Whether you’re looking into Phoenix area mortgage interest rates or mortgage rates Arizona overall, there are a few things to understand before making a decision on a mortgage lender that will help you avoid the anxiety of selecting a loan package with a certain rate.
Although the interest rate on your real estate mortgage loan are determined by your credit score, the length of the loan, the type of mortgage program you’re utilizing there are market factors that are outside of your control which can cause rates to change many times during the same day!
This is exactly why you need to take those “teaser” rates you hear about all the time with a grain of salt. Often a mortgage lender will advertise the best possible rate in order to develop more leads and prospects. Unfortunately, those “teaser” rates are reserved for a very select group of people with certain scores or who fit a very narrow qualification window.
Understanding how these mortgage loan rates work and how they’re determined will help you navigate the home financing process.
It is true that the loan program, credit score and other factors control the mortgage rates Arizona, always remember that you DO have some control over the rate you pay by investing in “Points” (which we discuss in another section). In short, you have the ability to pay more up-front in the form of Points or even loan origination fees that help you avoid paying higher rates in the long run. On the flip side of that coin, some borrowers choose to pay a higher interest rate to avoid the up-front fees at closing. This is often referred to as a “No Closing Cost Loan” option. Because you’ve hired a quality team of people to help you through this process, be sure to ask about these options to assure that you’re entering into an agreement that is right for you and your budget!
We talked earlier about the make-up of mortgage rates Arizona but we did not go into details. Let’s do that here by discussing
Mortgage Rate Basics
How are mortgage rates Arizona determined?
A common myth is that the LENDER is the one who sets the rates. In fact, mortgage lenders are basically the “messenger” since rates are largely determined by what’s called the “Secondary Market”.
You may not know it, but the institution to whom you pay your mortgage payment likely doesn’t own the loan anymore! Almost immediately your loan is sold off to investors who either hold them for their own earnings or bundle them together with other loans to sell to other investors. The entire process gets very complex – and at the end of the day it doesn’t affect your existing loan at all – but what an investor is willing to pay for a loan is what has the largest impact on the rate a financial institution will offer you!
Please click on the link to learn more about Secondary Markets!
What are the Top Five market factors that influence mortgage rates Arizona?
Everyone wants to time their decisions perfectly in order to lock in the best rate on a new mortgage loan. Keep in mind, this is a huge challenge even for the professionals since the rates are so dynamic!
Sure there are “generic” interest rate trends indicators online that can be researched. However, the difference between what’s advertised by a financial institution and what is actually available to individual lenders can change at any given moment. There exists at least 50 different variables in the market and each variable can be impacted by the individual loan!
Without a doubt the mortgage rate market is a volatile, ever-changing environment that’s nearly impossible to predict with certainty. Lenders make efforts to set their daily rates based on the activities of what is called “Mortgage Bonds” or “Mortgage Backed Securities” (simply, types of investments). However, during particularly volatile periods these rates can be adjusted up to five times in a single day! Things such as inflation reports, the Federal Reserve, unemployment rates and even geopolitics can have an impact on rates on a day-to-day basis.
It can be complex…so we invite you to click on the link to learn more about Rate/Market Indicators.
8 questions your lender should be able to answer about mortgage rates Arizona
Although it is true that your mortgage lender is more of a “messenger” about current rates, they still need to be “in-the-know” about market trends in order to provide you with the best possible information.
As we mentioned, mortgage rates Arizona can fluctuate several times in a single day. This is why it is important for you to “pre-qualify” your mortgage lender about their competency level as it relates to changing mortgage rates Arizona. Your lender should have the expertise to know what to look for and how to answer many of the basic questions we’ve provided you here.
The odds are good that if your lender doesn’t have knowledge of how the market works, the factors that can change rates, and the things you can do to time your mortgage closing for the best results…you stand a good chance of never seeing the initial interest rate that was quoted for you.
We invite you to click on the link to learn more about Mortgage Rate Questions so you can be better prepared to find the best mortgage lender for you!
What is the difference between a “Note Rate” and an “APR”?
The link below will provide you with an excellent discussion of the different between a “note rate” and an “APR”. In short, low rates with a high APR may or may not be the best route for you.
Comparing apples-to-apples is always the best way to determine which loan closing cost and rate scenario is right for you and your budget.
We definitely recommend clicking on the link to learn more about Comparing Rates so you can clearly understand the differences.
How do Mortgage Rates Arizona react when the Fed lowers rates?
A huge misconception that most people hold is that the Fed and/or the Federal Government controls what rates look like every day.
In fact, traditional news outlets wind up announcing mortgage rate movements days after things actually change! They also make grand announcements when rates are moving in the opposite direction of where we need them to go!