What can the Federal Reserve really do to effect the current mortgage rate?

Not as much as you think. Everyone gets excited when they hear something about the Fed lowering interest rates. They automatically think that means current mortgage rates are immediately going lower too.

A mortgage interest rate is not the same thing as the Fed rate. Other names for the Fed rate are short term rates, prime, Fed funds rate. This interest rate is the one tied to your car loans, credit cards, and home equity lines of credit. Even though a home equity line of credit is considered a mortgage, it is amortized like a credit card. That is the only mortgage affected by the Fed funds rate or Prime.

Mortgage rates are not directly but indirectly affected by the Fed moving rates. When the Fed makes a rate move it is felt by the investors. Some of these folks invest in mortgage backed securities. It is the mortgage backed securities that move mortgage rates up or down.

The Fed makes rate decisions on what is happening in the market. The unemployment number, consumer confidence, consumer price index, etc. are just some of the economic indicators the powers that be use to decide if a rate move is needed.

These same indicators are what affect the mortgage backed securities which in turn affect mortgage rates. Every day the market is analyzed using the economic indicators and a rate is established for the mortgage backed securities.

This happens every day whether the Fed is doing his thing or not. A good way to gauge where the market is for mortgage rates is by watching the 10 year bond. When there is bad news for an economic indicator then that means good news for the mortgage market.

Investors get nervous when a bad indicator shows up and they take their money out of the stock market where they feel their money may be at risk and put it into a safer place like the 10 year bond. When money floods into the 10 year bond it drives the price up but the yield down. When the yield is down then current mortgage rates go down.

When there are good indicators and news the investors take money out of the 10 year bond and put it back into the stock market. They can make a better rate of return in the stock market then in the 10 year bond. When they feel safe that the economy is rebounding then the stock market is the place to be. The 10 year bond price goes down and the yield goes up so the rates go up.

If you want to track current mortgage rates because you are thinking of buying or refinancing then do not listen to everyone else and certainly do not listen to the Fed. Check out a financial website and track the 10 year bond.

Remember, when the yield is up then mortgage rates are up and when it is down then they are down. Rates move every day and sometimes if good or bad enough news comes in during the day, they can change in that same day.



Sell and Rent Back

Do you want to invest in profitable property or simply buy a new home at a bargain price? If so, you want to consider property auctions.

Properties sold at auction are often owned by mortgage lenders after repossessions, former council / housing association homes or have being empty for some time after the owner passed away.

In each case, the owner has put the property on auction for a quick sale and this can lead to some great deals on the market value.

Finding an auction

as auctions tend to cater for property professionals, rather than the general public, advertising and awareness of auction houses is limited.

A good place to start is looking through the telephone directory, yellow pages or searching on Google or Yahoo.

Another good tip is to keep an eye out for Sale signs outside homes. Where the board says ‘for sale by auction’, call the telephone number provided. You will either get through to an estate agent acting on behalf of the auction house, for more details visit to www.auction-words.com or you will get through to the auction house directly.

If you get through to an estate agent, ask them for the contact details of the auction house. The estate agent may be reluctant to do this, so it is worth being persistent

Once you are able to make contact with the auction house, ask to be put on their mailing list. Although there is likely to be charge for this, you will begin to receive details of properties due for sale.

Before you bid

Having identified the property that you want to buy, you will need to arrange finance. For most people this will mean approaching a mortgage lender and it is important to do this in advance of the auction.

Remember once you win a bid, you are legally bound to purchase the property and you need to be able to pay within a set number of days.

The mortgage lender will require a basic valuation of the property, but it is advisable to invest in a full survey as the property may be at auction due to structural problems, for more details visit to www.auctions-profits.com which the basic survey would not pick up.

Before bidding for your desired property, you may want to attend a few auctions to get a better idea of the experience.

Winning your bid

Set yourself a price limit, but do not get carried away and bid beyond it. Having had a valuation done, you will have a good idea of the market value and should not go above the amount agreed with your mortgage lender.

If your bid is successful, you will be legally bound to purchase the property and will need to put down a 10% deposit of the property’s selling price. You will be asked to sign a contract, which you would have seen before the auction and the seller will be legally bound to complete on the day. Finally you will need to pay the remainder of the selling price within an agreed period, such as 28 days. Congratulations, you have just picked up an auction deal.



Sell and Rent Back

in the morgage says i need to live in the property for one year then i can do whatever , since i am in the first year what happen if i rent it

Sell House Quick