#home buyers guide

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How the 10-Year Treasury Market Affects Mortgage Interest Rates

The 10-year U.S. Treasury bond is a cornerstone of financial markets and plays a significant role in determining mortgage interest rates. Though they are not directly tied, mortgage rates often track the movement of the 10-year Treasury bond yield. Understanding the relationship between these two financial instruments can help borrowers, investors, and analysts better anticipate changes in mortgage rates.

What is the 10-Year Treasury Bond?

The 10-year U.S. Treasury bond is a debt security issued by the U.S. government with a maturity of 10 years. It pays interest to holders at a fixed rate, and its yield (the return on investment) is closely watched by economists, investors, and policymakers. This yield represents the cost of borrowing for the U.S. government and is considered a benchmark for other interest rates in the economy.

Treasury yields are often considered a “risk-free” benchmark, meaning they are seen as the most stable and least risky form of investment. The yield on the 10-year Treasury bond reflects investor sentiment about future economic growth, inflation, and interest rate expectations set by the Federal Reserve.

How the 10-Year Treasury Yield Impacts Mortgage Rates

Mortgage rates are influenced by a variety of factors, but one of the most important is the yield on the 10-year Treasury bond. The connection lies in the fact that mortgage lenders, like other investors, need to assess the profitability of lending money for long periods, which is similar to investing in long-term government debt.

The primary way the 10-year Treasury bond affects mortgage rates is through the spread, or difference, between the bond yield and mortgage rates. Mortgage lenders typically add a margin to the 10-year Treasury yield to account for factors such as the risk associated with the loan, operational costs, and profit margin. As a result, when Treasury yields rise, mortgage rates tend to rise as well, and when Treasury yields fall, mortgage rates generally decrease.

The logic behind this relationship is straightforward: if Treasury yields rise, the cost of borrowing for mortgage lenders increases. Since mortgage lenders often use Treasuries as a benchmark for pricing long-term loans, they adjust their mortgage rates accordingly to maintain profitability.

Other Factors Affecting Mortgage Rates

While the 10-year Treasury yield is a key driver, it is not the only factor influencing mortgage rates. The Federal Reserve’s actions are another significant influence. When the Fed changes the federal funds rate, it can directly affect short-term interest rates, which indirectly impacts longer-term rates, including mortgage rates.

Additionally, broader economic conditions such as inflation, unemployment, and consumer confidence can affect investor sentiment, which, in turn, affects Treasury yields and mortgage rates.

The Relationship Between the 10-Year Treasury and Mortgage Rates: A Historical Look

A graphical representation of the relationship between the 10-year Treasury yield and mortgage rates over time can illustrate how these two factors tend to move in tandem.

In the above graph, you can see that during periods of rising Treasury yields, mortgage rates tend to follow suit. For instance, in the mid-2000s, as the yield on the 10-year Treasury increased, mortgage rates also climbed, making home loans more expensive for buyers. Conversely, when the 10-year Treasury yield dropped during times of economic uncertainty (like in 2008 during the financial crisis or 2020 during the pandemic), mortgage rates also fell.

Conclusion

The 10-year Treasury bond yield serves as a vital indicator of market conditions and is a critical determinant of mortgage interest rates. While the relationship is not perfectly direct, the two tend to move together over time. Mortgage lenders use the yield as a baseline for pricing loans, so when Treasury yields rise or fall, it directly impacts the rates at which consumers can secure mortgages. Understanding this dynamic can help borrowers make informed decisions about when to lock in mortgage rates and take advantage of favorable market conditions.

Contact me today to begin your journey for home ownership.

Lanny Mixon

Mortgage Advisor - NMLS 2450250

lmixon@dlhpma.com

Apply Online Today!

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Is Your Wall Art Putting Off Home Buyers?

Veranito has taken a look at if your wall art is putting off home buyers. Here's what we've wrote over on medium, with some ideas on how to style your home to make buyers want to view and hopefully buy your home from their screen.

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Home Buying Tips for Smart Buyers

Learn how to navigate the real estate market with confidence! Make your home buying experience as smooth and informed as possible by learning essential home buying tips.

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Something that means something, but only to me.

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Difference Between Freehold and Leasehold Resale Properties: What You Need to Know Before Buying or Selling

Whether you're buying your first home or investing in a resale property, one of the most common (and confusing) terms you'll hear is Freehold vs Leasehold.

What is a Freehold Property?

In the simplest terms, a Freehold property means you own the property AND the land it’s built on, outright and forever. There’s no time limit, no rent to pay, and no landlord to report to.

✅ Key Features of Freehold Properties:

You have complete ownership of the property and the land.

There’s no lease agreement involved.

You can modify, sell, or transfer the property whenever you like.

Maintenance is your responsibility—but also your control.

