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What Factors Are Moving Mortgage Rates Today?

There were no important economic reports today, so our decision-making comes mainly from the economic data below.

Today’s Rate Lock Recommendation

Interest rates have drifted downward recently and are holding fairly steady at this time. However, some indicators point to possible rate decreases in the near term. If you are inclined to gamble, it could pay off in slightly lower rates by the end of today or tomorrow morning.

And if you need to wait a day or two to get a better price – for instance to get a cheaper 15-day lock instead of a 30-day lock, you can probably safely float in the short term. Your decision depends on your tolerance for risk and your own financial resources. Here is the full recommendation:

  • 7-day closing: LOCK
  • 15-day closing: FLOAT
  • 30-day closing: FLOAT
  • 45-day closing: FLOAT
  • 60-day closing: FLOAT

Economic Data Affecting Today’s Mortgage Rates

Here are major economic data that can impact current mortgage rates, and their likely effects:

  • Stocks Major stock indexes are mixed and flat, with the Dow slightly down and the S&P and Nasdaq up just a hair. End result? Neutral and having no effect on mortgage rates. 
  • 10-Year Treasury Yield Today’s 10-year Treasury yield fell two basis points (2/100th of 1%) from .63% to .61%. Yields on 10-year Treasuries usually move in the same direction as mortgage rates, and this move is slightly good for mortgage rates.
  • Oil Prices This morning’s oil prices dropped by .$.12 to $40.54 per barrel. That’s good for mortgage rates. Oil is a limited resource required for most economic activity in the US. Rising oil prices trigger fears of inflation and can cause interest rates to rise, while falling oil prices have the opposite effect.
  • Gold Prices This morning’s gold prices rose $8.80 to $1,818.80 per ounce. Investors buy gold when the economy weakens. Rising gold prices often go in tandem with lower interest rates, and rates often rise as gold prices fall. Today’s news is good for mortgage rates.
  • Fear vs Greed CNNMoney’s Fear vs Greed Index measures investor sentiment with a variety of metrics. When investors are confident, or “greedy,” mortgage rates tend to increase. And when investors become more “fearful,” Interest rates tend to fall. This morning’s index is in the “greedy” range, increasing from 63 to 65 since yesterday. The direction of movement (a greedier direction) is bad for mortgage rates.

Almost anything that impacts the world economy can cause mortgage interest rates to change. In most cases, news that indicates economic weakening is good for mortgage rates. That is because investors become more concerned about preserving their principal and less worried about the return they get. News that suggests economic strengthening is generally bad for mortgage rates. That’s because economic heat can also cause inflation, so investors want to see higher rates of return.

This Week’s Upcoming Releases

  • Monday: No economic releases or reports are scheduled today.
  • Tuesday: Nothing pertinent to mortgage rates
  • Wednesday: Existing Home Sales for June, expected to increase from May’s annualized rate of 3.91 million to 4.9 million. Higher home sales translates to higher demand for home loans, and that can cause mortgage rates to rise. But a lower-than-expected rate could cause interest rates to fall back.
  • Thursday: Weekly Initial Jobless Claims are anticipated to rise from last week’s 1.3 million to 1.4 million. Higher unemployment goes hand-in-hand with lower interest rates. And if claims come in higher than expected, rates could fall. If the actual figure is lower, rates could rise. However this is just a weekly figure and doesn’t have a lot of weight unless the actual numbers differ wildly from the estimate. Also on tap are June’s leading Economic Indicators. This group of metrics anticipates economic trends. If they show a warming economy, rates could rise A cooling one signals lower rates.
  • Friday: New Home Sales for June are expected to increase from an annualized $676,000 to $710,000. This foreshadows an expansion in demand for home loans, which can lead t higher pricing (interest rates or fees).

Why Do Mortgage Rates Change?

In general, positive economic news causes interest rates (including mortgage rates) to increase. That’s because an expanding economy can increase the rate of inflation, and investors demand higher returns when they are concerned about inflation. When the economy is shaky, investors become less worried about how much their money earns and more worried about losing it. So demand for safe investments like bonds increases, driving their prices up and interest rates down.

How Bonds Work

If you purchase a $1,000 bond paying 5% interest ($50) each year for $1,000, you’d be paying what’s called par pricing. This is called its “coupon rate” or “par rate” because you paid $1,000 for a $1,000 bond, and because its interest rate equals the rate stated on the bond — in this case, 5%).

Your interest rate: $50 interest / $1,000 bond price = 5%

When Interest Rates Fall

After you purchase your bond, though the economy becomes troubled. Perhaps by political instability or a global pandemic. Investor demand for safe places to put their money skyrockets and 5% becomes highly desirable. You can sell your $1,000 bond for $1,500. The buyer gets the same $50 a year in interest that you were getting. It’s still 5% of the $1,000 coupon. However, the yield drops.

