What You Need to Know about Mortgage Interest Rates

There is a popular misconception concerning interest rates and when is the best time to buy or refinance a home. Most believe that if the Federal Reserve Bank (FED) lowers interest rates, then it is a clear signal to act. In reality, the interest rates that are affected by the FED are short-term interest loans and not long-term. If you wait on the FED as the determining factor to buy or refinance a property you may be doing yourself a disservice.

What the FED does control is the rates at which banks lend and borrow to each other, not the mortgage rates. Long-term rates are related to long-term bond yields (the cost of federal funds) that can change on a daily basis and are dependent on the health of the economy and inflation. Whether the FED has reduced rates is not critical. You can still get a great loan if you have a clean credit history. So buying at a low rate does not necessarily mean it will be the most cost effective, especially if the mortgage will expand over a few years. Inflation rates could increase causing mortgage to also increase. Therefore inflation and the economy are factors to take into consideration as well as interest rates when choosing when to buy or refinance.

Currently it is a good deal if you can lock in your rate at 7% or under because there is no way to tell how low a rate can fall before it starts rising again. As a rule of thumb, some experts believe that in the end a good rate is one that works within your budget.

To learn more about how Real Estate Investments can help secure your family’s financial future, go to Dr. Alan Rosenthal’s website at www.taichinhhana.com where you can find more great investment information. And while you’re there, please sign up for your FREE Financial Health Real Estate Starter Package full of tips, newsletters and much more. Plus, you are cordially invited to attend one of his real estate investment workshops by visiting FinancialHealthRealEstate.com/UpcomingEvents.html. For additional information listen to one of Dr. Alan Rosenthal’s investment talks at FinancialHealthRealEstate.com/InvestmentTalks.html.