What Determines Interest Rates?
Welcome to Mortgage 101. We help home buyers and realtors understand home loans. You’re in the right place if you’re thinking of buying your first home, if you’re moving to your next home, or if you’re ready to refinance your existing loan.
Interest Rates are determined by many things and can be unclear when shopping for a home loan. Borrowers should know that interest rates are determined by many things, including mortgage backed securities, 10 year treasury bonds and the stock market.
Other than the current market rate, there are things like your credit score, down payment, and debt to income ratio that are some of the many pieces of the puzzle that determine what interest rate is offered to a borrower.
An interest rate varies depending on the type of loan you are applying for as well as your particular information.
How To Compare
When comparing different interest rates you want to make sure you are comparing apples to apples. Make sure that you are looking at rates on the same date and time as each other. This is because rates change multiple times a day, every single day. An interest rate on Monday morning may be different than later in the week, even within the same company.
So, when you are shopping for interest rates, compare them on the same day.
Not The Only Thing To Consider
Although interest rates are the most well known part of the loan, they are not the only cost you should find out about.
Remember to pay attention to lender associated fees. You can find these on the loan estimate or pre-application worksheet.