How pets can impact your home’s value

I once listed the home of a lovely woman who lived with the love-of-her-life, a young pit-bull, Jade.

Like most puppies, Jade had penchant for chewing – on EVERYTHING. My client came home from work one day to find her living room completely destroyed. The dog had torn the sofa to shreds – even the wood frame. The floor was a sea of shredded foam and chewed-up wood.

The dog had also taken a dislike to the baseboards and decided they had to go as well. Thankfully there were no showings that day and it took almost two weeks to get the unit back into showing condition (and a lock on the escape-artist dog’s crate).

Sure, this example is extreme, but pets damage homes, whether it’s the dark streak on a wall where they’ve rubbed themselves or cat urine in the carpet to even something as minor as hair everywhere. Pets can have a negative impact on your home’s value.

Other ways pets impact home value

Recently I read an interview with a Boston real estate agent who talked about selling a condo that belonged to a woman who owned multiple cats. It sold for $30,000 less than it should have because of the damage caused by her cats.

“When the damage is significant, however, a home could appraise at 2% to 5% less” than market value, appraiser Susan Martins-Phipps tells Beth DeCarbo at the Wall Street Journal.

Then there was an article in Business Insider that claims home values in a neighborhood with barking dogs are reduced between five and 10 percent. So not only might your pet bring down your home’s value, but your neighbor’s pets may impact it as well.

How to deal with existing and future impacts

Of course, you’ll need to repair pet damage before putting the home on the market. But you’ll also need to remove evidence of pets as well, such as hair, odors, stains, and pet paraphernalia, such as food dishes and litter boxes.

Urine in carpets is almost impossible to get out so you may want to think about replacing them. Painting the interior will get rid of rubbing marks on the walls and a lot of odor as well.

Here are a few other tips to ensure your home gives off a homey, not kennel vibes:

  • If pet odors are extra-heavy, consider hiring a professional to get rid of them.
  • Avoid the use of air fresheners, incense and scented candles. Certain scents can be turn-offs for some.
  • Keep your dog groomed during the marketing process.
  • Vacuum as often as possible.
  • Give your dog plenty of exercise and attention while the home is on the market. When he’s pooped out, he won’t be as likely to look for ways to beat boredom.
  • Don’t forget the backyard. If your pooch relieves herself there, you’ll need to ensure she hasn’t left any surprises for buyers who want to check out the area.

Finally, find a place to park the pets during showings. Ideally, that means removing them from the home. Park your pet at the groomer, drop it at the vet for a checkup, take it to doggie daycare, or hire a professional dog walker during showings and open houses.

Since it’s not always practical to remove the pet from the home, crate it, cover the crate with a blanket, and leave a note on the door that there are pets created in the room.


Need an electrician? Avoid these 4 common mistakes when hiring

From $150 to $600. That’s the going rate for electricians “… for most small to medium electrical tasks,” according to the editors at

They go on to suggest that the total amount of your bill will depend on three things:

  • The size of the home
  • The complexity of the project
  • The type of license the electrician holds

The latter breaks down into apprentice electrician, journeyman electrician and master electrician. Expect to pay up to $60 an hour for the apprentice, up to $90 an hour for a journeyman and up to $120 an hour for the master electrician.

Like most tradespeople, electricians aren’t all alike. Today we’ll take a look at ways to choose the right one for your job by unpacking common mistakes homeowners make when hiring an electrician.

1. Choosing the electrician that offers the lowest bid

According to Kristen Dalli at, “… despite record-high prices in nearly every category, a new survey conducted by Slickdeals showed that the majority of Americans prefer quality over a bargain.” There’s hope for us yet, right?

There are still those, however, who will always go with the lowest-priced bid. Sadly, “… buying the cheaper option over a higher quality item backfired for more than 60% of the survey participants,” cautions Dalli.

Apparently, more often, we truly do get what we pay for.

Hire a professional. Why take chances with something as dangerous and critical as your home’s electrical system and its components?

