been lower.  The old rule of lowering your rate over a point is no longer in play and everyone is different.  You need to do the math to see if it's right for you. 

See if a Refinance is right for you!