What Causes Moves in Home Mortgage Interest Rates

Mortgage Word Cloud Concept angled with great terms such as loan, home, banker and more.

Conventional and Government  (FHA and VA) lenders set their rates based on the pricing of Mortgage-Backed Securities (MBS) which are traded in real time, all day in the bond market.  This means rates or loan fees (mortgage pricing) moves throughout the day, being affected by a variety of economic or political events.  When MBS pricing goes up, mortgage rates or pricing generally goes down.  When they fall, mortgage pricing goes up.  Tracking these securities real-time is critical.

If you are in the market to purchase a home or perhaps refinance an existing mortgage, your best bet is to align yourself with a trusted professional Loan Officer that watches the markets daily to maintain an alertness to shifting rates.  A good Loan Officer is knowledgeable to pending national events that can influence the rate either up or down.  When the rates are favorable to the homeowner, often times, the rate can be “locked” as a benefit to the borrower thereby insuring affordability while approaching the completed home purchase.

As you look to prepare yourself for the mortgage application process and to better understand what total combined rate you will be paying, you will want to download the Consumer Financial Protection Bureau’s (CFPB) “Your Home Loan Toolkit”.  Learn that it is important to understand how to evaluate the total cost of a loan and not just the elusive promotional rate.  Lender’s origination costs, one time charges to buy down mortgage rates, and other fees can often skew the perceived rate to a much higher actual rate.  Ask for referrals from other real estate professionals to find a mortgage representative that you can trust.

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The opinions expressed by the owners and agents of Peak Realty Advisors, LLC are published for educational and informational purposes only, and are not intended as specific investment advice or as a substitute for professional legal or tax advice. Please consult an appropriate legal or tax professional for your specific investment needs or concerns.

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