What Causes Mortgage Rates to Fluctuate?
An interest rate is the amount it costs to borrow money and is usually calculated in a percentage. Whether you are buying a home or thinking about applying for a new credit card, your interest rate is important and something you want to track. Everyone wants a low interest rate since they know it saves you money, but not many people know how they are determined or how they change. You will usually find higher interest rates with shorter term loans, like payday loans, for example. These are usually not a good financial decision because the lender is making a large profit while you are paying back a large portion more than what was borrowed.
The Federal Reserve is in charge of the Federal Funds rate, the rate that banks use when borrowing from one another. This is the rate that people consider when discussing interest rates in the market, and when it would be the best time to purchase a home. If you are thinking about buying a home and are unsure of when to buy, keep an eye on the market and take note of interest rates and how they are changing.
Interest Rates and You
The biggest factor that determines interest rates is the economy. Not everyone studies the business pages on a day to day basis, so it might be difficult to figure out the status of the economy in regard to interest rates and how it affects you. A good indicator of the market is unemployment levels. When people are putting money back into the economy because they are working and spending, interest rates will usually increase. On the other hand, if people are unemployed at higher levels, they are spending less money overall, and the interest rates will be lower.
If you are thinking about selling a home, tracking interest rates can be useful to you as well.
Many people choose to wait before selling their home, so they can make as much as possible in profit from the sale. You’ll want to be sure you don’t sell your home too early, especially if the home is your primary residence. If you own your home for at least 5-10 years, you will have a better idea of the overall market and determining when to sell will be that much easier.
Always Do Your Research
No matter if you are choosing to purchase a home or to sell your own, doing research is always important. You’ll want to do a fair amount of research on the market in your area as well as the market in surrounding areas. Shopping around and comparing rates is going to be the best way to make sure you are getting the best option for your area.
Lastly, interest rates are important to those that are investing in a home. Multi-family homes like duplexes and triplexes can be a great way to turn a profit if purchased at the right time. Investors like to target areas that are growing and popular so they can purchase and rent out to people for short or long rentals as the profit margins are great when the market is in a positive place.
Contact Us Today!
We want to make sure you are getting all the information you need to help determine when you should purchase or sell some property. We would love to help you out in any case, so please reach out to Family First Mortgage in Lafayette, LA today!
