Submitted 2012-02-18 11:47:35
The supply and demand concept is a contributing factor to the mortgage rates. When there is more demand than supply, mortgage rates may increase and lenders may charge higher interest rates. The opposite goes when there is more supply than demand. If there are more houses on sale than potential buyers, mortgage rates normally go down because lenders may want to attract potential buyers to borrow from them. This is one reason why mortgage rates are always fluctuating. It depends on the current economy and real estate trend. This rule may apply to mortgage rates for refinancing as well. So, if you are on the lookout for the best mortgage refinance rates, you might want to do so when there is more supply than demand as you may be able to negotiate a much better deal.
Mortgage rates also depend on the Federal Reserve Board who has the power to control economic growth by changing certain key interest rates. Normally, interest rates are increased to curb inflation and sometimes dropped to stimulate growth and make home purchasing more affordable.
One of the reasons that you might want to keep your credit score at a decent level is because the mortgage rate offered to you may depend on it. For example, if your credit score is high your lenders will put you in the low risk category and will most likely offer you a significantly lower interest rate, especially if you are applying for a refinance with the same lender of your first mortgage. As a bonus, they might even be willing to waive certain fees and keep your monthly payments to a minimum. On the other hand, if your credit score is low you might find yourself having difficulty to get lenders to offer you a low interest rate, because you might land in the high risk category and they will be less likely to waive any fees. If you wish to find other options to get lower mortgage rates even if you have poor credit scores, you might want to check out government-sponsored programs that assist buyers who are unlikely to qualify for conventional mortgages.
Mortgage rates also depend on the type of mortgage that you have applied for. Generally, if you are on a fixed-rate mortgage, you may not have to worry about the fluctuations of interest rates, because your mortgage rate will remain the same throughout the life of your loan. With an adjustable rate mortgage, your mortgage terms will most likely specify when the lender may change interest rates. This is why, if you wish to refinance your home, experts will most likely advice you to convert your adjustable rate mortgage to a fixed rate mortgage before the adjustment period is due, especially when the market interest rate is lower than your current interest rate. By doing so, you will be able to enjoy the benefit of a lower interest rate throughout the rest of the life of your loan.
Your interest rate will most likely have an effect on the amount of your monthly payments. In order to estimate the amount, you may want to use mortgage calculators and rates tools that will allow you to gauge your financial capabilities to support your mortgage or refinance.
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By: Sean A.
Have you ever found yourself in a situation where you know you are going to refinance your home but somehow you feel like you probably won?t be getting a good deal on refinance mortgage rates? For some unknown reason, you feel like you probably won?t qualify for a decent refinance mortgage rate that will significantly reduce the monthly payments that you will have to make. Before you jump to your own conclusions, you might want to check out the factors that will have substantial effect in determining the refinance mortgage rates you most probably will be getting.
The supply and demand concept is a contributing factor to the mortgage rates. When there is more demand than supply, mortgage rates may increase and lenders may charge higher interest rates. The opposite goes when there is more supply than demand. If there are more houses on sale than potential buyers, mortgage rates normally go down because lenders may want to attract potential buyers to borrow from them. This is one reason why mortgage rates are always fluctuating. It depends on the current economy and real estate trend. This rule may apply to mortgage rates for refinancing as well. So, if you are on the lookout for the best mortgage refinance rates, you might want to do so when there is more supply than demand as you may be able to negotiate a much better deal.
Mortgage rates also depend on the Federal Reserve Board who has the power to control economic growth by changing certain key interest rates. Normally, interest rates are increased to curb inflation and sometimes dropped to stimulate growth and make home purchasing more affordable.
One of the reasons that you might want to keep your credit score at a decent level is because the mortgage rate offered to you may depend on it. For example, if your credit score is high your lenders will put you in the low risk category and will most likely offer you a significantly lower interest rate, especially if you are applying for a refinance with the same lender of your first mortgage. As a bonus, they might even be willing to waive certain fees and keep your monthly payments to a minimum. On the other hand, if your credit score is low you might find yourself having difficulty to get lenders to offer you a low interest rate, because you might land in the high risk category and they will be less likely to waive any fees. If you wish to find other options to get lower mortgage rates even if you have poor credit scores, you might want to check out government-sponsored programs that assist buyers who are unlikely to qualify for conventional mortgages.
Mortgage rates also depend on the type of mortgage that you have applied for. Generally, if you are on a fixed-rate mortgage, you may not have to worry about the fluctuations of interest rates, because your mortgage rate will remain the same throughout the life of your loan. With an adjustable rate mortgage, your mortgage terms will most likely specify when the lender may change interest rates. This is why, if you wish to refinance your home, experts will most likely advice you to convert your adjustable rate mortgage to a fixed rate mortgage before the adjustment period is due, especially when the market interest rate is lower than your current interest rate. By doing so, you will be able to enjoy the benefit of a lower interest rate throughout the rest of the life of your loan.
Your interest rate will most likely have an effect on the amount of your monthly payments. In order to estimate the amount, you may want to use mortgage calculators and rates tools that will allow you to gauge your financial capabilities to support your mortgage or refinance.
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