You may have noticed that mortgage rates have been dropping since the beginning of the New Year.  Even with the Federal Reserve raising funds back in December, which were expected to raise rates, the mortgage rates just keep falling – here's why:

1)Oil pricing: Believe it or not, oil investments have an effect on mortgage rates. The price of oil is dropping because of low demand. Due to the prices dropping and an uncertainty about when they will stop, investors turn to U.S. bonds, which are more reliable.  This is because treasury bonds will always be paid off to prevent the government from losing the confidence of its investors and creditors.  Because everybody is now buying bonds, yields are driven down because the government doesn't need to offer a high rate of return to get people to buy them.  This results in lower mortgage rates.

2)Overseas issues: Instability in overseas financial markets is causing a massive "flight-to-quality," which has benefitted the U.S. Treasury securities.  Because there is turmoil and instability overseas in the financial markets, investors are seeking lower-risk assets.  This is mainly due to tensions in North Korea, and the Middle East, and also the slowing growth of China.  Because mass amounts of investors are selling stocks and buying bonds in an effort to shift their holdings to safer assets, the mortgage rates are going down.

Clearly, the financial markets oversees seem to have a bigger impact on the mortgage rates than the monetary policy put into place by the U.S.  Mortgage rates continue to be at a temporary low, but as a homebuyer you should be looking at more than just mortgage rates.

When it comes to your mortgage, you need to think about your closing costs as well.  Closing costs are fees charged for services that must be performed to process and close your loan.  At Poli, the closing cost for each mortgage loan are tied to many factors.  These include property, state, loan amount, and optional coverage's like homeowners title insurance.  Because we are a known mortgage leader, we are able to offer some of the most competitive rates and closing costs for homebuyers in the industry.  

Although mortgage rates are at a temporary low, you should still be comparing rates and costs.  You could be offered a lower rate, but your closing costs may be high.  Having low mortgage rates doesn't do you any favors when you're bombarded with extremely high closing costs.  If you want to get the best deal possible, you'll want to be comparing rates and closing costs side by side.  Temporary low rates may entice you to get what you can quickly, but don't forget to inquire about your closing costs before you do. 

Want to learn more? Visit www.polimortgage.com for more information.