🧠 Real-life Example:

Let’s say you buy a bungalow in Pune marked as a freehold property. You don’t just own the house—you own the plot too. You can plant a garden, extend the porch, or even sell the entire thing without anyone else’s permission.

📝 What is a Leasehold Property?

A Leasehold property means you’re buying the right to live in or use the property for a fixed period, usually 30 to 99 years, but the land still belongs to a government authority, trust, or private landlord.

⚠️ Key Features of Leasehold Properties:

You own the structure (like an apartment) but not the land.

You need to pay a ground rent or lease fee.

Any major changes or resale often need the landowner’s permission.

After the lease expires, ownership typically reverts back to the original landowner—unless renewed.

🧠 Real-life Example:

Suppose you're buying a resale flat in Mumbai that's under MHADA or CIDCO. Chances are it’s leasehold. Even if the flat looks like a steal, make sure to check how many years are left on the lease. Less than 30 years left? Financing might be tough.

Which One Should You Buy in Resale?

It depends on your long-term plans:

Want full control, long-term value, and fewer legalities? Go Freehold.

Looking for a budget-friendly home in a high-demand area with limited availability? A Leasehold resale might be worth considering—but only after checking lease terms and hidden costs.

🛑 Final Tips Before Buying or Selling

. Check Title Deeds: Always verify ownership documents and lease agreements.

. Consult a Property Lawyer: Especially for leasehold properties.

. Evaluate Remaining Lease Period: Less than 30 years left? Reconsider or renegotiate.

. Understand the Rules: Some leasehold properties come with usage restrictions (like commercial activity bans).

💬 Final Thoughts

Both Freehold and Leasehold properties have their pros and cons, especially in the resale market. The key is not just understanding what they mean—but what they mean for YOU.

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How to Market Properties to First-Time Buyers in Ireland

Purchasing a property is a significant milestone for first-time buyers. In Ireland, this process can feel overwhelming, especially with the current property market dynamics. As a real estate agent or seller, understanding how to market properties effectively to this audience can make all the difference. Here’s a guide on how to attract and engage first-time buyers in Ireland, ensuring your properties are at the top of their consideration list.

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Avoid overpricing your commercial property! Learn its impact, why it happens, and expert tips to price right for a faster sale and better offers

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New Massachusetts ADU Law 2025: What You Need to Know

What is an accessory dwelling unit (ADU): An accessory dwelling unit (ADU) can be anything from a finished basement containing a kitchenette, living room, a bedroom as an attached structure to current home or a separate, smaller dwelling unit on the primary home’s property. Under the old law, these spaces could not be rented out and could only be used for family members and you had to go before…

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Top 10 Mistakes New Construction Buyers Make – And How to Avoid Them

Buying a new construction home is an exciting experience. The thought of moving into a brand-new home, built just for you, with no previous owners, is a dream for many. However, new construction purchases come with unique challenges, and many buyers make costly mistakes that could have been avoided with the right knowledge. What a lot of people don’t realize is that the cost of having their own…

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Comparing USDA and FHA Home Mortgage Products: Benefits and Features

When it comes to securing a mortgage, potential homebuyers have a variety of loan options to choose from, with the USDA and FHA being two of the most popular government-backed programs. Both of these options are designed to assist homebuyers with unique financial situations or specific living circumstances. Although they share the common goal of making homeownership more accessible, they differ in several key aspects, including eligibility requirements, loan terms, and benefits. This article compares USDA and FHA home mortgage products, highlighting the advantages of each.

USDA Home Loans

The U.S. Department of Agriculture (USDA) offers mortgage loans to individuals who want to purchase a home in eligible rural or suburban areas. USDA loans are designed to promote homeownership in these regions, which often experience slower economic growth and lower property values than urban centers. These loans are intended to benefit low- to moderate-income buyers who may otherwise struggle to qualify for conventional loans.

Eligibility Requirements

USDA loans are typically available to U.S. citizens or permanent residents who meet specific income and credit criteria. One of the most significant eligibility factors is the location of the property. Homes must be located in USDA-designated rural or suburban areas, which are defined based on population size, proximity to urban centers, and development levels.

Income eligibility is also crucial, as the USDA limits household income to $112,450 for a family of up to four and $148,450 for families of 5-8. These limits vary by region, so borrowers need to verify their income against local guidelines. USDA loans are available to individuals with credit scores as low as 580, though some lenders may consider applicants with lower scores on a case-by-case basis.

Benefits of USDA Loans

Zero Down Payment: One of the most attractive features of USDA loans is the ability to secure a mortgage with no down payment. This makes homeownership more accessible for first-time buyers and those without substantial savings.

Lower Mortgage Insurance Costs: USDA loans require two types of mortgage insurance, but the costs are generally lower than those associated with FHA loans or conventional loans. This can result in significant savings over the life of the loan.

Competitive Interest Rates: USDA loans typically come with competitive interest rates, often lower than those of conventional loans. The government backing provides lenders with more security, which allows them to offer favorable terms.