Your buyer’s interest rate: $50 annual interest / $1,500 bond price = 3.33%

When Interest Rates Rise

The opposite occurs when the economy improves. If after you purchased your $1,000 bond, the pandemic was resolved with the invention of a vaccine, and threats of war subside in volatile countries. The stock market is taking off and 5% doesn’t look so great. Investor demand falls for your bond and you can only sell it for $750. The buyer pays less and enjoys a higher yield.

Your buyer’s interest rate: $50 annual interest / $750 bond price = 6.67%

The relationship between bond prices and interest rates is predictable. It’s simple math.

Author Ron Kness is no longer in the service.

Q: I retired in 2007, I bought into the MGIB my first 4 years in. I have a few questions: 1 – Can I transfer to the Post 9/11 GI Bill? And if so, what form do I need? 2. Can I transfer to my spouse and child? 3. Where do I go to find out about my MGIB? — Mike

A: All good questions and I’ll answer them in the order asked. Yes you can switch to the Post 9/11 GI Bill. Because you have over three years of service after September 10, 2001, you would have full eligibility of 36 months at the 100% tier.

If you choose to switch to the New GI Bill, just go to the eBenefits website and submit VA Form 22-1990.

As far as being eligible to make a transfer of benefits to your spouse and child, that is a no-go. You have to be currently serving at the time you make a request. You really did not miss out on anything being you retired in 2007. The Post 9/11 GI Bill didn’t start until 2009 and it is not retroactive for those getting out before August 1, 2009.

The best way to find out what you have for Montgomery GI Bill (MGIB) benefits is to request your Certificate of Eligibility by filling out and submitting the form I referenced – VA Form 22-1990.

In return, you’ll get a Certificate of Eligibility that will show the GI Bill you have, the number of months/days of eligibility you have left to use and the date when you have to have used them or they will expire.

If you did not switch before, you could at that time by submitting another VA Form 22-1990. Indicate that you want to give up your MGIB and take the Chapter 33. Also enter in an effective date when you want the change to take effect.

Author Ron Kness is no longer in the service.

Q: I was an AGR Recruiter for the National Guard under Title 32 orders for 5 years, do I qualify for Post 9/11 GI Bill. This is the only active duty time I have?

A: Due to a change that was made under GI Bill 2.0, AGR time starting on August 1, 2011 under Title 32 does count. And you can go back to the beginning of the Post 9/11 GI Bill eligibility date September 10, 2001. What doesn’t count is AGR time before August 1, 2011.

I know this is confusing. It is confusing to me and I work with this stuff all the time. What it is saying is that AGR time before the August 2011 date does not count toward Post 9/11 GI Bill eligibility, however time on AGR orders after the August 2011 date does and you can push your eligibility back to the beginning of the Post 9/11 GI Bill eligibility start date – September 10, 2001.

So for example if you came on AGR orders for a three-year tour on August 1, 2007 and your orders ended July 31, 2010. None of that time would count toward the Post 9/11 GI Bill.

However if you came on another set of the same type orders on August 1, 2010, you would have two years of eligibility under those orders when they expired on July 31, 2013, along with an additional three years under the first set of orders. Three years total of eligible time would put you at 100% eligibility tier.

When you decide to use your Post 9/11 GI Bill, the VA will pay your tuition directly to your school up to the resident rate at a public school or up to $20,235.02 per year as a private school. Also you’ll get a housing allowance each month that currently averages $1,300 and a book stipend once per semester (up to the $1,000 per year cap).

Unfortunately, because you are no longer serving in an active duty status, you would not be eligible to make a transfer of benefits to your spouse or children.

Author Ron Kness is no longer in the service.

Q: I have two more quarters on my Post 9/11 GI Bill before the 36 months runs out. All I need to complete my bachelor’s degree is one more quarter and the final capstone class which is a total of $8,874 dollars left to finish my course. Is there any way I could get an extension on my Post 9/11 GI Bill in my situation?

A: I can’t ascertain from your question if you are running out of entitlement or thinking you are coming up on your delimitation date. Under the Post 9/11 GI Bill the cost of the class is mostly immaterial in that the VA pays your tuition up to the resident level. So if your $8,800 cost is resident tuition, cost really isn’t a factor.

If you have two quarters of time left on your Post 9/11 GI Bill, then I would think you have enough time left to complete your degree depending on the length of your capstone class. However if you don’t have another GI Bill that you can use, you most likely would not get an extension of entitlement. The Post 9/11 GI Bill provides 36 months of entitlement which if you have 9-month academic years, is likely enough to get a four-year degree.