2. Not ensuring the electrician is licensed and bonded

If you belong to your neighborhood group on or, you no doubt know how many people ask for referrals to tradespeople.

Invariably, tradespeople show up in the thread offering their services. Very rarely does anyone ask if he or she is licensed, let alone bonded.

Earlier, we outlined the three types of licenses for electricians. “To become licensed, electricians must first apprentice with a qualified master electrician for at least two, but usually four years,” according to the pros at Asbury Electric in Gloucester, VA.

The licensing exam is rigorous.

What about bonding? “While insurance offers protection for the company, bonding offers protection to a business’s customer,” explains Alyssa Gregory at Both are important for the consumer.

Ask the electricians that you choose to interview for your project if they are both licensed and bonded.

Licensed and insured

3. Not requesting and contacting references

The best way to find an electrician is through referrals from friends and family. Gather up a couple of names and, during the interviews, ask them for the contact information for their last couple of customers.

Then, call these people. Ask them about the quality of the work, the electrician’s punctuality, and anything else you need to know.

You might also want to check any reviews (if any) on the Better Business Bureau’s website.

4. Not setting out the agreement in writing

If the electrician doesn’t offer a contract, ask that at least he or she put the details (scope of work, fees, project timeline, etc.) in writing and that both of you sign it.

Money is tight for so many right now that it’s important to ensure you are getting quality work for the money you’re spending.

3 critical steps to a successful home sale

Closeup of person holding key to a new home

A friend who lives in another state sold her home last year. Long before she put it on the market and long before she chose a real estate agent, we talked about selling strategies.

Her home ended up selling in record time, at the best price she imagined. She suggested that I share my strategies with you.

So, here we go.

The successful sale of a home depends on the following strategies, and they must ALL work together:

  • Pricing
  • Presentation
  • Marketing

Read on for the breakdown of each of these strategies.

#1 Pricing your home

This seems so basic to me, so, when Clara (the aforementioned friend) decided to sell her home, I ran a quick market analysis for her to help us come up with a base price.

There was another home in her neighborhood for sale and another, about three blocks outside the neighborhood, that was also on the market.

Mary wanted to price her home comparable to the prices of these homes.

That’s mistake number one. The market value of a home is based on what a willing buyer pays for a home. Until her neighbors’ homes actually sell, what they are asking for their homes is a fantasy; who knows if the homes will sell for that price?

Keep this in mind: market value is based on the sales price, not the asking price, of homes comparable to yours

Yes, it’s hard to price your home higher or lower than the competition. It’s scary. But all you need to know is that their prices are a fantasy. Price yours at market value and you will be rooted in reality.

#2 Presentation

One of my colleagues sums this one up in one sentence: “Realize that little things do matter.”

Understanding the way real estate is evaluated is key to manipulating the end result. And, the way a property is presented is the key to everything.

PRESENTATION is paramount in the sale of everything from cars to, yes, homes.

You wouldn’t think of selling your car before detailing it, right?

Think a new kitchen faucet won’t be noticed? Think again. New knobs and drawer pulls? Buyers may not “get” them, but because they add to the overall appeal, they will contribute to a perceived value. And THAT is what “presentation” is all about.

Modern living area inside of a home

#3 Marketing

What are you expecting from a real estate agent when you choose him or her as your listing agent? Stick a sign in the yard and a lockbox on the door? A flyer box on the sign? Suggestions on how to stage the home?

In reality, marketing the home is a listing agent’s primary job.

And, when the price is right and the home is brilliantly presented and it still sits on the market, nine times out of ten it’s because of the lack of effective marketing.

It takes a lot more than a generic, one-size fits all template type of marketing plan, especially when online marketing is so important.

Forget about the hype you read about “how to hire a listing agent.” The number one criteria should be the agents’ plans to market your home. Ask for examples of past marketing efforts, including the home’s description in the MLS.

We’re happy to answer any questions you may have. Feel free to reach out!

Do open houses help sell homes?

