If you are a homebuyer seeking a mortgage, a big part of when you decide to buy and which lender you choose to finance with will likely depend on what mortgage rates are doing. Your mortgage rate not only affects the amount of interest you will pay over the life of your mortgage but can also influence the amount you are approved to finance, as well as your affordability of homeownership overall.
So how are mortgage rates determined? And why do they change?
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Who Determines My Mortgage Rate?
Your mortgage lender will determine if you are approved for a loan and on what terms, but mortgage interest rates are largely determined by the secondary market. This secondary market is where mortgages are bought and sold.
Mortgage investors, like Fannie Mae and Freddie Mac, buy loans from mortgage lenders and sell them to Wall Street, mutual funds, and other financial investors who then trade them like securities and bonds. The actions of these secondary market financial investors collectively determine the interest rate on your loan.
What Influences Mortgages Rates?
Your Personal Mortgage Rate
Though the government, housing market, economy, and stock market cause mortgage rates to increase and decrease, there are personal factors that will cause interest rates to vary from borrower to borrower. This includes down payment amount, credit score, and points purchased by the borrower.
If you are interested in where mortgage rates are currently, contact one of our mortgage bankers. For more information regarding home buying and financing, download our free Mortgage 101 Handbook, a great resource for first-time and repeat homebuyers.