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Keep Your Eye Focused on Treasury Bond Rates To Adjust Your
Current Mortgage Rates
Mortgage rates typically are based off the current rates of
treasury bonds. Most lenders set their long term mortgage rates
in line with 10 and 30-year treasury rates. The reason that they
do this is quite simple. Treasury rates are the rates that are
used as an index to represent what the future value of money will
be by the secondary market and investors. The Federal Reserve
Bank will issue these bonds along with an interest rate that it
will pay to holder of the bond once it matures. The market, in
reflecting economic and inflationary predictions, adjusts the
yields. Mortgage rates are then set according to the yields. If
the market expects that thing in the future are going to be good
with low inflation then the mortgage rates will be lower. If the
market forecasts higher inflation then the mortgage interest
rates will also rise.
This is something that is very important to look upon by
consumers because it will directly affect their bank account. In
most cases, a home is the single largest purchase that someone
will make in their lifetime. Home loans are usually very high in
their term, sometimes as long as 30 years. The amount of interest
paid over the the life of the loan can be staggering even for
lower cost homes. For example, if you finance a $100,000 home for
a term of 30 years at an 8% interest rate, the amount of money
you will spend on interest alone will be $164,153.60 giving you a
monthly payment of $733.76. If you could lower the interest on
your mortgage by just 1% you would save $24,645.60 over the term
of the loan and would pay $665.30 saving you $68.46 each month.
As mortgage rates rise you want to lock in your interest rate to
protect you against future increases however if the rates are
falling then you may consider refinancing to save you more
money.
Some people ask when is the best time to refinance your home
because there is a cost to refinancing. Typical costs include
appraisal fees, document preparation fees and up front points to
pay. It is not always in your best interest to refinance for
small rate changes. So the question is how much more will the
market continue to move lower and what would be the best time to
consider refinancing? This goes back to keeping an eye on
treasury bond rates. When you see long term treasury bond rates
start to take a dive after long periods of being high then it's
time to get focused on the current mortgage rates. Once the stop
diving then you may consider refinancing to lock in a better rate
for your mortgage allowing you to put more money back in to your
pocket!
Shannon Moran is the owner of http://www.the-best-in-loans.com
which provides great information on all types of loans such as
automobile
loans, mortgages and student loans. There is also information
on finding a great mortgage
company in reference to the article above.
Publishing Rights: You may republish the above article for use
on your website, in your newletter or ebook as long as you agree
to leave the article, author's signature and all links completely
intact.
 MORE RESOURCES updated Thu. February / 09 / 2012
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New HARP Could Help Up to 6.7 MillionNASDAQOther changes to the program were designed to make it easier for homeowners with private mortgage insurance (PMI) to refinance or to obtain a HARP mortgage refinance with a lender other than their current mortgage servicer. In addition, new limits were ...and more » |
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Private Mortgage
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If your down payment on a home is less than 20 percent of
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Mortgage Brokers or
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When you're looking for a home loan, you might work with an
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What if a banker or mortgage broker told you he's loan you
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Owing to the popularity of home equity loans, there are
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The investment need of an individual varies with time. Thus
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Whether you are a first time home buyer or a happy home
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