Although it is little-known by the general public, the Federal Reserve’s FOMC (Federal Open Market Committee) has a significant impact upon the U.S. economy. The FOMC is made up of twelve members who meet at least eight times per year, according to philadelphiafed.org. Members include the presidents of twelve Federal Reserve banks, as well as a Board of Governors. The FOMC is responsible for regulating transactions in open market securities. Various economic statistics and predictions are presented at the meetings, then members discuss lowering or raising the federal funds interest rate and vote on what changes should occur. For example, the FOMC lowered the rate by 0.75% on March 18th. Banks must pay this rate when borrowing money from reserve funds that all banks are required to maintain.

The expense to banks of paying the federal funds interest rate causes them to raise or lower the rates charged to customers on the various types of loans they offer, including credit cards, auto loans, and mortgages. This often affects the amount of purchases on credit that people make, thus indirectly impacting the stock market, inflation, employment levels, and other economic factors. Part of the FOMC and Federal Reserve’s intended goal is to promote economic prosperity and employment, without causing inflation to rise dramatically. It also makes decisions regarding international currency transactions, and releases statements on general trends or expectations for the economy.

The level of influence the FOMC has over the economy is largely dependent upon how many people use credit when making purchases. Interest rates would have little impact upon sales or inflation if most purchases were made using cash that has already been earned, as they are in some countries. However, the widespread usage of credit cards and consumer-oriented loans among Americans seems unlikely to change in the near future, thus ensuring that the FOMC continues to have a significant role. It is worth mentioning that federal funds rate changes are often indicated in “basis points” by the FOMC; these are equal to 1/100th of a percent, so a fifty basis point increase is the same as 0.5 percent.

Although (at first) the power of the FOMC seems as if it would only affect banks, its decisions can actually have a wide-ranging effect on the U.S. economy, and even that of the world, because of what occurs indirectly as a result.

A number of different fees apply to obtaining and paying off a home or business mortgage. Understanding these fees helps you avoid excessive or unjustified expenses. The majority of these costs occur when a mortgage is originated, but others may have to be paid later on.

A wide variety of fees are required at mortgage closings or settlements. According to federalreserve.gov, these may include expenses for private mortgage insurance (PMI), origination/processing, appraisal of the property, applying for the loan, determining if the home or business is in a flood zone, conducting a land survey, and/or transferring a mortgage from one owner to another. These costs are referred to using various other names at times. Understanding the lender’sdirect expense associated with them is possible in some cases, but not most. Many of these fees range from $50 to $1000, but can be higher depending upon the loan principal. Some lending institutions merge most of their fees into one. The Housing and Urban Development (HUD) website indicates that lenders must supply a detailed fee estimate prior to the closing, but the real expense may vary.

Additional fees can apply while mortgages are being repaid, but it is often possible to avoid them. A late fee will be charged if a monthly payment is not made on time. According to helpwithmybank.gov, lenders can still demand a late fee if the payment was postmarked before the due date but arrived too late. However, some more understanding banks provide a “grace period” before charging this kind of fee. Prepayment penalties are a type of large fee required when some kinds of mortgages are paid off earlier than expected, either because the home was resold or the owner made extra payments. If there is any likelihood that the home will be sold or funds will become available to repay the mortgage early, it is best to avoid mortgages with such penalties in their terms. Some borrowers also have to pay for private mortgage insurance on a monthly basis, in addition to the interest and principal.

Understanding the normal range for each type of fee before reviewing the closing costs estimate is useful in identifying unreasonably high fees. These fees usually cannot be evaded, but vary depending upon the mortgage principal and lender. Becoming aware of any prepayment penalty in the terms and avoiding late mortgage payments will usually prevent the two above mentioned post-closing fees from being charged.

When something as important as your home mortgage is concerned, it is especially important to recognize and avoid scams. A variety of fraudulent schemes have deceived home owners into turning over their deed and still owing money on the mortgage, exposing sensitive financial information, and/or having to pay excessive fees. Here are some tips on how to recognize such scams.

Some dishonest businessman attempt to take advantage of people who are having difficulty selling their homes, as sales have been poor in recent months. The Nevada Secretary of State’s website states that potential indications of these scams include a buyer who intends to “take over” mortgage payments on the home, or an owner being told that the involvement of a title company is unnecessary. It points out that a mortgage generally can’t be reassigned to someone else unless permission is received from the lending institution. Another way to recognize potential mortgage scams is the way they are promoted; for example, scams of this type have been marketed via unsolicited email advertisements. They are sometimes advertised using telemarketing or door-to-door salesmen as well. However, this certainly doesn’t mean they won’t use other methods when possible.

There are also scams involving reverse mortgages, which are a different type of mortgage which is only available to seniors. This is to be expected, as scams often target the elderly in general, so home owners should remain at least as cautious with regard to reverse mortgage offers as they are with other mortgages. Consumerlaw.org warns of a scam in which businesses charge the home owner to help him or her locate a reverse mortgage lender; it explains that the Department of Housing and Urban Development offers this service free of charge. Fortunately, this scam is not difficult to recognize after you have been informed of it. The website of Florida’s Attorney General warns against other reverse mortgage scams in which home owners are put under heavy pressure or deceived into accepting undesirable terms. He also cautioned that insurance brokers and sales agents may cooperate to scam borrowers.

It is important not to react impulsively to offers involving mortgages or other transactions, just as you wouldn’t buy an automobile without properly examining it and researching the model - even if the seller told you there was “limited time” or assured you there was nothing wrong with it. Conducting thorough research before agreeing to a transaction is one of the chief methods to recognize and avoid scams.