Why are mortgage rate up after the Fed reduced interest rates?

      Are you wondering why mortgage rates are up after three rate cuts in 2024? It's because mortgage rates follow the rates of their close competitor, 10 year Treasury Notes.   1. Investor Behavior and Risk Profile Treasuries: 10-year Treasury notes are considered a safe investment with a predictable return, backed by the U.S. government. Mortgages: Mortgage-backed securities (MBS), which fund home loans, are riskier but have a comparable time horizon since many homeowners refinance or sell within 10 years. Investors seeking slightly higher returns may prefer MBS over Treasuries, but their yields must stay competitive to attract buyers. If Treasury yields rise, mortgage rates often increase to maintain this balance. 2. Inflation Expectations Both Treasuries and mortgages are affected by inflation. Higher inflation expectations push yields and mortgage rates up because lenders demand more return to offset the erosion of purchasing power. 3. Economic Indicators Economic growth impacts both Treasuries and mortgage rates. For example: Strong Growth: Leads to higher Treasury yields and mortgage rates, as demand for credit increases. Weak Growth or Recession: Pushes rates down as investors move to safe assets like Treasuries, and the Federal Reserve may lower interest rates to stimulate borrowing. 4. Spread Between Treasuries and Mortgages Mortgage rates don't perfectly match 10-year Treasury yields; there’s a spread to account for: The risk of borrower default. Administrative and operational costs for issuing loans. Market conditions like supply and demand for MBS. Summary The 10-year Treasury yield acts as a benchmark because its maturity closely aligns with the average lifespan of a mortgage, reflecting similar economic influences. However, mortgage rates include additional risk premiums, making them slightly higher.

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Transfer on Death Deed

In the ever-evolving world of real estate, staying informed about the latest tools and strategies can make a significant difference in your financial planning. One such tool that has gained traction in recent years is the Transfer on Death Deed (TODD). This legal instrument allows property owners to designate a beneficiary who will automatically inherit their real estate upon their death, bypassing the often lengthy and costly probate process. One of the primary benefits of a TODD is its potential for tax savings. Since the property transfers directly to the beneficiary without going through probate, it can help avoid certain estate taxes and reduce administrative costs. This streamlined process not only saves money but also ensures that your loved ones receive their inheritance more quickly. Estate planning is another critical area where a TODD can be advantageous. By clearly designating who will inherit your property, you can prevent disputes among heirs and ensure that your wishes are honored. This clarity can provide peace of mind for both you and your family, knowing that your estate will be handled according to your intentions. Medicaid preparation is an often-overlooked aspect of estate planning that a TODD can assist with. If you require long-term care and need to qualify for Medicaid, having a TODD in place can help protect your home from being counted as an asset when determining eligibility. This protection allows you to preserve your property for your beneficiaries while still receiving the care you need.  Incorporating a Transfer on Death Deed into your estate plan offers multiple benefits, including tax savings, efficient estate planning, and Medicaid preparation. As with any legal instrument, it's essential to consult with an experienced attorney to ensure that a TODD aligns with your overall financial strategy and complies with state-specific regulations. By doing so, you can safeguard your real estate assets and provide a smoother transition for your loved ones.   For more information visit: https://guides.sll.texas.gov/wills-and-directives/transfer-property-after-death

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Tree Farm

In a year of stellar Bright Green Future Grants projects, the “farm” at Bailey Middle School stands out as one-of-a-kind. But first, a little backstory. Over the last two years, Bright Green Future Grants have funded several successful gardening projects at Bailey. Not content to stop there, Mike Berryman, Bailey PTA Garden Committee Chair and parent volunteer, led the charge to leverage the success of these Bright Green Future Grants projects to receive additional funds from Seeds for Change to build a greenhouse. With greenhouse construction completed, students could take their gardening efforts to the next level and this year’s Bright Green Future Grant ensured that they would. 6th, 7th, and 8th graders at Bailey are now growing native trees, cultivated to withstand extreme Texas weather. Here’s how it’s done. In his research on professional tree production, Berryman learned that Airpots help trees to establish very quickly and require minimal water. Airpots also permit “farmers” to easily prune tree roots in the air, without a lot of digging and replanting. Frequent root pruning signals the tree to continuously generate roots, resulting in a fibrous mass with no circling. This dense root system allows trees to absorb more water and nutrients per rain event. Berryman worked with Bailey students to build the pots and germinate the seeds. Once the seeds were planted, adult volunteers assembled the timed the auto watering system in the greenhouse. As the trees grew, students transferred the seedlings from the Airpots to larger pots. Once they reached a certain height, the trees were transferred from the greenhouse to be outside and watered by an auto irrigation system. Over the hot summer months when the students are away, adult volunteers are tending to the trees. When the students return to school in the fall, the trees will be sold at a Texas Arbor Day event to provide funds for additional school garden activities, as well as projects led by Bailey teachers with an interest in sustainability. “I am certain that the documentation of the Bright Green Future Grant Project helped us win a $10,000 grant that we invested in the greenhouse,” said Mike Berryman. “The greenhouse has given the kids a place to work, and a centerpiece for a twice yearly plant sale – the first one brought in $2,500! Our farm is on the way to being self-sufficient.” Students and volunteers also plan to educate the public about tree growing and care, including when to plant, the proper depth and dimension for the hole, how to fertilize the soil, and how much watering is needed. So, while it may not be Old McDonald’s Farm, the students and volunteers at Bailey Middle School are doing their part to grow a bright green future!    

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