Your Interest
Welcome: Are you shopping around for the best interest rate? Here’s the inside scoop on how to do it right.
 
Make sure your are working with an experienced, professional loan officer. The largest financial transaction of you life is far too important to place into the hands of someone who is not capable of advising you properly or troubleshooting tissues that may arise along the way. But how can you tell who is a true professional?
 
Here are four simple questions a professional lender absolutely must know the answers to. If they do not know the answers, run- don’t walk-to a lender who does.
 
1. What are mortgage interest rates based on?
 
The only correct answer is “Mortgage Backed Securities” or “Mortgage Bonds,” not the 10-year Treasury note. While the 10-year T-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 on the wrong indicators.
     

2. What in the next economic report or event that could cause interest-rate movement?
 
Economic events such as the release of the monthly Jobs Report and Consumer Price Index can cause interest rates to change dramatically. A professional lender will have this information at their fingertips.
 

3. When the Fed “change rates,” what does this mean,
and what impact does this have on mortgage interest rates?
 
The answer may surprise you. The Fed can only control two rates, the “Fed Funds Rate” and the “Discount Rate.” Both are very short-term rates that impact credit cards, credit limes, auto loans and the like. Mortgage rates most often will actually move in the opposite direction as the Fed change. In the example of a Fed rate hike, raising the “Fed Funds Rate” helps to combat inflation, which is a bond’s worst enemy, as inflation erodes the future fixed value of that bond. So a Fed rate hike is actually good for Bonds, and mortgage rates will typically respond positively.
 

4. What’s happening in the market today, and what do you see in the future?
 
If a lender cannot answer how Mortgage Bonds and interest rates are moving “live” – in real time – or explain what is coming up in the near future that could impact rates, 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 stockbroker who was only able to reference yesterday’s paper to tell you how a stock traded, but has no idea what the movement looks like at the present time or which market conditions could cause changes in the near future? No way.
 
Be smart. Ask questions. Get answers. More than likely, this is one of the largest and most important financial transactions you will ever make. You might do this only four or five time in your entire life…but we do this every single day. It’s your home and your future. It’s our profession and our passion. We’re ready to work for your best interest.
 
Click here to select an home ownership advisor to answer your questions.