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Should I Consider Refinancing?
Q: With the recent Federal Reserve interest rate cuts, should we expect the mortgage rates to go down?
A: Federal Reserve rate cuts may not directly affect mortgage rates since those cuts really apply to “short-term” credit whereas mortgages are considered “long-term” credit. The best way to follow trends in mortgage rates is to watch the bond markets (specifically the 10 year bond) since they give you the best indication of where mortgage rates may be going. It is important to note, when looking at bond prices, that there is an inverse relationship between the bond’s price and its yield. As an example, if the 10 year bond price rises, a decrease in mortgage rates usually follows. Conversely, if the price goes down mortgage rates will likely increase.
Q: How worried should I be about my credit score and how important is my score in obtaining a competitive mortgage rate?
A: Given the current turbulent financial climate in the mortgage industry, your credit score is more important than ever in terms of not only securing a competitive rate, but also getting approved for a mortgage. Lenders use your credit score to judge your ability to repay your mortgage loan. If your score is very low this could adversely affect your interest rate. Since every individual’s report is specific to his or her financial profile, you will need to call us to go over your personal scenario. Contact Galen Tallas at 847-733-7400 or gtallas@firstbt.com.