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What Are The Crucial Factors Influencing The Mortgage Rates

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Mortgage rates are totally dependent on how the economy is performing. The mortgage rate comes in different varieties and the most popular is fixed rate loan. In case of the fixed rate, there is no fear of the rate fluctuating. If you are planning to take the mortgage loan, you need to enquire about the mortgage rate. The loan is actually used by the purchasers of property to raise the funds and to buy the real estate property. Mortage rate is generally influenced by the target cash or the official interest rate which is set by the Reserve Bank. The moment Reserve Bank changes the official rate, it tends to influence the overall expenditure of the economy. In fact, when expenditure is more than the production, there is inflation. How the rate is determined and how the rate moves is an absolute mystery.

When to Look Up For Fixed Mortgage Rate?

If you intend to hold your home for a long time, it would be great to opt for the fixed mortgage rate. The one who goes in for 7/1 ARM, they can get the rate locked for 7 years and there is nothing to worry about the fluctuation. The rates are quoted in the 1/8% like 4.125%. It is usually the 4.4258% which is the APR or the Annual Percentage Rate.

The Fluctuation of the Mortgage Rates

There are too many factors influencing the fluctuation of the rates. The 10 year Treasury Bond Yield is the finest indicator. Here the 20-30 years fixed rate mortgage is paid within the tenure of 10 years or so. The payment is done by selling the home. The Treasuries are in fact backed by the credit and full faith of the US. Treasuries act as the bench mark for the other kinds of bonds. So, when the rate of the T-Bond or the Treasury bond goes up, the mortgage rates also go up. Besides this, there are several reports on the fluctuation of the mortgage rates.

Other Important Factors Influencing the Mortgage Rate

Mortgage rate is also affected by various other factors. They include the GDP or the Gross Domestic Product, the Consumer Price Index and Consumer Confidence, the Home Sales. If the economic news is good, the rates will go up and vice versa. If the stock market rises up, the rate of mortgage will skyrocket. The fluctuation in the rate is also dependent on the Federal Reserve which tends to adjust the Federal Funds Rate. The rates are sure to rise under inflationary economy.

How to Protect Oneself from the Rising Mortgage Rate?

A lot many people are worried about the fluctuating mortgage rates. When the mortgage loan is processed, the broker will tend to lock the rate to protect you from the rising mortgage rates. With most of the lenders, these locks may go between 15 and 45 days.

The interest rate on the loan gets adjusted and is influenced by various factors. Never be swayed away by the par value. If one is doing the LTV or high loan to value rate and the credit score is sound, there will be adjustments on the rate.

Source: www.artipot.com

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Home Mortgages

A mortgage is like a loan that is taken by using a property as a security. Conventionally, a mortgage loan is taken to buy the same property that is also used as collateral. Mortgages are generally taken on real estate properties rather than other movable properties. Home mortgages are loans that are taken to buy a house, which is also the security for the loan.

Taking a home mortgage enables a person to defer paying for the home purchased. Ideally, there are two parties in a home mortgage: the creditor (who gives the loan) and the debtor (who takes the mortgage). Other parties can be a legal advisor, a mortgage broker and a financial advisor. Like conventional loans, mortgages can be repaid in various ways: capital and interest, Interest-only, no capital or interest (reverse /lifetime/equity release mortgages), interest and partial capital, etc. Other kinds of mortgages are second mortgages, refinance mortgages, and bad credit mortgage loans.

Another most important aspect in home mortgages is the mortgage rate, which is the rate of interest that is to be paid, along with the capital. Based on the rate, home mortgages can also be categorized as fixed-rate mortgages and adjustable-rate mortgages. The kind of mortgage to be taken depends on the borrower’s requirements and situation. The main aspects to be considered are: how much can be borrowed? What is the price range? And what are the tax advantages of taking the mortgage?

The home mortgage process, also known as origination, involves several stages: submission of an application and documentation about credit history and income, checking of the documents and credentials by the underwriter, and granting of the mortgage. A good credit history is very important for securing a home mortgage. Creditors charge some fees for giving a mortgage: entry and exit fees, administration fees and lender’s mortgage insurance.

Getting a home mortgage is no longer a tedious process. Most lenders have online websites that enable borrowers to discuss the mortgage, submit an application and also compare the various options. Their sites also have easy-to-use home mortgage calculators that give all information, including payments to be made each month and the tax advantages, with the single click of a button. Most of them also have financial advisors who would provide advice online, or over the phone. The internet is a good source for locating a good mortgage dealer. However, make sure that their credentials are good enough.

