Looking for a mortgage broker? Lost as to what you need to know? Here are some great tips on mortgage rates to help get you started.
How are mortgage rates set?
A low rate is the one and only thing that will help you get out of your mortgage debt sooner. A house is likely the largest asset you will ever own. Mortgage rates are set based on mortgage backed bond securities traded on the stock exchange. These prices fluctuate a lot- pretty much daily- based on supply and demand. Your mortgage rate will rise inversely with this demand. They’re generally backed by the US government, so deemed very ‘safe’ as an investment option.
This base rate is then adjusted for your personal circumstances. Things such as the size of the property you are considering, your credit history and more will help influence this personalised rate. There are no other direct forces acting on your mortgage. Your local reserve, government and other types of influences will not adjust mortgage rates. This means their changes can be very random and difficult to deal with. Unfortunately, you won’t just be shopping for the best rate with your mortgage broker, either- you will need to look for the best associated closing costs too. Too high in one will negate the point of the other, so it’s vital to get the lender who gives you the right combination of both for your needs and tastes.
Will a mortgage broker give me a worse rate?
Many assume this, as the mortgage broker occupies a kind of ‘middleman’ status. Remember, however, that brokers save the banks costs, and so the banks are incentivised to give the brokers rates that closely emulate those their walk in customers receive. A mortgage broker also has the advantages of knowing which banks are best for you to approach depending on your personal requirements and your circumstances, and can often facilitate your paperwork and ensure your application is valid. They don’t, however, issue mortgages themselves or lend money themselves. Remember, they are there to facilitate you and the lenders coming together, nothing more.
Should I lock my rate?
I mortgage rate lock means the bank undertakes to honour a certain rate for a certain amount of time. Banks don’t like them, as almost anything could happen before that final date, especially if it’s a long while away. This means you are more likely to get a better rate lock if you are going to close sooner. Even if you are just refinancing, as opposed to taking out a new loan, you can get a significant improvement on your mortgage rate if you are willing to get your paperwork to the bank fast, and this can be of particular importance if you are trying to close a deal. It’s worth balancing if a mortgage rate lock is for you.
A good mortgage broker can be invaluable to help you negotiate the often sticky and convoluted issues regarding mortgages.
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