Tag: finance

The Fed Rate Cut: What You Need to Know About Mortgage Rates

When the Federal Reserve announces a rate cut, it always makes headlines — and it’s easy to assume that means mortgage rates are automatically dropping too.
But that’s one of the biggest misconceptions in the housing market.

Let’s break down what a Fed rate cut really means and how it affects your mortgage options.

🎥 Watch my quick video explanation here:
👉 The Fed Rate Cut Explained – YouTube

🏦 What Is the Federal Funds Rate?

The “Fed rate” refers to the Federal Funds Rate, which is the short-term interest rate banks charge each other for overnight loans. It directly impacts credit cards, auto loans, and home equity lines of credit, but not fixed-rate mortgages.

When the Fed cuts rates, it’s a signal that they’re trying to stimulate borrowing and spending — usually because the economy is slowing down or inflation is cooling.

🏠 Mortgage Rates Don’t Move the Same Way

Here’s where it gets tricky:
Mortgage rates are not set by the Federal Reserve.

Mortgage rates are primarily driven by the bond market, especially the yield on the 10-year U.S. Treasury Note. When investors expect slower growth or lower inflation, they move money into bonds — which can push mortgage rates down even before the Fed acts.

So, mortgage rates move based on how the market reacts to what the Fed says and does, not simply on the Fed’s official rate cut.

Sometimes mortgage rates even rise after a Fed rate cut if investors think inflation could come back or the economy will rebound faster than expected.

📊 What This Means for Homebuyers and Homeowners

If you’re thinking about buying or refinancing, here’s the key takeaway:

✅ Don’t wait for a Fed announcement to decide when to act.
✅ Focus on overall mortgage rate trends and your personal financial goals.
✅ Rate cuts can create opportunity — but timing the market perfectly is nearly impossible.

My advice: stay informed, get pre-qualified early, and make decisions based on your long-term goals, not short-term news cycles.

💬 Final Thoughts

After more than 25 years in mortgage lending, I’ve seen how confusion around “the Fed rate” can cause hesitation that costs homebuyers great opportunities.
Remember — the Fed influences the economy, but the market drives mortgage rates.

If you’d like to understand how today’s market impacts your homebuying or refinancing plans, my team and I are here to guide you with clarity, precision, and care.

📞 Contact me anytime at Fairway Home Mortgage.
Let’s make sure you’re positioned for success — no matter what the Fed decides next.

Chris Shumate
Senior Mortgage Loan Officer | Fairway Home Mortgage
Serving GA, AL, TN, FL, SC, and NC

Smart Strategies for Homebuyers in Today’s Market

Rate Buydowns Help with Affordability, but a Wide Portfolio of Mortgage Options Is the Ultimate Tool

Potential homebuyers today face more hurdles than in recent years. Many don’t have a large amount of cash to bring to the closing table, while others are focused on achieving a manageable monthly mortgage payment.

In an environment where mortgage rates have settled in the mid-to-high 6% range and inventory remains a concern in some markets, buying that first home or moving up with a growing family requires careful planning — and strategy. While this isn’t a one-size-fits-all process, The Shumate Mortgage Team at Fairway offers a wide variety of loan programs that are helping many buyers make homeownership happen.

It takes a savvy loan officer with a strong toolkit and market insight. At The Shumate Mortgage Team at Fairway, we understand that not every homebuyer is a “nail,” and not every mortgage is a “hammer.” Getting families into the homes they deserve requires a personalized approach, not a sales script.

One effective tool that’s gaining traction again is the interest rate buydown — a strategy that can help homebuyers ease into their mortgage payments in today’s higher-rate environment.

What Can an Interest Rate Buydown Do for a Homebuyer?

An interest rate buydown allows a homebuyer to temporarily lower their mortgage interest rate for one, two, or even three years. On average, a 1% drop in rate can save buyers anywhere from $200 to $300 per month. For example, on a $400,000 home, a 1/0 buydown could result in first-year monthly savings of $200–$300 — helping the buyer transition into their full monthly payment more gradually.

For buyers whose goal payment is $2,000 but who qualify at $2,200 or $2,400, using a 1/1 or 2/1 buydown can provide breathing room during the initial years of the mortgage.

