The Internet is a wonderful tool to do research, after all, you found this blog via the Internet, right? Well, don't scan the Internet doing research and rely on the information you received, even if it looks like it is from a reliable source. Failure to do that can prove very costly, especially as it relates to your mortgage.
This morning I was reading an article from my CNN Money feed that showed how wrong they could be and very subtly at that. Here is the blurb that caught my eye...
(Fortune Magazine) -- For many house hunters, these are good times. Home prices have fallen 10% or more in once-hot markets, and interest rates on mortgages of $417,000 or less have sunk to their lowest levels in four years. Today a family with solid credit and enough cash for a 20% down payment can lock in a rate of only 5.9% on a 30-year mortgage, according to Bankrate. Thank you, Ben Bernanke!
Did you see catch it?
In case you missed it, it all was in the last statement; "Thank you Ben Bernanke". Here is a source people read regularly and take as a reliable source, yet they give credit to Big Ben for something he didn't do, at least not directly, so they are subtly misleading their readers. Big Ben, as I have said before, does not directly control mortgage rates!
Mortgage rates on your primary loans are driven by mortgage backed securities, nothing else. ARMs do get driven by their indexes (plus margins) when they adjust, but their initial rates are driven by market forces. Mortgage rates on residential homes are not even driven by the 10-year note which I still see people, even mortgage professionals, relating to.
Now, look at what Big Ben and his buddies are doing, they are cutting rates still. But what is happening to mortgage rates? That's right, they are climbing higher. Does that sound like this writer should be thanking Big Ben for lower rates on conforming mortgages?
I do not want to discredit the entire article though as he does provide some good thoughts, such as getting an ARM instead of a fixed rate and seeking a mortgage broker to find the best deals, but the vagueness of his suggestions leave the ability to screw yourself as well. I can see people taking the advice and incorrectly applying, subsequently becoming another statistic in the future.
The point I want to stress is that you must ensure you are getting you information from sources that understand how mortgages work, and those sources are not as abundant as you may think. In fact, a lot of mortgage professionals across the realm don't even know, so be careful. Doing your own research and not relying on anyone is the best way to protect yourself and save money.
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