Understanding Mortgage Rates
A mortgage interest rate is the rate of interest charged on a home mortgage loan. In most cases, mortgage rates are greatly based on mortgage backed securities. Rates can be either fixed or variable.
Mortgage rates rise and fall and can drastically affect the homebuyer’s market and affordability. There are several factors that can determine the interest rate. Credit score and home price are among the largest as well as down payment, loan type and loan terms.
Fannie Mae and Freddie Mac have a major role in how rates rise and fall. Fannie Mae and Freddie Mac are large financial institutions that buy mortgages and compile them into securities that behave like bonds. They then sell the mortgage-backed securities to investors. The purpose of Fannie Mae and Freddie Mac is to keep the money moving through the mortgage finance system.
When you are ready to purchase a home, I will explain what rate you can expect to receive and when the best time will be to lock your rate in. Call me today to setup an appointment.