Who Pays for the Buydown?

The buydown cost can be covered in several ways:

  • Paid by the buyer at closing
  • Negotiated into the contract and paid by the seller
  • Covered through a lender-paid promotional offer
  • Or a combination of the above

For example, if a 2/1 buydown costs $12,000, that amount could be requested in seller concessions to make the offer more affordable for the buyer.

When Is a Lender-Paid Buydown an Option?

Lender-paid buydown options may be available during promotional periods. For example, during National Homebuyer Month, The Shumate Mortgage Team at Fairway may offer a 1/0 buydown covered by the lender, helping clients ease into homeownership without additional upfront costs. These offerings vary by location, so it’s important to ask your Shumate Mortgage Team at Fairway mortgage advisor about any current programs.

Educating Real Estate Agents and Homebuyers

Buydowns have become more popular post-COVID, especially as mortgage rates climbed. While they were more common in the 1990s and early 2000s, today’s market volatility has brought them back into the conversation.

For many buyers, buydowns open the door to important affordability conversations. They help prospective homeowners better understand what kind of home they can afford and which financing strategies can help them get there. Qualification is always based on the full monthly payment, not the reduced initial payment.

What Kind of Buyers Benefit Most?

Buyers focused on a specific monthly payment often find buydowns beneficial. If cash to close is a bigger concern, other tools like down-payment assistance may be explored instead — or in combination with a buydown. With more inventory available and homes staying on the market longer, sellers may also be more open to negotiations, creating opportunities for concessions that help with affordability.

How Do You Know Which Option Is Right?

The Shumate Mortgage Team at Fairway offers a wide array of mortgage products to meet our clients’ needs. With many buyers today having limited cash reserves, the key is to find the right mix of tools to make the purchase possible — whether that means a seller-paid buydown, down-payment assistance, or a combination of both.

We work closely with each buyer to understand their needs and craft a custom plan that fits. By coupling seller concessions, loan program flexibility, and buyer education, we help more families reach the finish line of homeownership.

Which Buydown Options Are Most Popular?

From a cost and practicality standpoint, the 1/0, 1/1, and 2/1 buydowns tend to be the most commonly used. While a 3/2/1 buydown offers deeper initial savings, it can come with a steep cost — sometimes $20,000–$40,000 — which may be more than sellers are willing to contribute.

Final Thoughts

Today’s homebuyers deserve a loan originator who’s willing to put in the time and strategy to match them with the right tools. At The Shumate Mortgage Team at Fairway, we don’t take a one-size-fits-all approach. We’re solution-oriented, responsive to the market, and committed to helping our clients become homeowners — even in a challenging environment.

Whether it’s reducing your interest rate, minimizing your cash to close, or finding the right combination of both, we’re here to help make homeownership possible.

Contact us today.

Chris Shumate

Loan Officer /NMLS #627360

Direct: 404-791-3155

Email: chriss@fairwaymc.com

Apply Online: http://www.chrisshumatefairway.com

*Not all temporary buydown options are available for every product or scenario. Talk to your Fairway loan officer for more details. A 3 year (3/2/1) temporary rate buydown will reduce the note rate by 3% for the first year of the term, followed by a 2% reduction of the note rate for the second year of the term, followed by a 1% reduction of the note rate for the third year of the term, after which the rate will then revert back to the original note rate for the remainder of the term. A 2/1 temporary rate buydown will reduce the note rate by 2% for the first year of the term, followed by a 1% reduction of the note rate for the second year of the term, after which the rate will then revert back to the original note rate for the remainder of the term. A 1/0 temporary rate buydown will reduce the note rate by 1% for the first year of the term, after which the rate will revert back to the original note rate for the remainder of the term. **Eligibility subject to program stipulations, qualifying factors, applicable income and debt-to-income (DTI) restrictions, and property limits. Copyright©2025 Fairway Independent Mortgage Corporation. NMLS#2289. 4750 S. Biltmore Lane, Madison, WI 53718, 1-866-912-4800. All rights reserved. This is not an offer to enter into an agreement. Not all customers will qualify. Information, rates, and programs are subject to change without prior notice. All products are subject to credit and property approval. Not all products are available in all states or for all dollar amounts. Other restrictions and limitations may apply.