We are due to close on our house next Tuesday. Our interest rate is 6.75% on an FHA. This past Tuesday, the interest rate was lowered by .5% by the Federal Reserve to help with the economy, etc. Do you think our mortgage company will lower our rate now that this has occurred? I hope they do because we haven't signed anything just yet besides some pre-approval paperwork and I would think we could get a better deal now...there or elsewhere. Thanks in advance.
2007-09-20 06:28:36 · 10 answers · asked by Anonymous in Business & Finance ➔ Renting & Real Estate
Call and ask, you may have already locked in your rate.
2007-09-20 06:33:52 · answer #1 · answered by shipwreck 7 · 2⤊ 0⤋
First of all, the Fed doesn't CONTROL interest rates- save for one mostly symbolic rate. The Fed sets the TARGET FED FUNDS rate and then the FOMC continually buys/sells Treasury securities to make the MARKET DRIVEN fed funds rate converge to the target. Changes in monetary policy and subsequent FOMC actions are then transmitted through the rest of financial market. Next, there is no reason to believe that a change in the Fed Funds target should cause a one-for-one change in any other market driven rate such as mortgages. Aside from your ignorance about the relationship between inflation and economic growth, you also need to learn about what goes into determining a particular interest rate. In the case that you mentioned above- inflation- is NOT the reason for rising mortgage rates. Rather, it is the fact that lenders are unwinding portfolios of mortgage faster than replacement investment funds can be found. Since there is less cash being made available for mortgage loans, the price (i.e. interest rate) has been increasing. It is precisely this liquidity crunch that the Fed is trying to mitigate. Thus far at least, the record amounts of liquidity that the Fed has been pumping into the economy has been insufficient to drive investment back into a mortgage market that is facing increasing defaults, declining collateral values, and the anticipation of higher unemployment and deepening recession. Try taking a couple of econ classes instead of relying on picking up on the random and incoherent thoughts of other people.
2016-05-19 03:02:47 · answer #2 · answered by ? 3 · 0⤊ 0⤋
The rate that was lowered is not the rate that is passed on to consumers. The rate that was lowered was the rate that banks charge eachother for loans.
Federal law requires banks to keep a certain amount of money that they have on deposit as available cash. Obviously banks never know how much they will get deposited and withdrawn each day so the amount they need to keep varies day to day. To cover these deposits banks have a system where they make loans to eachother overnight to cover the amount of cash needed.
This has absolutely nothing to do with the amount the bank charges you for your mortgage. Eventually the savings they receive MAY be passed on to the consumer, but if that happens it will be way down the line. The average mortgage rate has actually increased slightly this week so if you locked in last week you are better off.
2007-09-20 07:03:58 · answer #3 · answered by Patrick 5 · 0⤊ 0⤋
YES ! , unless you signed a Lock Agreement. But even if you did ,you have an option of changing lenders . Do not let R/E people convince you otherwise! All lenders purchase rates, if you used a mortgage broker, they purchases the rate from the lender you were approved thru. The rate you have is the rate you were approved for, if the new rate is lower, you do NOT have to be re-approved. So there is NO excuse not to get the lower rate. If you have to change lenders to get a lower rate, the old lender Must release the appraisal to the new lender, (with an request form), in any event,stick to your guns, and get the lower rate. Good Luck!
2007-09-20 06:55:20 · answer #4 · answered by Anonymous · 0⤊ 0⤋
The rate that was lowered by the Federal Reserve was not the same rate you are talking about with a mortgage. They lowed the Prime rate. The Prime rate deals with more short term lending. If you have any credit items that have a variable rate on them, ie credit cards and lines of credit (equity-line on a house, overdraft protection on checking accounts) you will see a decrease in those rates. Your mortgage is based on long term rates. There is not a direct correlation between lowering/raising the Prime rate and mortgage rates.
I am a mortgage broker and I doubt your broker/bank will just call you out of the blue and say "guess what, I just lowed your rate." It wouldn't hurt to ask them however to lower it!
2007-09-20 08:26:46 · answer #5 · answered by ctarr12 2 · 1⤊ 0⤋
For right now it sounds like your rate is locked in. Which gaurantees it will not change. If you want to see if it will change you are going to have to let your rate lock expire(its usually about 30 days from when it locked). But it also sounds like you dont have time for this since you are due to close on Tuesday. My advice is that you have a good rate and you should go ahead with you close as planned.
2007-09-20 06:37:07 · answer #6 · answered by young2bballin 2 · 1⤊ 0⤋
no way you close next tuesday with only having pre-approval paperwork signed. You would have to have the mortgage application submitted by now. Either your not closing, or your mistaken about what you have signed.
2007-09-20 06:37:20 · answer #7 · answered by Anonymous · 1⤊ 0⤋
They are not obligated to alter your interest rate. You may be able to use the lower Fed rates as a negotiating point if you haven't signed paperwork.
2007-09-20 06:34:13 · answer #8 · answered by Anonymous · 2⤊ 0⤋
you may need to talk to the lender about the lower rate.
they may assume you don't know anything about it and give you the higher rate from your pre approval.
2007-09-20 06:37:10 · answer #9 · answered by Don't Panic! 6 · 0⤊ 0⤋
depends on the loan amount....if it's over 175...then you should get a rate of 6.5% at least.
otherwise 6.75% is good
2007-09-20 07:23:20 · answer #10 · answered by Anonymous · 0⤊ 0⤋