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What’s with the Fed and Rates?

fed-ratesHave you heard references to the Federal Reserve or “the Fed” in the news? These reports usually pertain to the Fed’s raising or lowering of interest rates. The impacts of a rate decision can vary. Here are a few things to remember:

  • The Fed sets target rates for bank-to-bank and Fed-to-bank loans.
  • The Fed does not directly control fixed mortgage rates. In fact, fixed mortgage rates can change well in advance as the market anticipates any adjustments.
  • The prime rate is directly influenced by Fed moves. This rate is often used as the benchmark for interest charged on credit cards, auto loans and Home Equity Lines of Credit (HELOCs).

There’s talk that the Fed may raise rates before the end of the year. That may make this a good time to “lock in” a low rate on a purchase if you’re so inclined. Existing owners may want to consider refinancing or combining adjustable rate loans like HELOCs or even consumer debt into one low fixed rate. Consolidating debt is not for everyone, but we’re happy to arm you with information as you decide what’s right for you.

Please let us know how we can help; please contact us.

What You Don’t Know About Rising Rents

You may have heard talk about rising rents. By some estimates, the median monthly rent cost is about 25% higher than a typical monthly cost for owning a mid-priced home. Check out these quick stats:

rent_v_own6

*Costs to own are averaged historical samples only; they are not an offer to lend. Costs as follows: historical, annualized average prevailing first year monthly interest expense for a loan amount of $162,000 (10% down on a $180,000 home), taxes of $300, insurance of $40.50, Private Mortgage Insurance of $81. Actual expenses vary for any home and loan program; will include additional considerations for principal, maintenance, potential tax savings and appreciation/depreciation; and can be more or less than illustrated. Rates and fees for current scenarios available by request. Data is provided with rights for use by Estate of Mind, Inc.

As owners or buyers, we’re all impacted by high rental rates in some way. Consider this:

  • Rising rents could push new homebuyers into the market, which could drive prices higher. Rising values may help with refinancing or even accessing cash for repairs, improvements, tuition or other expenditures.
  • High rents make it harder to save for a down payment. Fortunately, low down payment options are plentiful.
  • Rising rents improve potential cash flow opportunities on investment properties or vacation homes. The timing may be right to follow that dream.

If rising rents mean it’s time for you or someone you care about to take action, please reach out. My team and I would be glad to help. You may contact us any of the ways noted here.