You may have recently heard that the Fed announced that they think the Fed Funds Rate will remain at zero through at least 2023.

First and foremost, the Fed Funds Rate and Mortgage Rates are two totally different instruments. The Fed Funds Rate can change from one day to another, but a Mortgage Rate may be in effect for over 30 years.

Mortgage Rates will be affected by inflation because inflation erodes the buying power of the fixed return that a mortgage holder receives. And interestingly, the best way to combat inflation is by raising the Fed Funds Rate. If inflation begins to rise, and there are already some signs of this, Mortgage Rates will start to climb in response. All this can occur while the Fed Funds Rate is at zero.

If you would like to see an example of this, look no further then what transpired a few years ago when Mortgage Rates rose nearly 1%, while the Fed Funds Rate remained at zero.

The current rate environment presents an incredible opportunity that should be taken advantage of. Looking to take advantage of low rates before things change? Connect with us today.

Doug Kennell

NMLS# 364758

Ask 10 different mortgage experts what the future of 30-year fixed rates looks like, and you'll get 10 different answers. From the latest deadly virus to the uncertain trajectory of the US political climate, there seems to be an endless list of potential causes for our inevitable economic doom. Rates have been under 4% since June 2019, but since we aren't certain which straw will break the proverbial camel's back, let's focus on what we know -- rates are LOW. What does this mean for the average homeowner? Refinance.

Cash-out, or rate-and-term -- What's the Difference?

Cash-Out refinances allow you to trade your home equity for cash. At closing, your existing mortgage is paid off, the closing costs are paid, and the remaining funds are given to the borrower. Common uses for cash-out refinances include:

  • home improvements

  • paying off student loan debt

  • paying off high-interest debt, such as credit cards, car loans, etc.

  • much needed vacation

One thing to remember about cash-out refinances is that it is not free money. For all intents and purposes, you're borrowing money from yourself in order to make a purchase or pay off debt.

Rate-and-term refinances allows borrowers to replace an existing mortgage with one that has a lower rate or more favorable term. Rate-and-terms are most often used by borrowers who have owned their home for more than a year however, sometimes plans change and borrowers refinance as soon as six months after their purchase. Has your home increased in value since you've bought it? You may be sitting on more equity than you think; a rate-and-term refi might allow you to get rid of that Mortgage Insurance payment!

A common question when talking to potential borrowers about refinancing is, "Have you lived in your home for more than a year?" This gives us a better idea as to what their current rate might be or how much equity they may have. After all, we wouldn't want you to go through the whole process of refinancing if it will end up costing you money in the long run!

Whether you've got debt that needs to be paid off or just a fear of missing out on the low rates, I encourage you to speak with your local Sovereign Mortgage loan originator. Save yourself time, money, and future headaches by speaking with a mortgage professional about your home loan options.

Doug Kennell

Sr.BranchManager, LoanOriginator




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What is a Jumbo Loan:

Jumbo loans let you borrow more than the conventional loan limit for your area -- $484,350, or $726,525 for high-cost areas -- in order to purchase a home that’s priced above average. Although Jumbo loans let you finance more, they have stricter requirements as a means of risk management for the lender.



  • Buy in cash.

  • Veterans and other eligible borrowers can obtain VA loans beyond conventional limits unless the borrower is doing a 0% down mortgage. When a down payment is provided, VA loans do not have a set limit. (Positive changes coming in early 2020 for VA loans.)

  • Conventional High Balance loan limit for single-family is $726,525 and for a 2 family $930,300. Maximum DTI is 43% and 2 years tax returns required.

Good options are limited when it comes to mortgage loans on high-priced homes, which is a blessing in disguise. Jumbo loan guidelines prevent borrowers from purchasing more house than they can afford.

Other Notes:

The Tax Cuts and Jobs Act of 2017 decreased the amount of debt from which mortgage interest could be deducted, from $1million to $750,000 (the House bill had it reduced to $500,000). Given that personal deductions were increased and that borrowers considering Jumbo loans have a good-sized savings, this shouldn’t weigh too heavily on the mind of the borrower.


Rates, regulations, and loan conditions can and do change. The information presented in this article was accurate, to the writer’s knowledge, as of 11/20/2019.Consult your Sovereign Mortgage Investments Inc. advisor to see if rates, regulations, and loan conditions have changed.

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Douglas Kennell

NMLS #364758

Sovereign Mortgage Investments, Inc.

NMLS #222681

(239) 542-6224

Cape Coral, FL 33904

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