Mortgage Rates have gone historically low. This may perhaps be the most heard of the message that most homebuyers are waiting to hear. It can be tempting to lock your mortgage application while the rates are low, but you can’t when your money isn’t enough to pay for the downpayment just yet.
The words may change, but the message remains the same – mortgage rates fluctuate faster than you can imagine. Have you ever asked your mortgage lender how they set the rates for those of you who apply for a loan? They must have told you that several factors come into play whenever they compete for the rates. Though some may take the time to explain what these factors are, there are others who would rather not go into details.
Did you know that mortgage rates are significantly affected by the movements in the bond market? When applying for a mortgage loan application, it is very rare for you to find a lender who would lend you the money for a good thirty-year period or so. If lenders did this, the investment they made on the property you intend to buy would not make as much as they hoped for. The cash flow would be very slow; thus, they would only have a limited capacity to help those who wish to buy their homes through the mortgage too.
To get around it, most mortgage lenders would offer packages that come with a backed-up security plan and is sold to those in the bond market. This usually entails some loan applications of the same nature grouped together to fit very specific investment characteristics. For example, a loan is offered for ten years for those whose credit score reaches 700 and above. There are several combinations as such, each one hoping to entice more borrowers. After all, mortgage loan application is what helps the market of mortgage lenders thrive.
The tie-up with the bond market does not end the responsibility or the relationship of the lender to its borrower. In fact, it is important that the mortgage borrower keeps a good relationship with the bank so that borrowers can easily ask questions about the mortgage loan and get answers without delay. In turn, it is the task of the mortgage lender to collect the monthly payments of the borrower to ensure that the loan is paid on time.
Mortgage loans can come with a lot of complexities; that’s why it is always best to keep in touch with your mortgage lender. Their representative will be able to help you get answers to your queries and unravel mysteries concerning your mortgage loan that you have yet to understand.
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