Interest Rate "Indifference" ... it Can Cost You

By
Mortgage and Lending with NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656 IL Lic 031.0006220/WI
http://actvra.in/4XNY

 

Interest Rate "Indifference" ... it Can Cost You

 

     Interest Rates are talked about endlessly ...  

 

 

  • Will interest rates rise ... or won't they?  
  • How big will the rate hike be?
  • How soon will the Federal Reserve Board raise its benchmark interest rate?
  • What indicators could influence a decision?
  • How will an increase effect the markets?
  • How will an increase effect housing and financing?
  • More ...

     

     Speculation regarding interest rates and their rise has been going on for almost a full year now.  In fact, it's been non-stop since the Federal Reserve Board last took action and raised rates in December of 2015.  That move proved momentous, as prior to that action it was June of 2006 when a movement in rates was last seen.

     But because Mortgage interest rates have held steady for so long ... , home buyers and borrowers have been lulled into somewhat of a coma.  They've come to think any talk of changing rates is hype or media "buzz".  

     And after such a lengthy time of stable low rates and many false alarms regarding an interest rate hike, it's easy to see why home buyers might feel that way.  And why they might have grown a bit deaf on the topic.  

     Right now, I'm seeing real proof of that "indifference" or "deafness" in many of my mortgage applicants.  Many are falsely assuming that Interest rates will remain low indefinitely.  They think the periodic "noise" heard regarding rates rising is of no real concern.  

     Unfortunately, that's not true.  History has taught us that.

     What's also unfortunate is that deafness ... that indifference ... has caused real stress and concern in a couple of my most recent transactions.  How and Why?  

     Over the last 30 days or so, the financial market has been in an upward swing.  And interest rates have been reacting to the market and following suit.

     Now it must be pointed out that it's always important that loan applicants remain engaged and in communication with their Mortgage Originator.  But it's especially important around interest rate lock time.

     It's been at this crucial point in the process that a few of my clients have gone AWOL, disappearing on me for days.  


     In each case, it has cost them. Interest rates, and their changes, wait on no one.  And that translates to dollars.

     
Expectations are that the Federal Reserve Board will raise rates at their next meeting.  The recent election has fed into that speculation, as there has been a significant uptick in rates following that event.  


     But the election isn't the only factor that contributes to this speculation.  Mortgage Interest rates react to a variety of changing or volatile factors, and change DAILY, not just when the News Media decides to talk about Fed decisions. 

   
 Other factors include:


  • Bond Trading
  • Political Factors
  • Economic Indicators
  • World Events
  • Inflation
  • Trade
  • Inflation Rate
  • Federal Reserve Board actions
  • and More ...


   
 Add to that:  Mortgage interest rates were at historic lows in 2013 and near that once again during 2016. It only stands to reason that interest rates will continue to, or likely will, be on the rise in the long term.  

     Given all the factors above ... plus recent activities, financial experts are predicting that interest rates will change and we'll finally see the Fed take action ... soon.

     Many of my younger or first-time home buyers are of the age that they know nothing but the current low interest rates.  Horror stories of multi-digit interest rates experienced during the 80's are just that to them ... stories.  As fictional as many movies or books.

     
What most do understand though, is rent is rising on their apartments, condos, homes.  Rising to a point that often buying a home and paying for a mortgage would provide them financial relief for housing.

     THAT single point grabs their attention and motivates them to contact me.  But discussing the steps and details of actually securing and processing their mortgage?  That causes their attention to wane. 

     Borrowers can't afford to have that happen ...  

     
Each stage of the mortgage process is important.  Even the more boring or mundane of them.  And that's really important to remember right now as interest rates have been more volatile and trending upward.  Any indifference shown ... or delay in communication with their LO ... has real potential to cause stress and cost them money.

     As the old saying goes, "Timing is everything" ... and that is certainly true when it comes to interest rates.  

     Stay engaged and stay in touch with your Chicagoland Mortgage Originator throughout your entire mortgage process.  From first contact to completion.  