Open house sign

Home sellers swear by them, while real estate agents have a love-hate relationship with them. Open houses, those typically-on-Sunday-afternoon soirees, wherein a seller leaves his home in the hands of his real estate agent who holds it wide open for the world to traipse through, have created an ongoing debate.

So, do open houses sell homes or are they a waste of time? Let’s take a look at some of the pros and cons.

Advantages to holding an open house

Open houses bring potential buyers to doors. What happens once they enter the door, whether they become among the 4% of buyers who actually purchase an open-house home, depends on several factors:

  • Price. Proper pricing of the home has a major effect on how quickly it sells and if it will sell to a buyer attending the open house.
  • The house. Even multiple open houses and a massive marketing campaign won’t sell a shabby house, especially if it’s overpriced.
  • The buyer’s real estate agent. The buyer’s agent’s experience weighs heavily on the outcome of the open house as well. Converting the looky-loo into a buyer takes a pro.

Home value graphic - decorative

And, the disadvantages

“Today’s buyers want to see homes on their own schedule,” a Colorado real estate broker tells Teresa Mears of And that’s well and good, as long as the market favors buyers.

Sellers’ markets, however, are a whole different breed. With a homeowner in the driver’s seat, buyers don’t have the luxury of looking at “homes on their own schedule.” Not if they want to be among the first to view a home. In this type of market, open houses are the ideal way to expose a home to the masses but they put buyers at a disadvantage.

Remember that 4% figure we mentioned above? (Courtesy of the National Association of REATORS) The chances are so small that an open-house attendee will actually put an offer in on a home, many real estate agents discourage the practice.

Consider why: the agent needs to clear her schedule for several hours on a weekend (our busiest time), and sit in someone else’s home as folks trickle in, knowing all the while that none of them are likely to actually purchase the home. So, for many agents, open houses are a waste of time. This may be time better spent on more promising marketing methods.

Many others, however, view them as a way to reel in new clients. So, again, there are advantages and disadvantages to most things.

The open house is a way to bring attention to a home, which is important when buyers have lots of homes from which to choose. In sellers’ markets, such as the one we’ve recently experienced when homes often sell before they’re even listed in the MLS, there may not even be time to hold the home open and, if there is, it still may be a waste of time.

Finally, the majority of homebuyers today turn to the internet first in their home search. They’ll look at homes, take virtual tours, and pore over floor plans, all at their leisure.

If you still have questions about the value, or lack of, holding an open house, feel free to reach out to us.

4 Hard-to-kill houseplants

Closeup of white peace lily

Green thumb. Most plant enthusiasts and gardeners are aware of the term and either self-identify as one who either has a green thumb or lacks one.

In other words, you are either good with plants, or not-so-good. If you feel you’re the latter, have faith. There are many houseplants that are both lovely and almost impossible to kill.

Peace Lily (Spathiphyllum clevelandii)

Not only is the peace lily hard to kill, it doesn’t demand the perfect spot with the perfect amount of sunlight. In fact, it is well-known to bloom even in relatively dark corners of a room.

What we like best about the plant, though, is that if you forget to water it, it will let you know by drooping. Give it a drink and it’ll perk right up again.

When you’re conscientious about watering, give it a huge amount of water – flood it – and then let the soil dry out. Other than that, and a dose of fertilizer once a year, the plant requires little care to thrive.

The one drawback to the plant, however, is that it’s toxic to pets, according to the ASPCA,  so if you have a cat or dog that loves to munch on greenery, either keep the peace lily out of its reach or choose another plant.

Pothos (Epipremnum aureum)

If you need something to fill a hanging planter, do consider pothos, a gorgeous and hardy vine. A fast grower, it will send out long runners that you can cut, stick in a glass of water, and root new plants.

Pothos tolerates low light (even artificial light) and dry soil (as long as it’s not dry for weeks). Ideally, you’ll water when the soil is dry to within an inch of the surface and cut back on the frequency when the plant isn’t actively growing (such as in winter).

A basic houseplant fertilizer, or a 20-20-20 fertilizer applied once a month during the growing season will have it performing at its best but it won’t die if you don’t fertilize it. It just won’t grow as well.