And if you happen to run out of entitlement mid-way through your capstone class, the VA will continue paying you until the end of the course.

If you are running out of time before you finish your degree, then that is a different story. The VA has to cut you off the day after your delimitation date (15 years from your date of discharge), but I can’t see that as the issue as we are not even close to the first possible Post 9/11 GI Bill delimitation date which at the earliest will be September 10, 2016.

So I’m not sure which situation applies to you, but in either case I think you should be able to finish up your degree with the benefits you have left albeit the length of your capstone course.

Author Ron Kness is no longer in the service.

Q: My father is a Command Master Chief in the Navy at the moment and I am a senior in High School ready to attend college. He is still on active duty and has $30,000 left on his GI Bill. He wants me to have $15,000 and then other half will go to my younger brother if he decides to attend college. Is there a way for that to transfer to me?

A: Not in its present form. Being you are referencing your father’s GI Bill in dollars remaining, it is telling me he has the Montgomery GI Bill. Unfortunately that one does not have a dependent transfer option. However don’t fret – he still has an ace in the hole.

You father could switch over to the Post 9/11 GI Bill. That one does have a dependent transfer option. All he has to do is go to the milConnect website and follow the Transfer of Benefits section.

However the benefits he has remaining will show up as months/days instead of a dollar amount. He can divide up his remaining benefit between you and your brother how ever he likes. And he can move around the benefits he gives both of you ( even after retiring from the military) if one of you ends up needing more benefits than the other.

Once his application for transfer is approved, then you (and your brother once he is ready to start school) have to go to the eBenefits website and submit VA Form 22-1990e. In return you’ll get a Certificate of Eligibility. You need a copy of that certificate with you when you register for school as a GI Bill student.

Just a word of caution – you father will have to extend his enlistment so that he has at least four years of service left, if he does not have at least that amount of time left at the time of his transfer request.

Author Ron Kness is no longer in the service.

Q: Hello, I was recently discharged from the Air Force for patella femoral pain syndrome and it is an uncharacterized discharge. I was told that after 6 months this would be honorable. Would you guys give me the correct information I’m looking for or point in my in the right direction? I really appreciate it as I’m trying to get funding for school now, thank you so much.

A: The correct information is that you were given erroneous information intentionally or otherwise to get you out of their hair and out of the Air Force. Discharges that are not fully Honorable do not automatically roll over to honorable after 6 months. That is a myth that refuses to die.

Because your discharge was uncharacterized, it tells me that you were most likely in less than a year. They probably determined that either you had it when you came in and should not have been enlisted in the first place. The only way to get your discharge changed is to plead your case before the Air Force Discharge Review Board.

There isn’t a special format to request an upgrade. Just submit your information in letter format to the Board. Your job is to convince them why your current discharge is not accurate. Be sure to include all medically-related information such as doctor’s reports, labs results, etc.

However if the med board found your syndrome service-connected, your current discharge is preventing you from using your Post 9/11 GI Bill benefits. Under serviced-connected conditions full Post 9/11 GI Bill benefits are awarded, but you have to have an Honorable discharge to use those benefits.

Author Ron Kness is no longer in the service.

Q: I am currently active duty Army but am going through a med-board for an injury to my cervical spine. My state of residence is Connecticut which waives tuition if you attend a state school. I am trying to decide which GI Bill is best for me. How are the payments from the Montgomery GI Bill paid out? Do they go to school or to the service member?

A: Under the Montgomery GI Bill (MGIB) payments go to the student. Right now you would receive about $1,729 per month and have to pay your own education expenses which if your tuition is paid, wouldn’t amount to much – mainly books.

However the pay structure under the Post 9/11 GI Bill is different. The VA pays your tuition directly to your school, pays you a book stipend per term (up to the $1,000 yearly cap) and pays you a monthly housing allowance.

Being your tuition is already paid, the VA would not pay your school anything as the VA is the last payee when other forms of tuition-fenced aid is used. So all you would get is your book stipend of around $500 per semester and your housing allowance which averages $1,300 per month. However because the housing allowance is based on the zip code of your school and the number of credits you take, your amount could be more or less than the average. So in your case, entitlement use and the amount you would get under each GI Bill (if your amount is average) is about a wash.

Another thing you should know is that if you are eligible for both GI Bills, you could get an additional 12 months of entitlement if your use your 36 months of MGIB first, switch to the Post 9/11 GI Bill to get the extra time. If you plan to get an advanced degree after your bachelor’s degree, this method could be of interest to you.

Author Ron Kness is no longer in the service.

Q: Let’s say, I am going to school to get my doctorate. I will use three years of the MGIB, and then the 12 additional months of the Post 9/11. (I do qualify and am at the 100% tier.) I would then want to use the Yellow Ribbon Program benefit since I am not yet done with the MD. Assuming the college participates, and I have exhausted all my GI Bill options, how would that work to complete my existing semesters under VA programs?