   
 Respond and respond in a timely fashion to their requests and communications.  Doing otherwise could cost you ... 




* When in need of Mortgage info, guidance, or service when buying a home in Will County or elsewhere in Chicagoland, contact me. I'll be happy to put my 40+ years of mortgage experience and expertise hard to work on your behalf.
     I'm easily found at:

Gene Mundt
 
Mortgage Originator - NMLS #216987 - IL Lic. #031.0006220 - WI Licensed
 
American Portfolio Mortgage Corp.
NMLS #175656


Direct: 815.524.2280
Cell/Text: 708.921.6331
eFax: 815.524.2281
 

 

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Gene Mundt

 Mortgage Originator  -  NMLS #216987    

                                   IL Lic. #0006220  -  WI License                                                                                                     

NMLS #175656

 

Gene Mundt, Mortgage Originator,  40+ years of #mortgage experience, will offer you exemplary mortgage service and advice when seeking:  #Conventional, #FHA, #VA, #Jumbo, #USDA, and Portfolio Loans in #Chicago and the greater Chicagoland region, including:  The #Lincoln-Way Area, #Will County, (#New Lenox, #Frankfort, #Mokena, #Manhattan, #Joliet, #Shorewood, #Crest Hill, #Plainfield, #Bolingbrook, #Romeoville, #Naperville, #Wilmington, #Peotone, etc.), #DuPage County, the City of Chicago, #Cook County, and elsewhere within IL and Wisconsin. 

 

Your Referrals & Testimonials are Always Greatly Appreciated! 

 

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Re-Blogged 2 times:

Re-Blogged By Re-Blogged At
  1. Roy Kelley 12/11/2016 06:00 AM
  2. Gabe Sanders 12/31/2016 11:15 PM
Topic:
Lending / Financial
Location:
Illinois Will County Joliet
Groups:
Mortgages
Chicago Area Real Estate BUZZ!
1st Time Buyers
Consumer Mortgage Tips
Bananatude
Tags:
interest rates
communication
interest rate locks
mortgage process
indifference

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Rainmaker
3,136,677
William Feela
WHISPERING PINES REALTY - North Branch, MN
Realtor, Whispering Pines Realty 651-674-5999 No.

Rates going up will cause a little problem, but nothing like the rise in health  ins.

Dec 01, 2016 12:12 PM #1
Ambassador
1,059,501
Joe Pryor
The Virtual Real Estate Team - Oklahoma City, OK
REALTOR® - Oklahoma Investment Properties

Since the election the rates have risen .5% without the Fed doing anything, so just becasue short term rates will rise, it is not in lockstep with long term.

Dec 01, 2016 12:16 PM #2
Rainmaker
3,182,918
Ron and Alexandra Seigel
Napa Consultants - Carpinteria, CA
Luxury Real Estate Branding and Marketing

Gene,

What a wonderful informative post.  It is true that many don't know about interest rates, and we have always preached this should be thaught to kids in high school.  A

Dec 01, 2016 12:40 PM #3
Rainmaker
1,093,816
Jane Peters
Home Jane Realty - Los Angeles, CA
Connecting you to the L.A. real estate market

Timing is everything. I am sure those borrowers who waited are kicking themselves. Another informative post, Gene and a great warning.

Dec 01, 2016 12:55 PM #4
Rainmaker
1,876,294
Nina Hollander
RE/MAX Executive | Charlotte, NC - Charlotte, NC
Your Charlotte/Waxhaw/Fort Mill Area Realtor

Hi Gene... I've been beating this drum for a while... and it's not just interest rates that are going up; home prices, as well. A double-whammy for many!

Dec 01, 2016 03:00 PM #5
Rainmaker
3,678,273
Gabe Sanders
Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

Good morning Gene.  Those that have been sitting on the fence should seriously consider making a move sooner rather than later.

