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Why The Fed’s Rates Aren’t the Same as Mortgage Rates

By Mary Heerwald | August 2, 2022

The Federal Reserve just raised the federal funds rate in an attempt to battle inflation — but the Fed’s rates and mortgage interest rates are not the same. For those looking to buy a home, it’s important to remember that what the Fed does isn’t directly related to mortgage rates. Here are three reasons why: The Federal Reserve is the country’s “central bank.” It controls the federal funds rate, which is the short-term rate that banks charge each other for overnight loans. Changing this rate is also one of the primary ways the Fed can impact inflation. Mortgage interest rates are most tied to the bond market. This means when there is high demand for mortgage-backed securities (mortgage bonds) sold in the bond market, rates usually decrease. When demand is low (usually when the stock market is performing well), mortgage rates increase. Mortgage rates are more affected by the overall health of the economy and its outlook, and they are also heavily impacted by inflation. When inflation increases, mortgage rates do, too. As inflation decreases, mortgage rates drop. Lower interest rates are also common during recessions. So, the Fed’s actions cause ripple effects that influence mortgage interest rates…but the Fed certainly doesn’t set them. In fact, the Fed’s most recent rate increase was simultaneous with mortgage rates falling!

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Major credit relief for consumers with medical collection debt

By Mary Heerwald | June 21, 2022

The three major credit reporting agencies – Equifax, Experian and TransUnion – are making significant changes to medical collection debt reporting. In an effort to help consumers who have struggled to pay unexpected medical bills, especially due to the pandemic, the agencies will remove nearly 70% of medical collection debt from consumer credit reports. What does this mean for borrowers? Credit scores are one of the most important factors influencing your financial wellbeing and abilities. If you’ve seen your credit score hurt by medical collection debt or if your finances are affected by unforeseen medical expenses in the future, these significant credit reporting changes could keep your score safe from taking a hit. Here are the details:  Starting July 1, 2022, consumer credit reports will no longer include paid medical collection debt. Consumers will have more time to work with insurance and healthcare provides to address their medical debt before it’s reported on their credit file. Previously, unpaid medical debt would be reported after 6 months – that period has increased to one year. In 2023, the three credit reporting agencies will no longer include medical debt under $500 on credit reports. Read more from the Equifax newsroom by clicking here.

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Exciting Loan Products to Meet Your Needs in the Current Market

By Mary Heerwald | May 18, 2022

With rising interest rates, low inventory, and changing markets, more creative loan solutions can help make your homeownership goals more attainable. A homebuyer’s unique situation might mean that a conventional 30-year, fixed-rate mortgage may no longer be as beneficial to them in the short or long-term. Other homeowners are also opting to stay in their current house rather than move, so are more inclined to do house renovations — and are looking to leverage the home equity to fund those projects. Here are four products Sente offers that are particularly helpful and compelling in the current housing market conditions, depending on your objectives and personal circumstances: Sente’s Adjustable-Rate Mortgages (ARMs) There are many reasons why we don’t keep our current mortgage as long as we stay in our homes. In fact, most Americans keep their current mortgage for around seven years, despite having a 30-year, fixed-rate loan. Any number of events can lead to this, such a refinancing your current mortgage or selling your house. If you plan to stay in your new house or keep your mortgage for ten years or less, an adjustable-rate mortgage (ARM) could give you better options than a fixed-rate loan in the current market. The Basics: ARMs have 30-year terms, but a fixed rate only for a set number of years before the interest rate starts adjusting. The number…

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