A Brief Explanation of Why Interest Rates Go Up or Down

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A simple guide to understanding why rates moveInterest rates are always changing in the economy today. With numerous aspects of the global finances depending on the interest rates that groups like the World Bank charge, it is easy to get confused and start thinking of rates as a mysterious force. Well, in this read, we are going to look at the primary causes of changes in interest rates.

Money Supply

There’s a limited supply of money on the globe, but at the same time, there’s an endless supply of money. If this sounds like a paradox, well in a way it is. Economic minds are at a constant battle with the money supply. When there is too much money circulating, then interest rates need to be high so that borrowing does not go out of hand. However, when there’s less supply of money, interest rates go down in order to encourage borrowing.

Investor Risk Tolerance

The investors in this world are human beings and as you may guess, we are not always rational beings. While what leads to bad and good economic times is still open for debate, what is really easy to tell is when investors fear losing money in the market. The fear of loss tends to affect the market which results in lower rates as bond purchasers are willing to settle for less. When the market seems to be great, investors want to make more money and so, people purchasing bonds are expected to get a higher interest rate.

Bond Market

When a country gives more debt in its government’s name, it needs to create more money in order to offset the debt. This leads to greater money supply and as discussed earlier, this results in higher interest rates. This is also contributed by the need to keep the borrowing rate reasonable.

When the bond market yearns for the bonds that the government gives, this results in an increase in money supply. On the contrary, when the bond market isn’t interested, the money supply usually decreases or stagnates, which pressures the interest rates to go down. Well, comprehending the bond market is not as easy as reading several charts and following a ticker, but with continued reading, it makes sense over time.

Savings Rates

People have particular tendencies like saving when they receive a significant amount of money and spending when they get it in small doses. However, the savings rate across a nation is not a static or fixed variable.

When the savings rate increase, borrowing isn’t that necessary for consumer spending and as a result, the interest rates go down. When the savings rates go down, borrowing becomes more necessary and as a result, the interest rates rise in order to compensate for this.

Talk to a Mortgage Broker today to discuss how to get the best interest rates for your needs.

Two Mistakes To Avoid As A First Time Home Buyer

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Before you purchase your first home, there are many decisions that you must make. These decisions are not only exciting, but they can also be downright scary at times. It is very easy to get caught up in the excitement that surrounds buying a new home, and unfortunately, this is the window of time during the process where mistakes can be made.

First home buyers

If you have decided that you are ready to buy a home for the first time, or you are ready to purchase another home, having the right knowledge will save you a lot of stress and anxiety later on. Here are some of the most common mistakes that are made by first time home buyers, and how to avoid making these mistakes when you are on the hunt for a new place to call home.

House Hunting Before Meeting A Mortgage Lender

We have all been guilty of it. We take a weekend stroll and drive through different neighborhoods to see if there are any houses for sale. However, this is one of the biggest mistakes that home buyers make.

You should never start viewing homes and attending open houses before you speak with a mortgage lender.

In larger markets, the housing market is very competitive and fierce. This means that you may find that you are in a position where you have to stretch your budget in order to get a home that you want because you did not get pre-approved for a loan first.

What you should do before you fall in love with your dream home is to make sure you have pre-approval first. By making sure you are pre-approved will show the lender that you are serious about purchasing a home.

Not Being Careful With Your Credit

During the preapproval process, mortgage lenders do pull credit reports. They do this to make sure that everything checks out before you even start looking for a house to buy. Lenders also complete a preapproval before the loan closes. This is done to ensure that nothing has changed with your credit during the home buying process.

Opening new credit card accounts or applying for new loans during the home buying process can jeopardize your closing. This is one lesson that first time home buyers typically learn about the hard way.

Your credit goals should be to keep your finances and credit the same from pre-approval to the closing. So, what does this mean? Do not open new credit card accounts, make large purchases on existing accounts or apply for new loans. Also, pay all bills on time and try to pay your existing balances down below 20 percent of the credit limit you have available.

Buying a home for the first time can be very overwhelming. Fortunately, this process can be streamlined and less complex by avoiding mistakes that can cost you the house of your dreams.

