What causes changes in mortgage rates? There are any number of reasons for mortgage interest rates to fluctuate and we’ve broken down some of the more common reasons to help you gain a better understanding of this ever-evolving market.
Mortgage Bond Prices:
Interest rates and mortgage bond prices are inversely related. If mortgage bond prices go up, interest rates go down.
Economic Conditions:
Generally speaking, when economic reports/conditions are positive, interest rates will rise. Just this week, the report on retail sales was flat versus the expected .2% increase. This helped keep interest rates down. Last week the jobs report was positive, unemployment was lower than expected and more jobs were added to the economy, which caused interest rates to spike. These are subtle changes that can greatly affect the mortgage industry.
Federal Reserve System:
Janet Yellen, Chair of the Federal Reserve System, plays a large role in the interest rates for the mortgage industry. For a number of years the Federal Government was purchasing large amounts of mortgage backed securities in an effort to keep interest rates low. The Fed monitors the economy and will influence the interest rates to control the economic growth of the US. By decreasing interest rates, the Fed is attempting to spark growth in the economy and encourage borrowing. If the economy is growing, they will use rising rates to control the growth.
Inflation:
Inflation is a prominent economic factor and a key concern for the industry. Inflation increases prices and decreases the spending power in the economy. As inflation rises, interest rates will also rise.
In summary, there are many factors that influence mortgage interest rates. All of these factors are outside of our personal control. When it comes time that you need a loan to purchase or refinance a home, you will be faced with making a decision to lock in your interest rate or let the rate “float” in hopes that the market improves and you can get a lower rate. Here is my advice in regards to that decision: It is much better to be locked in with rates falling than floating with rates rising.
Every borrower has a unique need, as far as their loan is concerned. If you have any questions or would like more information, please contact our preferred Lender, Keith Harris at Intercoastal Mortgage Company.
The JS Realty Team – not only serving Brambleton, serving all of Northern Virginia.
So what does that mean in plain English? If you are purchasing a home, ratification of the contract begins the moment the contract has been delivered to all parties with ALL of the terms agreed to in writing. This is the moment when you all are committed to each other and the terms of which you have agreed to work under. This is the moment when the timelines that you set in the contract begin (unless otherwise stated that they begin based on other terms). So your Realtor is congratulating you on the fact that all parties have reached an agreement and will be moving forward.
point of being ratified, so getting your contract ratified means they are committing to your terms and no one else’s. Also, as the Purchaser, you will want to know when the home inspection deadlines, appraisal deadlines, financing contingencies and other contingencies actually start. You will want to ensure that you meet the terms of your agreement and stay within the timelines to protect certain rights of yours within the contract.
So, the next time your Realtor congratulates you on officially being “ratified”, you will know that this is in fact a great moment and worth a little celebration!
life. Children can grow up with their same friends, continuing on through school with people they are comfortable with. It helps your family grow roots, so to speak, and feel as though they are part of a community, when you have the familiarity of living in the same home, neighborhood, and town. Children’s (and adult’s!) hobbies and sports also benefit from having the same core group of neighbors, teachers, and coaches continuously supporting them when you own your home in your community.
substantially reduces your taxes owed. As a homeowner with a 30 year mortgage, most of your payment is interest on the loan. Homes generally rise in value; this is how you build equity in your home. As you slowly pay down the loan your home’s value is rising. Making improvements to your home also adds value. Another great benefit is that you get to choose the improvements instead of living with someone else’s choices. Rents in our area are continually on the rise. Provided you have a fixed rate loan, owning your home means your mortgage payment remains the same throughout the length of the loan. And with rates as low as they are today, most people are choosing a fixed rate on a 30 year loan.
control to decide if and when you move. Most rental properties are not available to rent for more than 2 years, so this means every few years you have to start the whole process of finding a home to rent and moving all over again. Stability and being in charge of your own destiny is a very powerful and liberating feeling.
