What Impacts Mortgage Interest Rates?

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If you’re looking for a home or about to sell one, you know that monthly mortgage interest rates are a key factor in housing affordability. But what makes rates go up or down? What national economic indicators affect the interest you’ll pay?

The information out there can be confusing. Should you pay attention to stocks, T-bills, bank rates, short-term rates, crystal balls or the Federal Reserve? Unless you’re a financial professional, all the data can make your head spin.

Here is the one interest rate indicator that will tell you where mortgage rates are headed: Bonds. Bonds, bonds, bonds. Specifically, bonds called mortgage backed securities, or MBS.

It gets even simpler, but first here’s the Wikipedia MBS definition:

A mortgage-backed security (MBS) is a type of asset-backed security that is secured by a mortgagor collection of mortgages. Mortgages are sold to a group of individuals (a government agency or investment bank) that securitizes, or packages, the loans together into a security that investors can buy.

Still sounds too wonky? Wait! Here comes the even simpler part. The bond impact simply works like this — bond market up, interest rates down. Bond market down, interest rates up. How’s that for easy?

Where can you find the latest info? There’s lots of information just about anywhere on the internet, like Mortgage News Daily  I love the blog!  But to get the best information for your particular needs, talk to a financial professional.

Boost Your Selling Price

(Video courtesy of Consumer Reports)

Looking for ways to build equity faster?

  • Get a 15 year mortgage – not always feasible, but if it’s in your budget and works well for your situation.  Talk to your financial wizard.
  • Pay more on your mortgage (especially if you don’t want to commit to a 15 year mortgage and the larger payment that comes with it)
  • Should you consider bi-weekly mortgage payments?
  • Make a larger down payment
  • Renovation/Update – Have a plan.  Get advice, especially if you plan to sell in a few years.  The tile or counter top trending now may be unacceptable next year.

Here’s help with math!  I love calculators  and these are handy!  You can find Affordability, Rent vs Buy, Mortgage, FHA, VA, not to mention help with renovation measurements and more.

And if you’re looking at loan products, check out this page.

What Do You Hear From Your Agent?

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Of all the complaints real estate consumers voice, the loudest is probably that their agent never communicated with them once the house was listed. They ‘stuck a sign in the yard and we never heard from them again’. It’s hard to overcome this betrayal of trust.

Expectations are an important part of your relationship with your agent.  Set them at your first meeting.  Do you want weekly communication or to simply be informed about feedback from showings, offers, and a closing date?  What’s your preferred method?  A combination of phone, text and emails?  Is it important to minimize work day interruptions and that dastardly game known as phone tag?

A consistent schedule solves many problems.  Perhaps a check in on Mondays to go over weekend showings or open house feedback and Thursdays to do a run-down of the week’s activities and discuss the upcoming weekend schedule.

Allow for some flexibility.  I know texting is easy, but it’s not practical for all updates.  Realtors love to text but since they’re so frequently strapped into their cars, be prepared to wait a bit for a response.  They’re not ignoring you.  They’re attempting to get from A to B without raising their insurance rates.  I like to schedule an occasional visit, as well.  I want you to see my face and know I’m involved.   Continue reading What Do You Hear From Your Agent?