Tips On Tapping Into Your Home Equity With A Home Equity Loan

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If you have a home that is free and clear, or if you only have a small mortgage attached to the structure, it is possible for you to potentially take out a home equity loan. This is a loan that is based upon the equity that is built into your home. They will simply look at the market value of your home, and based upon your income, and your credit score, they will provide you with a loan of your choosing. In most cases, home equity loans are a small fraction of the total amount of equity. Unless you have a substantial amount of income coming in, and impeccable credit, this will likely not exceed half the value of the home itself. Here are a few tips on how you can tap into the home equity of your home by getting a local home equity loan.

How Do Home Equity Loans Work?

A home equity loan is something that is very easy to obtain as long as you have good credit and gainful employment. It is easiest to get when you have no other loans against your property, and you have a very small amount, or an absence of, existing debt. The bank will loan the money to you using the home as collateral. It is very similar to a home mortgage with the exception that they are basing the loan upon the equity of the home itself. You will then make regular payments, and at some point in time, you will pay this loan off either in full all at once, or you will make payments until the loan is completely paid off.

How Quickly Can You Get One Of These Loans?

The speed at which you are able to get these loans will depend upon the bank, your credit score, and the amount that you want to borrow. They will also take into account how much you are making on a monthly basis. They will specifically consider the net amount of money that you are taking home every month, and once it is approved, that money will typically be deposited into your account within a few days.

Using the equity in your home is one of the wisest decisions that you can make. It is far wiser than selling your home as you are actually losing an asset. As long as you have a game plan for paying it off, and you have the means to do so, it is advantageous for most people to take out a home equity loan when they need to get capital very quickly. Just make sure that you are working with a reputable bank, one that is known for approving loans based upon the amount that is requested. This may take some time, but once you are done with your research, you can feel confident that your home equity loan will be approved and the money will be deposited in a reasonable amount of time.

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Proudly brought to you on behalf of Mortgage Brokers Northern Beaches

Using A Mortgage Broker

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Mortgages Now - Using a Mortgage BrokerInvesting in a home is probably one of the most important purchases you’ll ever make. Most buyers spend weeks, even perhaps months searching for an ideal home. But when it comes to financing that purchase, much too often buyers are prepared to consider the first option that comes along or they believe their current bank will be able to provide them with the best home loan option on the market.

Not shopping around for the best mortgage could and will cost thousands of dollars in extra interest over the lifetime of the loan.

A large number of buyers make the assumption that their local bank will approve any mortgage application and give them the best deal since they are current customers and probably have been customers for quite some time. This could also cost thousands in extra interest over the term of the loan.

The reality is that a savvy buyer will pay just as much if not more attention to the details of the financing as to the house their purchasing.

So what are the options out there? How do you find the best deal and a mortgage that will suit your situation without spending the next 3 months doing research?

Let’s look at what happens if you go to your current bank;

  1. You will see the lending officer at your local branch (if they still have a local branch) who will discuss with you the amount you wish to borrow
  2. They will check your financials, make sure that you are able to service the loan repayments and also check your credit rating
  3. Then they will advise you if your application has been approved, and if so you will most likely pay a hefty application fee once the loan is drawn down

Now on the other hand, mortgage brokers don’t work for one particular lender – they typically have a relationship with many lenders. This translates to many options from many lenders.

Since mortgage brokers do not represent any single lender, this works to your advantage.

For example, take a buyer with a really good credit history and a decent deposit who simply wants a mortgage with no bells and whistles and the lowest interest rate. A mortgage broker will know what their partner lenders’ interest rates are and be able to present the best mortgage options in a reasonable timeframe. No work on your part.

Alternatively, if your credit rating is not that great, a mortgage broker will save you hours and hours visiting all of the local banks applying for a mortgage, not forgetting it might pull your credit rating down further with all the credit inquires! Additionally, you wouldn’t know about particular lenders who specialise in lending to people with poor credit ratings.

Another advantage of a mortgage broker is that have a lot of experience with different financial situations. This allows them to offer solutions to problems that you might not have thought of.

Your mortgage broker will do all the work for you, from finding the most suitable mortgage to completing and lodging paperwork. This saves you so much time and your chances of loan approval will be high because the mortgage broker would have already pre-qualified you.