Pothos is toxic to dogs and cats, causing “Oral irritation, intense burning and irritation of mouth, tongue and lips, excessive drooling, vomiting, difficulty swallowing,” according to the ASPCA.

Snake Plant (Sansevieria spp.)

Also known as the mother-in-law’s tongue, the snake plant (Sansevieria spp.) tolerates both shady and bright environments, and requires very little water.

In fact, the best way to kill the snake plant is by overwatering it. Eventually (if happy) it can reach to 4 feet in height.

Pot up your snake plant in a loose, well-draining mix or even a cactus mix combined with potting mix. For extra oxygen at the plant’s roots, which are prone to rotting if kept too moist, use a terra cotta planter. Remember to drain water in the saucer beneath the pot after watering.

Snake plant indoors in a pot

ZZ Plant (Zamioculcas zamiifolia)

If you’re seeking a “set-it-and-forget-it” plant, the ZZ plant can’t be beat. It will thrive in low-light and dry soil conditions.

To help it retain moisture, the plant grows from rhizomes (which many mistake for bulbs) which not only store water but allow the grower to easily propagate the plant.

Keep in mind that all parts of the ZZ plant are toxic. “ If chewed or swallowed symptoms can cause immediate pain or a burning sensation and swelling of the lips, mouth, tongue and throat. Contact dermatitis may also occur in sensitive individuals,” according to the experts at Children’s Health Queensland Hospital and Health Service in Queensland, Australia.

4 things to do if your home isn’t selling

Confused couple checking their phones

In the wake of the hot housing market, it may seem a bit too soon for any home for sale to not attract buyers. But the market is transitioning, and we may start seeing homes sit on the market for longer than we’ve grown accustomed to.

Bloomberg’s Natalie Wong and Chris Fournier call it “the chill.” And, the cooling of the once national, red-hot single-family home market may be contemplating extending its icy fingers into our local market as well.

Chalk it up to higher borrowing costs if you like. The fact is home “Showing activity across the U.S. is down 8.8% from October,” according to research from the ShowingTime Showing Index®.

Don’t let this frighten you out of the market. Instead, as your real estate representative, we urge you to consider the following steps if your home seems to be languishing on the market.

1. Reduce the price

The most common reason that a home sits on the market is price. Homebuyers know when a home is overpriced, and their real estate agents certainly know. Consider the following:

  • Nearby homes, similar to yours, are priced lower than yours.
  • Showings of your home are few and far between.
  • You have received no offers in the first two to three weeks the home is on the market, or offers that you do receive are below your asking price.

These are all indications that your home is overpriced. There is no shame in a price reduction. In October of last year, “… homes unsold after more than 120 days saw prices reduced by an average of 15.8%,” according to Lucia Mutikani at, citing data from the National Association of REALTORS®.

To avoid such a hefty reduction in what you’ll walk away with, lower the price sooner, rather than later.

Real estate markets can change quickly, so we’ll check current conditions and advise you on a new price, if necessary. We often find that when a homeowner reduces the price, traffic picks up.

2. Make some cosmetic changes

Feedback from potential buyers who tour your home is invaluable both for you and for your agent. We actively solicit this feedback to help us determine if the condition of the home is keeping buyers from making offers.

The information helps the seller understand which changes to make, what to update, and what to spiff up.

Sometimes fresh paint will do the trick but don’t be surprised if buyers are turned off by something that’s more expensive to fix, such as flooring.

Before and after renovation

3. Beef up the marketing plan

Compelling advertising of a home is critical. As your listing agent, we will be considering what tweaks we can make to our marketing plan. If we feel that we’ve missed the mark on that point (which really rarely happens), we’ll look at additional ways to make your home stand out.

4. How’s your flexibility?

Yes, it’s challenging to have to keep your home model-perfect while it’s on the market and it’s easy to become annoyed when someone calls at the last minute, wanting to view the home.

The more people that come through that door, however, the quicker it will all be over. If you are putting restrictions on when the home can be shown, it may just sit on the market longer than you expected.

