Earlier today the Fed announced another .25% rate cut, so that means mortgage rates are coming down, right?... RIGHT?!
That’s not necessarily how it works, unfortunately. Mortgage interest rates are not directly tied to the decisions made by the Federal Reserve. The rate cut you’re hearing about in the news relates to something called the Fed Funds Rate.
Simply put, it’s the interest rate banks charge to other banks (not consumers) to lend money.
So, what does today’s announcement mean for homeowners looking to refi or possibly shopping for a new home? Plenty!
Here’s a quick synopsis that might help. We’ll dive into the details below:
Current Homeowners
✅ Have a fixed-rate mortgage? No changes—your payment stays the same.
✅ Have an adjustable-rate mortgage (ARM)? Possible minor changes up or down, but nothing major to worry about.
Homeowners Considering Refinancing
✅ Thinking about refinancing? Talk to a mortgage advisor to explore your best financial options.
✅ Not locked in yet? It’s okay to wait and see how rates move, but locking now is often safer.
✅ Already locked with a closing date soon? You’re all set—no changes needed.
Purchasing a Home
✅ Just browsing? Stay active in your search but get pre-approved to understand your budget.
✅ Under contract but not locked? Lock your rate soon, as significant drops in rates aren’t expected.
✅ Under contract and locked? You’re in good shape!
The above is based on available market data as of 2 PM EST 12/18/2024. Make sure to speak with your mortgage advisor about any changes that may impact your mortgage strategy.
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