Buying a home is an interesting process because it throws people right into the middle of a high-dollar real estate transaction for many, for one of the only times in their lives. Suddenly, you are dealing with hundreds of thousands of dollars on the table. With so much on the line, understanding the basics of the process is critical.
This article will look at what mortgage rates and interest rates are, and whether or not they mean the same thing to you as a buyer. That way, when you look at Greensboro homes for sale, you have a better understanding of what will happen next if you decide to make an offer.
The Answer is Yes – Sort-of
When speaking in the context of home buying, the answer to the title question for this article is yes, mortgage rates and interest rates are the same things. Mortgage rate is simply another way to refer to the interest rates that will be imposed on your mortgage if you choose to take one out in order to purchase a home.
So, if an agent says something to you like “the mortgage rates are really good right now”, you can assume that they are referring to the going interest rates that the market is currently offering on a mortgage. There are countless factors that influence how the rates move over time but knowing these two terms refer to the same thing, you can have important financial conversations with confidence.
The reason the answer is not “absolutely YES!” is because some people use the term “interest rate” to refer to the federal funds rate, which refers to the target interest rate set by the Federal Open Market Committee (FOMC). The federal funds rate is the rate that banks lend money to each other and is related to the mortgage rates is not the same thing.
The Market Never Rests
It is tempting to try and time the market to make sure you are getting the best possible interest rates on the purchase of your house. After all, you’ll be locked into this rate for a while, so it’s tempting to sit around and wait for just the right moment. Unfortunately, that line of thinking can wind up costing you a lot of good opportunities in the end. More likely, the better plan is simply to figure out what you can afford based on the current rate level and make an appropriate decision accordingly.
The issue at the heart of the matter here is that no one truly knows what is going to happen to the market. In fact, you can’t be sure what will happen tomorrow with rates, let alone a year or two from now. So, if you sit around waiting on those great rates to arrive, you could be waiting a long time – or forever. Work with a qualified lender to determine what kind of house you can buy with the rates as they are today, rather than thinking about some hypothetical future. That way, you’ll be dealing with concrete numbers, and you can be confident in the choices you make.
A Winning Team
As Greensboro Realtors, Smith Marketing knows what it takes to submit a winning bid in this market. Don’t let home buying stress you out when the process can be made easier through the help of the Smith Marketing team. Get started today!