What Can Affect Your Mortgage Rate-www.yinwowo.com

What Can Affect Your Mortgage Rate-www.yinwowo.com

July 24, 2018
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Personal-Finance There are several factors that can influence your mortgage rate. One primary factor of mortgage rate movement is inflation. Inflation is a growing economy and increasing prices of goods and services. A growing economy means a higher demand for goods and services, allowing producers to increase their prices. This increase in prices therefore results in higher real-estate prices, higher apartment rents, and higher mortgage rates. In an effort to reduce inflation and slow down economy, the Federal Reserve decreases interest rates, and in the process, lowers mortgage rates. Although mortgage rates have the propensity to move in the same direction as interest rates, their actual movements are also based on the supply and demand for mortgages. Mortgage rates have a slightly different equation in their supply and demand when .pared with interest rates. This slight difference is the reason why sometimes, mortgage rates move differently from other rates. For example, a lender has a .mitment to make and is forced to close additional mortgages. To do so, they would have to decrease the mortgage rates even if interest rates are going up. Additional Factors Affecting Mortgage Rates There are other factors, besides inflation, that influence mortgage rates. Naturally, your mortgage rate will increase as the amount of the loan increases. This expansion of mortgage rates is particularly true when the loan amount exceeds your established loan limit. The loan limit will usually change at the beginning of each year to conform to mortgage rate trends that have been established. Loan duration may also affect the mortgage rate. A loan over a shorter period will usually equate to a lower mortgage rate, while longer loan terms can bring about higher mortgage rates. If you take a loan over a fifteen or twenty year period, you can save thousands of dollars on mortgage rate payments. However, this shorter time period will also mean that your monthly mortgage payments will also be much higher. It’s possible to avoid these high payments with an adjustable mortgage rate. This plan can allow you to start out with a lower mortgage rate, but your monthly mortgage payment will increase if the current interest rates go up. Fixed mortgage rates are typically higher than adjustable rates, but they provide the opportunity to save money as interest and mortgage rates increase. Greater down payments can help you save up on your monthly mortgage rate payments. You can get the best possible mortgage rate with a down payment that is more than 20 percent. Higher mortgage rates are typical if the down payment is less than 5 percent since the beginning equity is smaller and provides less collateral. Discount points are another thing that affects mortgage rates. Lower mortgage rates generally means higher points paid on your loan. The same rule applies for closing costs, which are fees that the lender must pay. Higher closing costs paid to them results in lower mortgage rates. However, if you do not want to pay for all the closing costs upfront, the lender will increase your mortgage rate in order to cover it. The concept is quite simple. Lenders are generally willing to lower mortgage rates as long as more money is paid upfront. More money down results in lower mortgage rates. And less money down results in higher mortgage rates. About the Author: 相关的主题文章:

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