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When Will Mortgage Rates Drops?

Finance: Mortgage

Mortgage rates are always low but its human nature that always search for the more than what is available at that time to him and now no one want to take a loan so in the result the mortgage rates are further dropped lower. The question is the how or what factors determine the rates you will be able to get. The following are the factors that will answer this question.

1. Your personal situation and characteristic of your loan.

2. What is happening in the mortgage backed securities market and in the back offices of the big lenders?

3. The final factor is that how much you are willing to pay to get the loan.

Your personal situation and your loan characteristics

When people are shopping for mortgage almost all of them come with the assumption that the one size will fit all the situations. But don’t get into this as every loan is priced on its own. The adjustments for the loan price levels are available to you for a vast variety of situations. Some of the factors that could affect the prices are;

• Fico scores - if you will be able to get 740 fico score it will be the best available rate for you. If the score will go below 700 the prices will get high which leads to higher interest rate. So try to take the better credit score as it will help you in getting the lowest rates.

• Loan to value - loan to a value is an assessment that how much you have in your property. The more equity you have the lesser the risk will be. But if you will not have the equity then you can got hit by high prices.

• Loan Amount - the rates are higher on small loans as compared to the bigger loans so take the bigger loans to get the maximum of it.

• Property type - the prices are higher for multi unit buildings and condos.

• Secondary financing - if you already have a mortgage and having another one this can also be another price hit to you.

• Type of mortgage - if you take a loan with adjustable mortgage rate for short term then the rate will be lower. Adjustable loans are always lower in comparison with the fixed rates as they carry more risk.

• Property use - if you don’t live at your own property then it will be taken as a non owner occupied and the higher mortgage rates will be applied.

So the key point of this discussion is that the loans are priced individually but mortgage rates are changed day by day so mortgage rates will be charged accordingly to your situation.

What is happening in the mortgage backed securities markets and the back offices of the big lenders

Mortgage rates go up and don’t base on this going on in the economy of a country and it can be seen in the daily changes of mortgage backed securities markets. Lenders use mortgage bonds to buy up contracts and lock into profit and to meet the rates they charging.

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