Always Be Aware of Current Rates


by Sarah Dinkins - Date: 2006-12-23 - Word Count: 454 Share This!

Before going in for mortgage loans you should always remember that mortgage rates fluctuate with respect to the rate of real estate markets. The fluctuation is quite similar to the stock market system; someday experiencing the depression, the next day it grows.

Therefore, it becomes mandatory for you to consider the interest rate factors before going in for the actual deal or filling up the form. To predict the current mortgage rate is somewhat impossible. The changes in the rates are sometimes so rapid that it may fall drastically as you start to pay or may rise enormously, after you get your loans. In order to get a keen sight on the market and the rates, it is advisable to understand the reason behind the rise and fall of the interest rates.

The Basics

It happens, that whenever the economy suffers a crisis, the desire to invest on the current mortgages consequently decreases, thereby bringing a drastic fall on the mortgage rates. On the contrary, when the economy is going through a pleasant phase, and receive a growth on the money availability, people invest wholeheartedly in the market, causing inflation in the mortgage rates. However, the rise and fall of the mortgage rates also depends upon the actions taken by the Federal Reserve, which slow down or accelerate the economy, and hence mortgage rates are lowered or increased accordingly.

Effects Of The Federal Reserve Actions

Sometimes the Federal Reserve increases the interest rates deliberately. This is done in order to decrease ongoing inflation rates, in order to slow-down the economy, when it is going through a stagnation period. The cause of inflation in the market can be the rise in the prices of goods, thereby bringing in a drastic growth in the current economy. And this strong economy thereby gives rise to the inflation in the real estate market prices, like apartments, rents and mortgage rates.

Actual mortgage rates are determined by the supply and demand equation. But it is very different from the interest rate equation, hence making the rise and fall of the mortgage rates different when compared to other rates. The situation turns critical for you, when you are about to step in into your new home, but are still uncertain about its mortgage rates. The best thing to do in this case is to ask the lender to fix a rate for you, so that at the time of the fall in the interest rates, by refinancing you get to pay the lower rates. But there is always an air of uncertainty, which pervades you. So it is better to refinance only if you are getting the interest rate of the mortgage rates lowered by two percent than the current mortgage rate.


Related Tags: mortgage rates, mortgage loans, purchase a home with a home loan, federal reserve actions

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Sarah Dinkins is an Expert Loan Consultant in the financial industry that helps people to repair their credit and get approved for home loans, unsecured personal loans, student loans, consolidation loans, car loans and other types of loans and financial products. At www.badcreditfinancialexperts.com/article she is continually adding new finance articles useful for those in need of professional advice.

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