|
Potential home owners often find the process of buying a home more than they can handle. Home owners are bombarded with more information than they can handle about mortgages including information about mortgage rates, fixed rate mortgages, variable rate mortgages, closing costs, discount points broker fees and a bunch of other items. The very first thing you should do is figure out what type of mortgage loan fits your needs and what the current mortgage rates are for that type of loan. Unfortunately most individuals start the home loan process by contacting a bank they already have a banking relationship with or going to a mortgage broker. Sometimes that isn't the best route to take when getting a loan. Doing the latter, going to a mortgage broker that you don't even now might cost you more than you need to spend. Before going out to look for a mortgage, you need to have a better understanding of mortgage rates and how rates are determined There are many different factors that can affect mortgage rates and drive rates higher or lower at any given time. The most common barometer is the yield on 10 year Treasury bonds. Longer term mortgage rates like 30 year rates and 15 year rates are fixed to the yield of 10 year bonds. Other factors that can affect mortgage prices is Fannie Mae and Freddie Mac. Both these government institutions by mortgages from lenders after loans are made. Just recently the annual insurance premiums on loans were raised to help protect these government institutions from home owners to default on their loans. Another factor that can affect mortgage rates, especially jumbo mortgage rates are the demand for mortgage backed securities. What makes up mortgage backed securities are home loans. These loans are bundled together and sold to investors. When demand for these investments goes down rates on mortgages go up. During the financial crises jumbo mortgages were almost impossible to get because no investors wanted to buy mortgage backed securities because the real estate market bubble burst. Many investors in these securities lost a lot of money in mortgage backed securities they already bought. In fact, nobody was buying these securities so the actual market dried up. The Federal Reserve actually had to step in and provide liquidly to this market by buying these securities. Since the financial crisis and recession is over investors are once again buying these securities. Rates on jumbo loans are always higher than regular rates. During the crisis the difference between both types of loans was 200 basis points which is 2.00 percent. Now that the markets have stabilized the spread between conforming and jumbo loans is only 50 basis points or .50 percent.
Compare Mortgage Rates by using our interest rate tables. You can find the best mortgage rates in your state at MortgageRates.RatesORama.com
|
