Foreclosure Shop   Educational Resources
 

Print Debbie Siegel's Mortgage Minute

Debbie Siegel
How much should you worry about "The Fed?"

The next meeting of the Federal Open Market Committee, more commonly known as "the Fed," will be held March 27-28. Potential clients often call me in a panic saying, "I've got to finalize my mortgage before the Fed raises rates." Should you rush to lock in a fixed rate mortgage before the end of March?

You can spare yourself unnecessary anxiety if you learn about the relationship between Fed actions and the rates charged on mortgages.

The Fed meets regularly to set targets for two kinds of short-term interest rates:

  1. The "Fed Funds Rate" is the interest rate at which depository institutions lend balances at the Federal Reserve to other depository institutions overnight.

  2. The "Discount Rate" is the interest rate charged to commercial banks and other depository institutions on loans they receive from their regional Federal Reserve Bank's lending facility ("the discount window").
This Article is an excerpt from the 16 Page Print Edition!

Are YOU getting the print edition of ForeclosuresMass Monthly?

Get a FREE copy* of this month's newsletter (worth $49.97!) when you pickup your Real Estate Investors ONLY Free Gift (worth over $267.97!)

First Name:

Email Address:

* Next 37 17 investors only!

The key phrase here is "short-term." When the Fed makes a policy pronouncement, it's more likely to influence short-term rates like these.

If you've got an adjustable rate mortgage or home equity line of credit that's priced at the prime rate plus a margin (portion above the base rate) then yes, you're likely to feel the impact of fluctuations in the short term rates. Banks change their prime rate - the rate they charge for loans to their best corporate customers - immediately following a Fed rate change. (Note that not all ARMs are tied to the prime rate.)

If, on the other hand, you're looking for a 15-year or 30-year mortgage, you'll likely feel no impact at all by the Fed meeting. Long term mortgage rates are set off the 10-year Treasury - a rate that's not based on short-term rates influenced by the Fed.

So before you jump to any conclusions, make sure you're clear on how the next Fed meeting will impact the mortgage you decide to purchase.

Got questions about real estate financing? Contact Debbie@westchester-mortgage.com or 617-965-1236. She'll consider them for inclusion in a future column. Debbie Siegel is president of Westchester Mortgage in Newton, Mass. She is licensed in several Northeastern states.

« Interview With The Expert March 2006  

What did you think of this article? How did this article help you? Let us know, and we just might include your response in the Mail Bag section of the newsletter!
Name: Email:

Did you like this article? You May Also Like:
Gary Gorman Success Strategies: Capitalize on the Current Real Estate Market with a Reverse Exchange
Gary Gorman, The 1031 Exchange Experts
Did you know that you can purchase foreclosed properties now, while the market is still down, but not take Title to them until you're able to sell your current properties when the market goes up (and thus defer capital gains taxes)? It's true - and you can do this with a reverse 1031 exchange. Like the normal 1031 exchange, the reverse exchange has its own set of rules and guidelines, all of which Gary Gorman, the reverse 1031 exchange expert, explains in this article.
Dana Robinson Nothing Succeeds Like Success: An interview with investor and realtor, Dana Robinson
Dana Robinson
In seven years as a real estate investor, Dana Robinson has done everything from buying and rehabbing commercial properties to investing in and flipping multifamily foreclosures. We caught up with Dana recently, to learn more about his "CRE Kit," a simple, but effective, tool for introducing himself and gaining the trust of homeowners and potential partners.
Richard Cohen Negotiation Skills: Developing Strong Relationships... A Key to Success with your Contractors
Richard Cohen, Negotiation Coach and Consultant
As a property investor, you're challenged by the sheer number of contractors with whom you must negotiate. It can be a struggle, but as Richard Cohen explains, it doesn't have to be. Build strong relationships with these folks and watch your negotiations go smoothly.
Szifra Birke Success Strategies: Three Tips for Updating Your Financial Myths
Szifra Birke
It's a fact that old money myths can keep your from reaching your goals. If you carry around ideas such as, "I'm not good with money" or "It's better to help people than make more money," then you need to read Szifra's article on how to banish these limiting beliefs from your life.
Sheila Farragher-Gemma Interview with the Expert: FCM Co-Founder Blasts Her Way Into Prosperity Thinking
Sheila Farragher-Gemma, ForeclosuresMass, Corp.
As Sheila Farragher-Gemma states in her interview, success is based on your attitude. Carry a negative mindset and you'll never accomplish anything. Change your attitude and you can achieve anything. Sheila explains how she's used Dan Kennedy's program, Wealth Attraction for Entrepreneurs, to learn what separates the *really* successful entrepreneurs from the rest of the pack. As she reveals, combining positive thinking with action can help you overcome self-doubt and develop the "millionaire mindset" - the kind that attracts real wealth.
Asheesh Advani Success Strategies: Seller Financing
Asheesh Advani
Financing - an arrangement wherein the seller acts as the "bank" for the buyer - has seen a rebirth in recent years, thanks to a market characterized by high prices and rising interest rates. Asheesh Advani explains how this approach works, and why it can be beneficial to both buyer and seller...
Jacqueline Fitzgerald-Boyd Feature Article: Keep Your Title Clean: Three Strategies for Preventing Title Problems
Jacqueline Fitzgerald-Boyd
Did you know you can create some serious Title problems when you transfer Title on your own? And, did you know that a Title problem can sometimes exist for more than 20 or 30 years without ever being found - and then bang, one day this hidden ticking time bomb becomes your major Title headache? It's true. Title expert Jacqueline Fitzgerald-Boyd talks about common Title issues and how you can alleviate them. (Hint: Title is more than simply a piece of paper.)
Eileen Schwartz Feature: How Real Estate Investors Make Big Money with Syndication
Eileen Schwartz, Real Estate Investor
Want to get in on a little "secret" real estate professionals have long known to offer a very considerable return on investment? Eileen Schwartz shares her knowledge of real estate syndication, a potentially lucrative strategy that involves forging a partnership with a group of shareholders to invest in multi-million-dollar properties. This introduction to real estate syndication provides everything you need to know to get started.
Susan LaPlante-Dube Feature Article: How Effective Networking Helps You Close More Deals
Susan LaPlante-Dube
Motivated buyers. Motivated sellers. Real estate investors. Home improvement specialists. Home inspectors. Electricians. Appraisers. Bankers. Mortgage Brokers. Real estate attorneys. The list of people you need to run a successful...
Paul Deltorio Nothing Succeeds Like Success: Accountant Turned Real Estate Investor Closes 10 Deals First Year Out
Paul Deltorio, CPA
After twenty-five years as a CPA, Paul Deltorio was ready for a change. With coaching from real estate investor Jim Gage, Paul launched a successful real estate business, closing ten deals in twelve months. In this interview, Paul explains how Jim taught him to approach homeowners experiencing foreclosure, identify great deals, and stay focused on his goals. One year out, Paul is considering giving up accounting to pursue real estate full time!

Copyright © 2003-2009 ForeclosuresMass Disclaimer/Policy Media Inquiries
ForeclosuresMass is a division of ForeclosuresMass, Corp. For more foreclosures, visit: RI CT NH VT ME MA DE CA MD PA NJ