Expected Fed Rate Cut and What It Means for Your Mortgage
When the Fed meets in mid-September, we’re expecting to see a rate cut (.25%–.5%, depending on who you ask). The expected cut would have the biggest impact on short-term rates or rates that fluctuate, like credit card rates.
Unlike those consumer rates, mortgage rates are forward-looking—so they’ve already gone down, just based on that expectation of a rate cut. In early August, mortgage interest rates dropped to their lowest point in 15 months, hovering around 6.5%. That’s a big difference from the nearly 8% rates we saw in October 2023.
The drop has a lot of people thinking about refinancing, or moving forward with buying a home, now that the rate environment is a bit more favorable. If you’re thinking about getting home financing:
- Start talking to your mortgage loan originator now. Add that person to your phone with the word “mortgage” in their name to make them easy to find in your contacts. That way, when you’re ready to start your application, you can easily get in touch.
- Gather the documents you’ll need for your application:
- Employment history: Two years of history, including address and supervisor contact information
- Residential history: Two years of history, including address and, if applicable, landlord information
- Driver’s license
- One month of most recent paystubs
- Two years of most recent W2 forms
- Two years of most recent federal tax returns (all pages and schedules), signed and dated
- Two months of most recent bank/asset statements (all pages requested)
- Homeowners insurance company, agent, and phone
- Copy of your Mortgage Statement
- Add your phone number to the National Do Not Call Registry. This is optional, but as soon as your credit is pulled for your mortgage application, you’ll start getting calls from other lenders who purchase “trigger leads.” The three credit reporting agencies get notified when your credit is pulled, and they sell that information to other lenders looking to connect with people in the market for a loan. If you’re on the Do Not Call list, you’ll avoid having your phone inundated by these telemarketers in the days after you submit your mortgage application. It usually takes about two weeks for your number to be added to the registry.