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Tips For Locking in the Best Home Mortgage Rate – Part 1

Tip #1: Always Shop For Home Mortgage Rates

Don’t blindly accept a Realtor or Builder referral to apply for a Home Mortgage through their preferred lender. Many times they will say, “We work closely with this guy and he gets the job done”. Translation: “We play golf together and he buys the beer”. Remember, the Realtor won’t be paying the bill each month for the next 30 years, you will.

Mortgage Loan Officers that work off of a referral network of Realtors and Builders don’t have to have competitive Home Mortgage Rates because they have a steady stream of “Drones” (people who are referred to them and don’t shop) calling them. Shop around, get the lowest cost Home Mortgage Rate, then if you are inclined, approach the “preferred” Loan Officer you were referred to and ask him to match the quote.

If you apply for a Home Mortgage through a preferred lender without shopping, you will pay hundreds or even thousands of dollars in additional costs.


Tip #2: Call For Home Mortgage Quotes After 11:00 a.m. Eastern Time

Mortgage Rates change each day and sometimes midday. The previous day’s rates typically expire by 8:30 a.m. the next morning. Generally, Home Mortgage Rates are published each day by 11:00 a.m. Eastern time. This varies from lender to lender. To make sure you are getting Home Mortgage Rates from the current day and not a mixture of rates from the previous day from some lenders and the current rates from other lenders, always do your rate shopping after 11:00 a.m. Eastern time.

Get all your quotes after 11:00 a.m. Eastern time.

Sometimes Home Mortgage Rates change midday due to a volatile bond market. When this happens, some Home Mortgage Lenders will adjust the Discount Points for their rates in accordance with the new bond prices and publish new Home Mortgage Rates for that day. Other Lenders may continue to honor their morning rates.


Tip#3: Always Tell The Mortgage Loan Officer You Are Prepared To Apply For A Loan NOW

If you are buying a home, tell the Home Mortgage Loan Officer you are Rate shopping and you have a “ratified contract” to purchase a house. Tell him you intend to make a decision and Lock-In a rate on that day, but you have to check a few other lenders. If he asks you how his rates compare to the others, tell him he’s the first person you’ve called. If you are refinancing, tell the Home Mortgage Loan Officer you are ready to apply for a Refinance Home Mortgage today. If you don’t tell him that, he may provide a fake Home Mortgage Rate quote.

Loan Officers know you will probably talk to another lender with lower Home Mortgage Rates and the only way he can be sure for you to call him back is to give you a fake quote that appears to be the lowest. He’s expecting you will rate shop for several days and figures you will call him back in a day or two because he provided a low, bogus rate quote. Also, since Home Mortgage Rates change daily and are subject to change at any time, he’s not concerned about giving you a fake quote.

How will you compare quotes if you don’t know which quotes are real and which are part of a bait and switch plan? The only way to ensure getting real quotes is to box in the Home Mortgage Loan Officers by making them think you are ready to Lock-In a Home Mortgage Rate immediately.


Tip#4: Ask For The Total Points And The Total Fees

When you call a Mortgage Lender, ask for the “Total Points” (Discount Points, Loan Origination Fee, Broker Points) for each Home Mortgage Rate. Some lenders will only quote the Discount Points and deliberately leave out the Loan Origination Fee. You won’t find out about the 1.00 Point Loan Origination Fee until you apply for the Home Mortgage. By that time, the Loan Officer figures you will just accept it because he’s got your application and pulled your credit report. In addition, Mortgage Brokers often neglect to mention their Broker Fee.

Some lenders do not charge a Loan Origination Fee.

When you are quoted the Total Points, specifically ask them if there is an additional Loan Origination Fee or Broker Fee being charged. You truly have to nail this down when you talk to a Home Mortgage Loan Officer.

Also, ask for a list of ALL other fees that will appear on the Good Faith Estimate that you will be paying to the Lender or Broker. Make sure they include their Credit Report and Appraisal Fees. Some lenders charge one lump sum fee and that includes the Credit Report and Appraisal Fees while other lenders will itemize each fee. Keep it simple and ask for all fees, including the cost of the credit report and appraisal fees.

Don’t get confused by Title Company, Attorney Fees or Escrows. A lender will estimate these on your Good Faith Estimate, but these charges are not related to costs associated with a Mortgage Rate quote. The amount required for your escrow account will not change from lender to lender and Title Company and Attorney Fees are not being charged by the lender. Don’t include them in your comparison.

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