A: Your plan wouldn’t work and here is why. The Yellow Ribbon Program is a feature of the Post 9/11 GI Bill and not a program of itself that can be used alone. It has to be used in conjunction with the Post 9/11 GI Bill. Because of that fact, your plan will not work.

The first part of your plan is solid if it will take over four years to get your doctorate – using your MGIB first and then the Post 9/11 GI Bill next. However if you can do it in four years, a better plan would be to switch your MGIB benefits over to the Post 9/11 GI Bill.

Under the MGIB, you’ll get about $1,729 per month. Out of that amount, you would have to pay tuition, buy books and pay for other education-related expenses. But if you use the Post 9/11 GI Bill, your tuition up to the resident level is paid in full if you attend a public school or up to $20,235.02 if attending a private school.

If your tuition exceeds what the VA can pay and your school is a participant in the Yellow Ribbon Program, the unpaid difference could be picked up by your school and the VA.

Once per semester you would also get about $500 per semester for books (up to the $1,000 yearly limit). You would also get a monthly housing allowance that averages $1,300. Because it I based on the zip code of your school and the number of credits you take, your amount could be more or less.

So in the end, your decision as to which GI Bill to use should hinge on how long it will take to get your doctorate degree.

Author Ron Kness is no longer in the service.

Q: My son was advised to use the Post 9/11 GI Bill and has completed his 36 months. His plan was to then use the Pell grant – but now he is told that all of his units completed using his GI Bill count against the Pell. He will be without funding the end of this semester. All the VA office at his school said all they could do for him is give him a phone number to see if he could switch to Montgomery. He has called repeatedly, but never gets a call back. My questions are:

Can he switch to Montgomery? He is completing undergraduate in Astrophysics. If he can – HOW can he do this if there is no one who appears to be able to help him? Thank you so much!

A: What he was told about his GI Bill units counting against his Pell grant eligibility is true but not in the sense he was told. Pell grants can only be used for undergraduate funding and because he used his GI Bill first and got his degree, he is no longer eligible for the Pell grant. A better plan of attack would have been to use the Pell grant for undergraduate and then his GI Bill for his advanced degree if he insisted on using the Pell. But there are other financial aid options, including the Perkins, Stafford and Direct Plus.

The physical aspect of switching GI Bills is easy – submitting one form electronically. But the bigger issue is his eligibility.

If the Post 9/11 GI Bill is the only one he has, then he could not switch to the Montgomery GI Bill (MGIB) because he would not have signed up for it when he first enlisted nor would he have paid the $1,200 contribution fee.

If he did have the MGIB and switched to the Post 9/11 GI Bill, then he no longer has the MGIB, as he agreed to “give it up” when he made the switch to the New GI Bill.

Now if he happened to have another GI Bill, other than the MGIB and Post 9/11, and he gave up that GI Bill when he switched to the Post 9/11 GI Bill, then he would have 12 months of eligibility under the MGIB.

If that is the case, then he should go to the eBenefits website and submit VA Form 22-1990 to get his updated Certificate of Eligibility. It would then show he has 12 months of MGIB eligibility that he can use when registering for school and the date when the benefits will expire.

Author Ron Kness is no longer in the service.

New Disclaimer:
Effective immediately, Army Study Guide Blog resources are being funneled toward updating the outdated Army Study Guide.

The new blog posting schedule is one post each Tuesday and Thursday. Also, like questions will be combined and answered to the extent possible.

Q: My husband and I are both active duty in Germany right now. I will be getting out and using my GI Bill to go to school in Germany while my husband finishes out his contract here. Am I still entitled to the monthly housing allowance if we live in government quarters housing? We do not receive OHA? – Rachel

A: In your case Rachel, yes you are. Because you have your own Post 9/11 GI Bill, you are treated as an individual veteran and not as a spouse of a serving military member. Different rules apply to each type of status, so it can get confusing.

As a veteran, you’ll get your tuition paid directly to your school by the VA. Monthly you’ll get a housing allowance in the amount of $1529[check amount] which is the foreign school rate. Where you live is immaterial as it has no impact on what you get from your Post 9/11 GI Bill.

Once per term you’ll also get the book stipend in the amount of $41.67 per credit.

Now if you were using transferred Post 9/11 GI Bill benefits instead of your own, then you would not be authorized the housing allowance. You can’t get more benefits than what your sponsor can get and he would not be authorized the housing allowance either as long as he is serving. However he would get his tuition paid and receive the book stipend if going to school while still in.

Of course once he is out and if he chooses to go to school, then he would be authorized the housing allowance.

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