Dec 02, 2016 05:12 AM #6
Rainer
64,353
Cody Carmen
Adhi Schools, LLC - Rancho Cucamonga, CA
Market Analysis--Educational Content, Adhi Schools

Very informative and well-contextualized. Consumers will realistically never understand the complex set of factors that influence rates, but knowing what some of those factors are and how rate changes translate to dollars out of their bank account is entirely possible.

Dec 02, 2016 09:22 AM #7
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2,418,265
Dick Greenberg
New Paradigm Partners LLC - Fort Collins, CO
Northern Colorado Residential Real Estate

Hi Gene - Excellent post and a great overview of what's happening with interest rates. Change is coming, and the advice of an expert like you is a valuable asset. Have a great weekend!

Dec 02, 2016 02:39 PM #8
Rainmaker
568,045
David Alan Baker Laveen Realtor & South Phoenix Realtor
HomeSmart - Laveen, AZ
Your local Expert

It really can cost, and so many do not realize it.

Dec 03, 2016 11:22 AM #9
Rainmaker
3,991,955
Roy Kelley
Realty Group Referrals - Gaithersburg, MD
Roy and Dolores Kelley Photographs

This is very good reading for prospective mortgage borrowers.

Smart consumers have already taken advantage of the low mortgage interest rates.

Dec 04, 2016 05:06 PM #10
Rainmaker
2,380,173
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

Interest rates are a still not perfect but will do the trick for now!

Dec 07, 2016 11:11 PM #11
Rainmaker
2,380,173
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

Exactly, Roy!Low interest is the keeper a lot of buyers and kind of always will be.

Dec 07, 2016 11:12 PM #12
Rainmaker
1,456,959
Patricia Feager
DFW FINE PROPERTIES - Southlake, TX
Selling Homes Changing Lives

Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi 

This is another outstanding post for a complex question concerning costs + interest rate. I hope this one gets featured too! The information is so timely and it's imperative Buyers and Sellers know and understand what's going on with the Feds and how it impacts sales. 

In honor of the holiday season, I thank God for the wise men on ActiveRain:

 

Dec 10, 2016 10:56 AM #13
Rainmaker
612,004
Sheri Sperry - MCNE®
Coldwell Banker Residential Brokerage - Sedona, AZ
(928) 274-7355 ~ YOUR Solutions REALTOR®

 Hi Gene, Interest rates will be a hot topic all this week, after all, the Fed is meeting.  I will be surprised if it does not raise rate by at least a quarter percent. I am sure it will have some affect on mortgage rates and the psychology of the prospective mortgagee. 

Dec 11, 2016 06:09 AM #14
Rainmaker
1,064,992
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi
NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656 - New Lenox, IL
708.921.6331 - 40+ yrs experience

It sure looks as though they will finally pull the trigger on the rate hike, Sheri Sperry - MCNE® ... it's anyone's guess as to what the reaction will be though.  Some think we've already seen the hike adjustment just in anticipation of the Fed action.  Hang on to your hat ... time will tell ...

Gene

Dec 11, 2016 02:11 PM #15
Rainer
76,649
Shahar Hillel
Augusta Financial Inc. - Stevenson Ranch, CA
Mortgage Consultant, Loan Officer.

Thank you for this post. Very informative article.

Have a Happy New Year.

Dec 31, 2016 11:30 PM #16
Ambassador
3,161,651
Jeff Dowler
Solutions Real Estate - Carlsbad, CA
The Southern California Relocation Dude - Carlsbad

Hi Gene

As always something relevant and important for buyers to keep in mind. I suspect many are really thnking about what the rising rates might mean for them not how much impact it can have. And combine that with rising prices...

Jeff

Jan 02, 2017 05:34 PM #17
Rainmaker
1,110,081
Inna Ivchenko
Barcode Properties - Encino, CA
Realtor® • Green • GRI • HAFA • PSC Los Angeles CA

Looks like the looming threat of interest rate increases may be prompting more buyers to enter the market this year. 

May 17, 2017 11:37 PM #18
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Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi

708.921.6331 - 40+ yrs experience
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