Sometimes, real estate markets experience a lull. If your home is in good condition, it’s priced right and you’re Gumby when it comes to flexibility, take a deep breath and relax. It will pick up again.

Easy spring home maintenance chores

Spring cleaning decorative image

Remember when you bought that house and all the “stuff” that comes along with owning it? I promised to be with you every step of the way, both before and after the sale, and here I am, nagging you to keep up your investment. You’ll thank me later.

Believe it or not, someday you will sell this home and my hope for you is that it’s in pristine condition so you get top dollar for it.

To that aim, take a look at some of these easy spring home maintenance chores that will help you keep your home in peak condition. Chip away at them over the course of the season and I promise, you’ll be glad you did.

Is it hot in here?

It will be soon, so change the filter in the HVAC system before firing up the air conditioner for the season. In fact, the International Association of Certified Home Inspectors recommends that you have the system inspected once a year.

If you smoke, have pets or if you suffer from allergies, plan on changing the HVAC filters monthly.

Dirty HVAC filter

If it slides, lubricate it

Windows, sliding glass doors and anything on hinges can use a squirt of lubricant at least once a year. Get out the WD-40 or whatever else you have on hand and get going.

Be sure to clean the tracks and window frames before applying the lubricant. Wipe them down with a cloth to remove the loose gunk and then use the vacuum to get the rest.

A solution of vinegar and water (hot water is best) is good to clean up mildew or heavy grime buildup. Use a clean damp cloth to rinse of the solution and then a towel to dry everything.

Now you can spray the lubricant. If you have vinyl windows, be careful. Avoid getting the lubricant directly on the window because it may leave a mark.

You can not only get the interior of the house squeak-free and moving without struggle, but probably the shed and garage as well, in less than 20 minutes.

Gutters get really gross over the winter

Caked on gunk in the gutters can be hard to remove so water it down and use a trowel to scoop it out. Then, use the hose to run water through the gutters to ensure there aren’t any leaks and that the downspouts aren’t clogged.

If you have a tree that loves to drop the leaves into the gutter every fall, consider covering said gutters with wire mesh. It just might save you from having to do the cleaning routine again next spring.

Dirty roof gutters on a home

How’s the deck looking?

If you spend a lot of time on the deck during summer, don’t neglect this tip. Take a minute or two to inspect the boards and if any are cracked or curling remove them and replace with new ones.

Then, go underneath the deck to check that the supports are in good shape and there aren’t any missing nails or screws. If you see signs of pest damage you’ll need to call a pest control professional to ensure the deck is still sound.

When was the last time you

Drained your water heater? I know, it’s a tedious and thankless job. But if you’ve ever had a water heater fail and leak all over the garage you’ll understand that these beasts need maintenance as well.

Sediment settles in the bottom of the tank. While one- or two-years’ worth may not be an issue, if you let it go for too long it will build up and can result in a loss of heat to the water and maybe even clog the drain line (therein lies the real danger).

You’ll find a handy video walk-through for the process online at Today’s Homeowner.

Step-by-step guide to a successful move

Want to see your friends get really busy real fast? Tell them you need help packing and moving – it’s amazing the assortment of “Oh-I’m-sorry-but-I-have-to’s” that will come up.

So, plan on minimal help, unless you hire someone. Even then, there’s a lot more to do than merely hiring a moving company, so sit down and create a timeline of events and tasks that need to be done within the two months before the move.

Yup, the moving process can be downright overwhelming, unless you use our handy Moving Checklist. This is part one so you’ll need to check back next week for the next installment.

Bins and purge

You don’t necessarily need to run out and purchase a bunch of bins for this part of the process; big boxes will suffice.

You’ll need three boxes, and if you have a lot of stuff, you’ll need three boxes for each room in the house. One box will be for items you want to donate to charity, another for items you want to sell and a final box for items to give away to family, friends or even strangers – anything not suited, for one reason or another, to give to charity.