 

Mortgage Broker Coffs Harbour

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mortgage broker coffs harbourTips to Finding The Best Mortgage Broker Coffs Harbour

A mortgage is one of the biggest expenses most families will endure so it goes without saying that you want to make sure you get the right one that is suitable and compatible with your situation. Mortgage Broker Coffs Harbour prides themselves in taking the time to listen to their client’s needs and making it a priority to find the most suitable mortgage.

Sometimes the most suitable mortgage may not necessarily be the one with the lowest interest rates and fees. These days in the Australian financial sector, mortgages come in many different forms and shapes, and the mortgages available to the people of Coffs Harbour is no different.

Finding the right mortgage for you means finding the right mortgage broker – the right mortgage broker will go beyond finding the average loan to finding the perfect loan.

Most banks and lenders advertise their interest rates and mortgage features on the internet which is usually updated daily. What might be hard to find however and not is clear are any special conditions or terms of that mortgage which may end up costing the customer more in the long run. In addition, the time required on your behalf to compare and wade through multiple offerings from multiple lenders will take a significant time investment.

An expert mortgage broker will have this information already on hand, if not, they will spend their time researching current products on the market.

Take the time to talk to a few different mortgage brokers and meet with them to discuss your needs. You’ll need to inquire about their offerings in terms of interest rates and product features. Also you should feel comfortable with the personality of the broker – if you don’t trust him/her then the process will be very difficult.

Also discuss with the mortgage broker their fee schedule. Most brokers will not charge the client for a standard mortgage because they get paid from the lender, however there are cases where a broker may charge and you want to make sure you’re clear on the fees up front. If you’re looking for a commercial loan, then it is standard to expect to pay a fee because of the amount of work involved.

Another topic to discuss with the broker is their application time. Normally a half decent broker will do all the paper work for you which means that most of the application process and time will rely on them getting the work done. Try and judge their response if they are serious and value the importance of a timely application. Last thing you want it having made a decision and then waiting weeks for the broker to do the application.

Our preferred broker, Mortgage Broker Coffs Harbour, meets all these challenges and exceeds expectations. They have a 100% approval rate because of their experience and knowledge in the mortgage industry.

Choosing A Mortgage Broker

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Mortgages Now - Choosing A Mortgage BrokerThere are so many lenders and financial institutions on the market today it can be difficult to know who to choose – using a mortgage broker will take the guesswork out of picking a lender.

A mortgage broker such as Mortgage Broker Central Coast will also help you with the right mortgage for your financial needs and situation. It is important to pick the right mortgage broker to help you through and this article discusses some factors to consider when choosing a mortgage broker.

Mortgage Broker Charges

Mortgage brokers are paid a commission from the lender for getting them the loan. In regards to residential lending, for most mortgage brokers they are happy with the commission payment and do not expect their customer (i.e. you) to pay them any money. However, some mortgage brokers do charge a fee so it is worthwhile asking the mortgage broker upfront what their fee schedule is when shopping around for a mortgage broker. It is recommended to find a broker who does not charge their clients fees.

For commercial lending, most mortgage brokers will charge a fee and this is because commercial lending takes a lot of work and organisation to complete a mortgage application. Ask the broker what their fees are for commercial applications.

Licences

In most places around the world, mortgage brokers need to carry a valid licence. The licence itself may have various names depending on the country but ensure your mortgage broker is properly licensed according to your local regulations.

Experience

Ask the broker you are consider what their experience is. You would want to choose a mortgage broker with a minimum of 5 years financial industry experience.

Even better if the broker has banking experience – this gives you the comfort knowing that the broker knows the banking industry and a general knowledge of banking procedures.

Years In Business

Similarly to experience, check how long the mortgage broker has been in business. It is always comforting to know that a business has been around for a while. But don’t discount the mortgage broker if they’re only new in business and posses other good qualities mentioned in this article.

References & Testimonials

Don’t be shy in asking the mortgage broker for 2-3 references or clients that you can contact that will be happy to discuss their experience with that broker with you. This is important as customer service is a big factor in the overall mortgage application process.

Banks and larger financial institutions are generally quite poor in customer service, but you should expect great service from your mortgage broker. Speaking with some of the broker’s other clients will give you an insight into how they conduct business.

Summary

Similar to other businesses, a mortgage broker will rely on a good reputation and providing great customer service to stay in business. Choose carefully as an incorrect mortgage could end up costing thousands in interest over the lifetime of the loan.