subject: Stop Worrying About The Federal Reserve Rates They Are Not As Important As You May Think [print this page] There is a myth that the Federal Reserve controls mortgage interest and just like most myths, this one is not based on any facts. The simple truth is that your mortgage rate is entirely independent from what the fed rates are and the sooner you can grasp this, the better off you will be.
And yet there are still many who quickly contact their lenders hoping to secure a lower interest rate.
Your financial situation matters the most
And this is something that is difficult to grasp for a lot of individuals since much of what the Federal Reserve actually does is unknown. However, the
Federal Reserve Banks are mostly responsible for monitoring and controlling the rates at which commercials banks lend each other money.
They do not meddle with mortgage home rates as some would think.
One thing to note though is that the policies that the Federal Reserve implements does have long term effects in the financial markets such as with stocks and bonds.
But as mentioned earlier, there is no link that directly affects mortgage loan rates. Just because the rates lower by a quarter of a percent does not mean that mortgage rates will follow instantly.
Mortgage rates are extremely volatile
Sometimes mortgage rates can reduce but this change often has nothing to do with what the Federal Reserve did or did not do. The one thing you should really focus on is your credit score and what your financial history is like.
Your chances of getting a lower interest rate are directly related on your finances and your ability to pay back the loan.
One of the first things you should be doing prior to looking at homes is to get a copy of your credit report and look over every detail. Then work towards improving it as this will make your finances look much better in the eyes of a potential lender.
Then when it comes to shopping around for a home, your chances of securing a loan that meets your needs will be favorable to your circumstances.
