What the Federal Reserve's COVID response means for home buyers

Apr 30, 2020 8:51:13 PM / by Brett O'Daniell posted in Mortgage, Home Loan, housing market, mortgage payments

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Zero percent rates? Did you hear that right? You did, but they’re federal fund rates, not mortgage rates. 

On March 15, the Federal Reserve lowered the target range for the federal funds rate to 0 to ¼ percent, in an attempt to combat the current toll the coronavirus outbreak is having on the economy. The Federal Reserve explained, “This action will help support economic activity, strong labor market conditions, and inflation returning to the Committee’s symmetric 2 percent objective.” 

Zero percent mortgage rates, on the other hand, are indeed too good to be true—they don’t exist. Federal fund rates apply to overnight loans between U.S. financial institutions, not individual borrowers. 

Mortgage rates are dependent upon bonds which are traded thousands of times per day, and mortgage lenders typically update rates daily, while the Fed meets eight times per year (plus in the event of an emergency, such as the COVID-19 crisis) to discuss potential rate changes.

Despite mortgage rates not being completely slashed, as some misunderstood, they were still historically low, causing mass amounts of refinance applications to come through lenders’ doors. Those massive number of mortgages needed to be sold to investors in order for lenders to continue functioning, which in some instances overwhelmed investors, causing prices to fall and consumer rates to rise. Some lenders actually raised rates slightly as a means to slow down business.  

 

A recovery plan in the works

The Federal Reserve then announced it would buy unlimited amounts of treasuries and agency mortgages in order to help the credit markets. “While great uncertainty remains, it has become clear that our economy will face severe disruptions. Aggressive efforts must be taken across the public and private sectors to limit the losses to jobs and incomes and to promote a swift recovery once the disruptions abate,” the Federal Reserve explained, stating they’ll continue to purchase treasury securities and agency mortgage-backed securities. 

 

Where do mortgage rates stand? 

In early March, mortgage rates hit all-time lows, with the 30-year-fixed rate at 3.29 percent—the lowest average on record since Freddie Mac began tracking data in 1971—and have remained relatively low. While buyers strive to take advantage of these rates, competition will continue to increase, with inventory tightening and home prices rising. What can you do to help yourself stand out? 

A pre-approval* is a great place to start. In a matter of minutes, you can elevate yourself from the competition. Many of our lender partner's pre-approvals can be completed in 15 minutes or less.  You can also count on our lender partners to help you understand the ever-evolving market throughout this unprecedented and uncertain time. 

 

*“Pre-approval” means an automated underwriting system approval based upon credit information supplied by applicant and subject to the lender’s review of loan documents. Applicant subject to credit and underwriting approval. Not all applicants will be approved for financing. Receipt of application does not represent an approval for financing or interest rate guarantee. Restrictions may apply, contact lenders for current rates and for more information.

 

Sources: 

Federal Reserve

Mortgage News Daily

Mortgage News Daily

Housing Wire

Federal Reserve

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Apr 28, 2020 2:29:10 PM / by Brett O'Daniell posted in home purchase, property taxes, home ownership, credit profile, mortgage payments, before you buy, buying a home

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Feb 12, 2020 12:12:57 PM / by Brett O'Daniell posted in Mortgage, foreclosure, payments, mortgage payments, maintenance, emergency funds

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It's right around the corner; The paperwork is done, the insurance is paid, you are moved into your new home. The power is turned on and the movers just set down the last piece of furniture. Finally, you have time to rest right?

You're almost there!

By following the expert's check-list provided by HomeTraq, you can guarantee that you manage your new home or property like a professional!

 

 

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Feb 5, 2020 11:28:31 AM / by Mark Gorman posted in homebuyers, Credit, Credit Score, financing, capital, mortgage payments, homebuying, boosting credit, credit bureaus

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There are three major credit reporting agencies.

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4 reasons why buying a home with cash may be a mistake...

Oct 8, 2019 4:49:14 PM / by Mark Gorman posted in Mortgage, Pre-Approval, Pre-Qual, Lending, Home Loan, Pre-Qualification, Approval, professional, home purchase, financing contigency, FHA, closing costs, homebuyers, home ownership, PITIA, financing, capital, payments, mortgage payments, emergency funds, boosting credit, income, asset, myths, credit bureaus

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There’s a common misconception out there that buying a home with cash is always a faster and easier option than financing. If you have the funds to buy a home in cash (congrats on that saving, by the way), financing might actually be a better option. Financing your purchase with a qualified lender offers homebuyers a host of unique advantages that cash buyers just can’t enjoy. If you’re weighing your cash vs. financing options, consider the following:

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