Now, there are instances when buying might not be right for you. If you are not going to be in the area for more than 2 years, you probably would be better off renting. If you are saving to buy a home then maybe sacrificing and living in a small home you rent would help you save the money you need for your down payment.
loan such as an FHA or VA? Conventional loans tend to have less stringent home inspection and appraisal requirements.
inspections and any other inspections to as short as possible. The job of your Real Estate Agent is to get all of the contingencies in the contract released as soon as possible. Appraisal & financing contingencies are difficult to shorten too much, because you are relying on 3rd parties to do their job, so therefore you have less control.
remember sitting in my Real Estate class, thinking “I am learning a whole new language!” It was a bit overwhelming, even though I had the desire to understand each and every word, along with its definition. Not everyone understands Real Estate terms, especially if this is your first time working with a Realtor. Over the next couple of months, the JS Realty Team will work towards enlightening you and helping you learn our “Real Estate Language.”
An Earnest Money Deposit is an important part of the home buying process. It is an amount of money that you will deposit (in escrow) that tells the Seller you are committed to the purchase of the home. It’s important to know that this earnest money deposit is not an extra cost of buying a home. It will be credited towards the down payment at closing, and in case it exceeds your mortgage down payment, and settlement cost, you will receive the balance at closing.
whether or not there are multiple offers on the property. If you feel that you are not in competition, you can expect to pay around 1-2% of the sales price in most markets. For example: a $300,000.00 sales price x 1% = $3,000.00 EMD. If you are in competition with other offers, you may want to offer more, as this will tell the Seller you are more serious about their home and could help you win the offer. This is where a good Realtor can really help you structure the correct offer with the right amount of EMD.
In most cases you will write the check to your Realtors, Real Estate Brokerage Company or the company that will be assisting you in the settlement (Title Company). Never write the check to the Seller or the Realtor directly. The money is usually due very shortly after the contract is fully accepted by all parties (ratified) and will be placed in an escrow account. Shortly before you go to settlement, it will be released so it can be applied towards your settlement cost and down payment on the day you purchase the home. In the event the amount you put down exceeds the amount needed for these cost, you will get a check refunding you the balance. As you can see, this is your money, and it is treated as such. It is only applied to your cost.
home and really want to buy it.” In most cases the money remains yours and is applied to your cost in regards to the purchase. It can also be a great way to leverage your offer in the event you find yourself in competition with another Buyer. A great Realtor can guide you in the offer process and help you structure a deal that is more than just about a sales price.
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selling or buying is a hefty task for you to take on. On average, most people only buy or sell real estate a couple of times in their entire lives. Now that you are ready, hiring the right Realtor should be at the top of the list. Yes, most of us have a family member or a friend that “might” be able to help, but let’s be real – unless you know they are fully committed to the job as a full time agent and are the best at what they do, you may want to rethink who you are choosing and why.
great Realtor can not only bring professional insight on the home selling or buying process, but they will also coordinate and manage all the professionals during the process. You deserve a high level of service and below are some key questions you should consider asking a Realtor prior to engaging their services.
media have really changed how Real Estate is done. While they all provide a level of efficiency to the process, the pace at which things get done has increased tremendously. Your Realtor should be able to accommodate your style of communication. If you are someone who likes to email, then a phone call or text may not be the best way to communicate with you. If you can’t answer the phone during the day due to work, then you really need someone that is willing to email or text you instead of calling. If you are out of the area and can’t see a house, a video tour of the home can help a lot too! Realtors have all sorts of services available to them, including electronic signature services. This not only saves you paper and ink, but time – there’s no need to print, sign, scan and email anymore. Understanding what tools and resources your Realtor has available to them can save you a lot time. Be sure to ask and make sure you are working with someone who can accommodate your preferred level of communication.
front counts. Buyers usually don’t pay commission directly, but sellers often do and the costs can vary from agent to agent. If you are selling a home, it will be important to understand and know what you are getting for the fee. An agent may charge less than another, but that does not mean they all provide the same services and resources. Make sure you are comparing apples to apples. Also ask for a breakdown of estimated closing costs, as they are different from state to state, and can also differ depending on if you are buying or selling. Understanding this upfront, can save you from “unforeseen surprises” later in the transaction.
the seller in the transaction? While it’s usually legal to represent both parties in a transaction (with proper disclosures), it’s important to understand where your Realtors obligations lie. Have your Realtor explain their agency relationship to you and describe the rights of each party. At the end of the day, we all want the highest level of service and someone to represent our best interest. Make sure your expectations can be met.
surrounding yourself with professionals that will meet your needs will be key. A Realtor providing a high level of service will have surrounded themselves with other professionals in the field alike, whom they will be referring along the way. You may only buy or sell a home 2-3 times in your life – why not ask for the best?