What to do with all that stuff you won’t be keeping

The local chapters of VVA don’t pick up items; the pickup must be coordinated through the national chapter. Just follow the link above and you’ll get to the right place.

  • Sell: If you’ve decided a garage sale is just too much work but have items that you want to sell, consider Craigslist, ebay or Facebook Marketplace.
  • Give Away: Many people and places will take items you no longer need. Consider giving linens, such as blankets, sheets and towels to your local animal shelter or favorite rescue. Hospitals may take old books and magazines off your hands. Homeless shelters and food banks may take your unwanted food.

Place a “curb alert” ad on Typically listed in the “For Sale” category, in the “Free” sub-category, curb alerts let folks know that you’ve placed free items at your curb, to be picked up on a first-come, first-serve basis. TIP: Don’t list your phone number in your curb alert or you’ll have people phoning you to find out if the items are still on the curb.

And the stuff you’ll be taking with you?

Go through each closet in the home with an eye toward making it appear roomier. This might mean removing bulky winter clothing if winter has come and gone and anything large that you store in the clothes closets.

Box these items up for the move and stack the boxes neatly in the garage. Do the same for the linen closet, ridding it of bulky winter blankets and comforters. Don’t forget the bathrooms.

In the kitchen, box up items you seldom use but want to hang on to. This might include items you use when you entertain and seasonal items (Thanksgiving platters, etc.).

Anything that you can remove and store for the move will help make the storage options in the kitchen (pantry, cupboards and drawers) look roomier, which is appealing to homebuyers (if you’ll be selling the home).

Next time we’ll look at who will do the actual move: You, a moving company or a combination of both. See you then!

Is Seller Financing Right for You?

Being turned down for a mortgage is disheartening, especially if you’ve worked hard to get one.

But it doesn’t mean it’s the end of the line for your homeownership dream.

There are other options and one of them is seller, or owner, financing.

What is owner financing?

“Owner financing happens when a property’s seller finances the purchase for the buyer,” according to Jean Folger at

It differs from a bank loan in that the seller doesn’t provide cash to the buyer, but instead, extends credit.

Seller financed loans are typically short term. They are ideal for the buyer who has met challenges qualifying for a bank loan or meeting traditional credit score requirements.

The homeowner who owns his home free and clear is in the best position to offer financing. Those that still carry a mortgage typically need their existing lender’s permission to offer financing.

The challenge for the buyer seeking seller financing is finding a seller willing to help him out. Most sellers are reluctant to finance — less than 10 percent do – mainly because of the risk that the buyer will stop making loan payments. It is possible, however, to reduce the risk of default.

To get tips on how to reduce the risk, visit

Then there are the legal and logistical hurdles to overcome. Combined, these challenges convince many sellers that financing the buyer is too much work.

If you need to get the home sold, however, it could turn out to be a blessing.

Benefits for sellers

The biggest benefit for homeowners is the sizable return on investment they realize with seller financing.

Borrowers who typically seek seller financing are considered a higher risk than others. Because of this, sellers commonly charge 8 or 9 percent interest on the credit extended, according to Michele Lerner at

Offering financing is also beneficial in a buyer’s market, with lots of other homes on the market. It opens your home to a larger pool of buyers and may help sell the home quicker.

The seller is released from paying property taxes, homeowners insurance and maintenance expenses, according to Scott Steinberg at

Additional seller benefits include:

  • A faster closing than would be had during the traditional mortgage process.
  • No closing costs.
  • The possibility of selling the home as-is.
  • “Potential to earn better rates on the money that you raised from selling your home than you would from investing the money elsewhere,” suggests Folger.

Benefits for buyers

Seller financing can be a bonanza for buyers with less-than-perfect credit who can’t obtain financing from a traditional lender. Down payment requirements are typically lower as well.

The terms of the loan are negotiable so , while it is unlikely, it’s possible that the buyer may be able to get a better rate than what banks offer. Depending on how the loan is structured, buyers may also get the tax benefits of homeownership.

