Arcadia Chamber of Commerce - The Connection to the Business Community

Fed Meeting Causes Upheaval – Notes from Prestige Capital

The Federal Reserve’s July meeting leaves the benchmark interest rate unchanged once again at the target range of 3.50% to 3.75%, with three of the nine committee members calling for a rate hike. This rattled Wall Street as the Dow plunged 1,153 points, and the 30-year Treasury yield surged to the highest level since 2007. While the Dow partially recovered the following day, the national average on 30-year fixed-rate mortgages ticked up to 6.66% according to Freddie Mac’s weekly survey.

What to Do When Rates Are Volatile
Mortgage rates move with the bond market – which no one can predict – so timing the market can be a gamble. However, prospective homebuyers can take a proactive approach to get the best rate possible.

Improve Your Financial Snapshot: Work on raising your credit score and decreasing your debt-to-income ratio (DTI) to qualify for lower interest rates and fees. Ultimately, a credit score of 760 and above, coupled with a DTI of 36% or less of your gross monthly income is ideal.
Consider Various Loan Programs: Thirty-year fixed-rate mortgages are by far the most popular, but there are many other types of loans available. For example, FHA loans allow for lower credit scores, lower down payments, lower interest rates, higher DTI limits, and gift money to cover down payment and closing costs. Crunch the numbers with a seasoned mortgage pro to understand all your options, and get side-by-side loan comparisons to help you make an educated decision.
Buy Discount Points: If you intend to stay in the home for an extended period of time, consider buying discount points to lower your interest rate and monthly payments.
Make a Larger Down Payment: The more you can allot for down payment reduces your loan amount. By putting 20% down, you can eliminate paying private mortgage insurance (PMI) and reduce your monthly payment.
Decide Whether to Lock or Float: If you have a 30- to 60-day closing window, consider locking in your rate if rates appear to be trending up. Some lenders offer a float-down option that gives you the opportunity to lower your rate if the market improves.

Whether you’re interested in buying a home, refinancing, or unlocking your built-up equity, we have the tools and the team to expedite your loan process. Give us a call to explore your options! We’re here to help.