Lenient Credit Guidelines: While USDA loans do have minimum credit score requirements, they are often more lenient than those of conventional loans. This makes USDA loans an excellent option for those with less-than-perfect credit.

FHA Home Loans

The Federal Housing Administration (FHA), a division of the U.S. Department of Housing and Urban Development (HUD), insures loans made by approved lenders to borrowers with lower credit scores or limited financial resources. FHA loans are popular among first-time homebuyers, as well as those who may not meet the strict requirements of conventional loans.

Eligibility Requirements

FHA loans are available to any U.S. citizen or permanent resident who meets the financial criteria set by the FHA. These loans do not require a specific location like USDA loans, so they can be used for properties in both rural and urban areas. To qualify for an FHA loan, borrowers typically need a minimum credit score of 580 to secure the lowest down payment of 3.5%. Borrowers with credit scores between 500 and 579 can still qualify, but they will be required to make a 10% down payment.

FHA loans have more lenient guidelines than conventional loans, making them ideal for buyers with less-than-ideal credit, minimal savings, or inconsistent employment histories.

Benefits of FHA Loans

Low Down Payment: FHA loans require as little as 3.5% down, making them a great option for individuals with limited savings. This low down payment requirement is especially appealing to first-time homebuyers.

Flexible Credit Requirements: FHA loans are accessible to individuals with credit scores as low as 500, which is a significant advantage for those who have faced financial challenges in the past.

Lower Interest Rates: FHA loans often come with competitive interest rates. They are typically better than those of conventional loans for borrowers with less-than-ideal credit.

Higher Loan Limits: FHA loans tend to have higher loan limits than USDA loans, due to debt-to-income ratio restrictions due to the USDA income limits, allowing borrowers to purchase homes in more expensive markets or areas where property values exceed USDA limits.

Comparison of USDA vs. FHA Loans

While both USDA and FHA loans have similar benefits, such as low down payment requirements and competitive interest rates, there are notable differences between the two programs.

Location: USDA loans are limited to rural and suburban areas, while FHA loans can be used for properties in any location.

Income Requirements: USDA loans have strict income limits, while FHA loans do not impose income caps, making them more accessible for higher-earning individuals.

Eligibility for Buyers: USDA loans are reserved rural buyers, but locally more than 96% of the land area in Mississippi is USDA eligible. FHA loans can be more inclusive and available to a wider range of financial situations, including individuals with lower credit scores or a history of financial challenges.

Conclusion

Both USDA and FHA loans offer distinct benefits, making them excellent choices for specific buyer needs. USDA loans are ideal for those purchasing homes in rural or suburban areas who meet income qualifications, while FHA loans provide more flexibility in terms of location, credit score, and income. Ultimately, the best choice depends on individual circumstances, including income, credit, location, and down payment capabilities. By understanding the benefits and differences of each program, prospective homebuyers can make an informed decision that aligns with their financial goals and homeownership aspirations.

Contact me today to begin your journey for home ownership.

Lanny Mixon

Mortgage Advisor - NMLS 2450250

lmixon@dlhpma.com

Apply Online Today!

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Feeling stuck in your home-buying journey?

Feeling stuck in your home-buying journey? 🏠 Here are 4 motivation killers to watch out for

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Ready to own your first home? Here are key steps:

Financial Prep: Set a budget and save for a down payment.

2. Loan Options: Explore mortgages & get pre-approved.

3. Location Matters: Research neighborhoods, consider schools & amenities.

4. Expert Help: Consult a realtor for guidance.

5. House Hunting: Visit properties, compare, and take notes.

6. Secure Financing: Lock in your loan with favorable terms.

7. Contract Care: Review contracts meticulously.

8. Inspect Thoroughly: Don’t skip inspections.

9. Seal the Deal: Negotiate, sign, and celebrate your new home!

For more information, visit at: www.bmgrouprealty.com/blog/guide-for-first-time-home-buyer/

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Egypt visa-free countries

Egypt offers visa-free entry to citizens of several countries for stays up to 90 days. These include Bahrain, Hong Kong, Kuwait, Lebanon, Macao, Oman, Saudi Arabia, and the United Arab Emirates. Additionally, some nationalities are eligible for visa-on-arrival, while others must obtain a visa in advance. The list of visa-free countries can change, so it's advisable to check with the Egyptian embassy or official government sources for the most up-to-date information before planning travel. More info: https://toppicksreviews.com

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What Every Homeowner Should Know About Homeowners Insurance

Key Facts Discover the differences between Named Peril and Open Peril coverage options. Learn about common policy exclusions and claim limits for specific items. Understand how Replacement Cost and Actual Cash Value impact your financial protection. Navigating homeowners insurance is essential for new and existing homeowners alike. Understanding the basics of what your policy covers helps you…