Types of seller financing

Sellers can choose from a variety of financing options and much of the choice will be based on the buyer’s financial situation. Here’s a quick look at a few of the more common types:

Assumable mortgage – This type of seller financing allows the buyer to take over the seller’s existing mortgage. Not all mortgages are assumable but VA loans and some FHA and conventional mortgages are. You’ll need the lender’s approval with this option.

Land contract — With a land contract, title isn’t conveyed to the buyer but she gets what is known as “equitable title,” a shared ownership until the loan is paid in full.

Lease option – This method allows the buyer to lease the home for a specified amount of time. The rent is typically higher than market rents and there is an upfront fee, akin to a security deposit, except the buyer will forfeit it should he decide not to purchase the home at the end of the lease.

The terms of a lease option are negotiable. This generally includes the length of lease, what portion of the rent is credited toward the purchase and the purchase price. For this reason, there is no standard lease option but numerous varieties.

The all-inclusive mortgage and junior mortgage are two other popular methods of providing seller financing. Ask your real estate attorney for details on these options.

Seller financing can be complicated for those not familiar with it. It is important that both the buyer and the seller obtain the services of a real estate agent.

Don’t hesitate to call us or your real estate attorney with any questions about seller financing.



What you need to know about mortgage interest rates

Interest rates, especially mortgage interest rates, have become the stuff of headlines over the past year. Homebuyers with budgets that put them on the edge of affordability have been forced out of the market and those who are left can look forward to higher house payments than they had hoped.

If you’re new to buying a home, read on as we dive into the topic of mortgage rates and why they fluctuate so often.

The Federal Reserve

The Federal Reserve System, known as “the Fed” for short, is considered our country’s central banking system. It is, however, independent of the federal government. In essence, the Fed controls the movement of money throughout the U.S. financial system.

The Federal Reserve System is comprised of a Board of Governors and 12 Federal Reserve Banks, spread throughout the country.

The seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four other reserve bank presidents serve on the Federal Open Market Committee (FOMC), the policy-making body that determines, among other things, the interest rate charged to commercial banks.

The FOMC controls inflation by tightening or loosening the country’s money supply. One way they do this is by raising interest rates to control inflation. When borrowing money costs more, consumers tend to shy away from taking out loans, hopefully leading to lower prices.

By the same token, lower interest rates encourage consumers to borrow and spend, which in turn boosts the economy. Overall, the fluctuations in mortgage interest rates reflect an attempt to keep a balance in the economy and to prevent inflation without bringing the economy into a recession.

Mortgage investors

The Federal Reserve is not the only player affecting mortgage rates. To create more money to lend, banks often sell their loans on the secondary market, now controlled by the federal government.

Banks and other mortgage lenders sell mortgage-backed securities to investors. The return on investment for these investors is generated by interest paid by mortgage holders on their loans. For the investors to realize a return, banks must charge a higher interest rate.

Homebuyers (mortgage loan borrowers) naturally want low-interest rates on their mortgages. This force drives interest rates back down. In addition, when investors know rates are going to drop, they purchase these securities, increasing demand and eventually sending interest rates back down. Banks must balance these two opposing forces, and the resulting push-and-pull drives mortgage interest rates.

The impact of fluctuating rates on loans

“Your mortgage rate isn’t guaranteed until it’s locked,” cautions Denny Ceizyk at And locking in your rate is critical if you hope to protect yourself from fluctuating mortgage rates.

“Even minor changes to mortgage rates can impact the amount you pay when you refinance or close on your home loan,” suggests Victoria Araj at

You can lock your rate anytime from loan approval to five days prior to closing on the loan. According to Araj.

“Some lenders may even lock your rate at the same time they send you the loan estimate,” she continues.

“However, your rate lock will have an expiration date, after which your interest rate will start to increase or decrease even if you haven’t completed your refinance or home purchase,” Araj warns.

While all of this may seem complicated to the average homebuyer, an awareness of what drives interest rate changes can help you know when the ideal time has arrived to apply for a loan.

We are not mortgage specialists or financial professionals so we urge you to contact either for more information about how fluctuating mortgage rates can impact your loan.