karan nice blogs: The Fed Rate and Your Home Loan

A common question I hear from my clients is whether a decline in the rate the Fed will lower interest rates on home loans. The short answer is no, in fact, home loan rates tend to fall lower before Fed rate increase and after it was announced. This leaves the question of exactly what affects the interest rates on housing loans for consumption. The answer is not nearly straight.

The process of
Before we can consider lending rates that we need to understand the flow of money in the process home loan. When you apply for a loan shops around mortgage brokers and find a lender that has a main program and rates that meet your needs. The primary lender to process your loan and pays the seller for the home you buy. Now, the senior lender may either keep your loan and collect the interest you pay, or they may sell your loan on the secondary market, which is what usually happens. The main buyer of mortgages in the United States is Fannie Mae. They buy loans specific requirements of primary lenders, which allows lenders to turn around and make more loans. The loans can also be bundled and sold to open market as mortgage-backed securities which is generally what happens to loans that do not conform to the standards of Fannie Mae. Once the loan is sold, the senior lender has cash to go out and make new loans to home buyers. This cycle is what works the home loan sector in our country.

Risk / Marketability
Because the vast majority of loans are sold to Fannie Mae or mortgage-backed securities the level of risk to your loan greatly affects your home loan rate. Your credit score, loan to value, loan type, and even geographical influence the best possible rate for your loan. In essence, the more likely you repay your loan, the lower your interest rate. Buyers at higher risk will be charged a higher interest rate to compensate for the increased risk of default. The federal funds rate federal discount rate that we hear so much about, has little to do directly with your loan rates home! The federal funds rate is the price of short-term loans that banks pay to borrow money from the Federal Reserve Bank. This in turn affects the rate that banks charge to lend money to each other and from which banks set their prime interest rates. The Wall Street Journal Prime Rate is the measure most commonly cited prime. This is a survey of 30 of the largest lenders and changes when three-quarters of them adjust their prime rates. This index is commonly used as a reference for credit cards, lines of credit and adjustable rate mortgages.

Fed rate for investors home loan is one of the indicators of how the economy is doing. The home loan rates are market-oriented, and if investors believe that the economy is bad, and if rates go down and experience it warms inflation rates will rise. There is no index or the serial number of your home loan is linked to. Loan rate movement and flow and can change multiple times throughout the day. So if your loan officer says, "lock your loan now," you can do immediately.

Putting It All Together
This, we must begin to be clear that this is not the Fed defines your home loan rate, but investors will eventually be buying your loan, even if they never know who you are personally. This is their assessment of the economy in general combined with market demand for loans that actually takes rate loan at any given time. This is a good reason to establish a relationship with a reliable mortgage broker and check with them from time to time that the credit market is.

Your best bet
If you ask to buy a new home, then it probably will not be in your best interest to try to time the market home loan. You should talk with your loan officer and tell them about your situation and requirements in relation to this loan are currently available. It is much more profitable to invest time in improving credit scores, improved debt to income ratio and building up your deposit, as those who will improve all type of loan available to you provision. Refinancing a home provides more opportunities for synchronization rate, and if you have a variable rate loan or a fixed rate loan that is too high interest rates, you may find that refinancing is a good idea. Talk with your loan officer about programs that are available, and what they expect lending rates to be in the near future.

Jacquie Cliff is a professional real estate agent based in Lynnwood, Washington. She has several years of experience in all phases of residential real estate sales and marketing as well as loans and credit sector. She has helped many people fulfill their goal of real estate in areas ranging from Seattle to Marysville itself and out of Snohomish.

karan nice blogs

My Blog List

Thursday, December 27, 2012

The Fed Rate and Your Home Loan - Is There a Connection?

No comments:

Post a Comment

Followers

Blog Archive

About Me