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FAQs about buying and refinancing a home and how they relate to mortgage interest rates

Buying and refinancing a home are the largest financial transactions you will make in your life. This is far too important of a decision to place in the hands of someone who is not capable of advising you properly.

So, how can you tell if you are working with an experienced, professional loan officer? Here are four simple questions your lender absolutely must be able to answer correctly. If they do not know the answers… RUN… do not walk… and find a lender that does!

1) What are mortgage interest rates based on?

A: The only correct answer is “Mortgage Backed Securities” or “Mortgage Bonds,” not the 10-year Treasury Note! While the 10-year Treasury Note sometimes trends in the same direction as Mortgage Bonds, it is not unusual to see them move in opposite directions.
DO NOT work with a lender who has their eyes set on the wrong indicators!

2) What is the next economic report or event that could cause interest rate movement?

A: A professional lender will have this at his/her fingertips. For an up-to-date calendar of weekly economic reports and events that may cause rates to fluctuate, email or call us today.

3) When the Fed changes rates, what does this mean and what impact does this have on mortgage interest rates?

A: The answer may surprise you. When the Fed makes a move, it is changing a rate called the “Fed Funds Rate” or “Discount Rate.” These are very short-term rates that impact credit cards, home equity credit lines, auto loans and the like. On the day of the Fed move, mortgage rates often move in the opposite direction as the Fed change. This is due to the dynamics within the financial markets in response to inflation. For a more in-depth explanation, just give us a call.

4) Do you have access to live, real time, Mortgage Bond quotes?

A: If a lender cannot explain how Mortgage Bonds and interest rates are moving in real time and warn you in advance of a costly intra-day price change, you are talking with someone who is still reading last week’s newspaper and probably not a professional with whom to entrust your home mortgage financing. Would you work with a stock broker who is only able to grab yesterday’s paper to tell you how a stock traded yesterday, but had no idea what the movement looks like at the present time and the market conditions could cause in the near future? NO way!

Be smart…Ask questions… Get Answers!

You need to know your options, so you can make informed choices about buying a home and obtaining the right mortgage that is “built” to fit your budget. Here’s what you need to know.

You might do this four or five times at the most, in your entire life. We do this every single day. With all the choices about types of mortgages, interest rates, discount points, closing costs and down payment, you can not rely on the advice of a banker who does not “specialize” in mortgage loans, or the advice of well-meaning family and friends. It’s your home and your future. It’s our profession and our passion. We are ready to work for your best interest.