Letting Mortgage Rate Trends Work For You

mortgage rates trends

By Jonathan Andrew

Being handed the keys to a home of your own will make you feel like nothing else on Earth. Home ownership is considered the foundation of the American Dream, and if you are ready to start shopping for a home of your own, you know that you have a very big decision to make. So you need to plan your entry home market, and try to wait until mortgage rates trends are favorable before accepting a home loan.

Once you have committed to a mortgage, you will be stuck with that interest rate even if the mortgage rate trends head down, unless you have opted for and adjustable rate mortgage. Of course you don't want to wait forever to jump into the housing market, because whenever the mortgage rate trends down, more people just like you see an opportunity to purchase their dream homes. When that happens, the supply of available housing shrinks, so the sales prices of homes are likely to rise. And you may end up paying more for your home even if you catch the mortgage rate trends on the way down.

Think About An ARM

An adjustable rate mortgage, as opposed to a fixed rate mortgage, will have an interest rate which fluctuates with the prime lending rate. If the Federal Reserve lowers the prime lending rate then the interest rate you are being charged for your adjustable rate mortgage will also decrease, as will your monthly mortgage payments. So you will not be stuck with a high interest rate as you watch mortgage rate trends fall quarter after quarter.

You can determine current mortgage rate trends by reviewing financial newspapers and following the financial networks. Mortgage rate trends are tied to supply and demand in the housing market, and as the supply of available housing increases, the mortgage rate trends will head down to encourage more buyers to enter the market and clear the backlog.

If, on the other hand, the housing supply is tight, then the mortgage rate trend will head north as lenders can take advantage of the situation and people are willing to spend more just to get into their own homes. This is known as a seller's market, and mortgage lenders love it, because they make their money on the interest on your home loan.

Being Smart Can Require Patient

If you have been watching the housing market for about six months and realize that the mortgage rates trends are heading up, you would be wise to wait until you hear that the number of new housing starts is increasing. This means that the housing market will loosen in a relatively short period, and more new homes become available and the mortgage rates will eventually head down to reflect the larger home supply.

Waiting a few months for mortgage rates to drop can save you tens of thousands of dollars over the life of your home loan. And having as low a rate as possible will be a cushion in case you run into some unforeseen financial difficulty. You want to make sure you will be able to handle your monthly mortgage payments no matter what.

Don't take on the commitment involved in being a home owner unless you are sure you can meet the financial obligations involved. Paying attention to mortgage rate trends is one way to make sure you can really afford the home of your dreams.

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mortgage rates trends

What Does Determine Your Home Mortgage Loan Interest Rate?

mortgage rates trends

by Prosperity66

There are several different factors that can determine how interest rates are calculated when time has come to enter the home mortgage loan approval procedure. To provide you with a rate that is comparable to other companies and determined by your personal history, all of these elements are taken into account by the bank that you are dealing with. You will find below the factors that will help you to visualise how your bank determines your home mortgage loan interest rate.

Your Credit Rating

One of the points that has an impact on your home mortgage loan interest rate is your credit rating. Many home buyers are aware that the higher the credit score, the less risk that the consumer poses to the company and for that reason a lower interest rate can be provided to the customer. Instead, if the credit rating is lower, then the borrower is generally faced with a higher interest rating which will be reflected in the rate of the mortgage when your credit rating is taken into account with the other aspects that affect a mortgage rating.

It is therefore mandatory to take action in order to inflate your credit score so that you will get a lower home mortgage loan interest rate. Having your payments done on time and using variable types of credit can create a high credit score that will make you able to generate a credit rating that will get you the best rates with the loaner.

The Market

The market depends on many points the interest rate of the economy and the stock market as well as the international rates.

A lesser interest rate is applied to the borrower when the market interest rates are low. When the market interest rates are high then the consumer is generally charged with a higher interest rate. The state of the market is combined with the credit score of the consumer to calculate the home mortgage loan interest rate that will be offered.

Trends and History

Trends and history can also impact the home mortgage loan interest rates that are being offered by banks. They make use of history to forecast the future home mortgage rates. This is associated with the state of the economy to create an interest rate that is feasible to the lending institutions and to the home buyers that are applying for home mortgage rates.

Comparison shopping can save you up to two % on the price of your home mortgage loan interest rate. Although two % may not look like a large sum, it is necessary to realize that too many home mortgage loans are in excess of two-hundred thousand dollars, which could convert into thousands of dollars worth of economies over the entire life of the home mortgage.

About the Author
Prosperity66 purchased a house as a single parent and experienced how difficult it is to borrow such a big sum of money especially if you don't know where to begin. So, if you want more Home Mortgage Help, feel free to visit Home Mortgage A to Z, your Online Guide.

mortgage rates trends