Your Questions About Mortgage Rates

Susan asks…

Do we need lower mortgage rates or lower home prices?

We need lower home prices not lower mortgage rates. We built too many homes.

By printing off money and keeping home prices inflated, homes are STILL being constructed. See how they delay recovery?

admin answers:

Obama said he was going to help those in foreclosure – he didn’t. Foreclosed homes are being bought by foreigners because they are seen to be more “affordable” than property in their own countries. Comforting isn’t it.

Sandra asks…

Describe the advantages and disadvantages of three different institutions of best mortgage rates and terms?

“Imagine you want to arrange a mortgage on your first house purchase. You need $200,000.00 Find the best rates and terms available from three different type of lenders such as a mortgage broker a major bank and a banking company such as president choice. Describe the advantages and disadvantages of each and choose the best one.”

admin answers:

You can get into all kind of variables in the loan business. What you are attempting to do is almost impossible to do.

You are the one getting the loan. Which of the three do you feel comfortable with? Which is charging you less for the loan? Which has the best rate? Can you make the mortgage payments with ease? Did either give you a pre-approval?

The reasons it is difficult to tell you about the various mortgages is because one could be charging a processing fee while another is charging a lender’s fee.

One loan could be a no points no fee loan and this loan is costing you a .125, while the other is charging one point, but you can deduct the point off you income tax at the end of the tax year.

So as you can see it boils down to the APR and which ever is the cheapest. One might offer better service. Or be closer to where you live.

You are not gonna save that much if the difference is .125 or .25.

What we are trying to tell you is that without the entire loan amount, interest rate, closing cost we are not able to separate the three.

Your best bet is the mortgage broker, he has more underwriters underwriting his loans. He also have more programs, he just might have your major bank and banking company with the president Choice program.

I hope this has been of some use to you, good luck.


Thomas asks…

Whats a good site that compares mortgage rates?

I live in Cincinnati and am looking to buy a home. What is a good site that can find the best mortgage rates in my area?

admin answers:

You can try on a national level or for more local banks.

James asks…

When the fed lowers their rate, how exactly does this affect mortgage rates?

is there a ripple effect? is there a conversion formula? is the affect on mortgage rates delayed? if so, by how much time?

admin answers:

The Fed rate barely touches mortgage rates, if at all. Mortgage rates are much more reliant on the rates of T-bills and similar. The Fed rate affects such things as credit card interest rates.

William asks…

Why are mortgage rates variable and not fixed at the time of borrowing?

If you borrow money from a high street bank at a particular rate based on the BoE base rate, why then do the banks revert to a variable rate after a pre determined time? Surely mortgages taken out now at an agreed rate should be fixed for the duration of the mortgage, as the banks have effectively borrowed from the BoE the one time to finance the loan in the first place?

admin answers:

The banks set their rates by the LIBOR rate, not the base rate alone. The LIBOR rates, which stand for London Interbank Offered Rate, are benchmark interest rates for many adjustable rate mortgages, business loans, and financial instruments traded on global financial markets.

In the US, the majority of Mortgages are underwritten by government backed mortgage companies – Fannie May and Freddie Mac, this is one reason why 30 year fixed rate mortgages are the norm there, because they are effectively underwritten by the government.

In the UK, the banks have to base their mortgages on LIBOR rates as they underwrite the loans themselves, rather than having the government as a guarantor which can only be fixed for a much shorter period, hence you rarely see 25 year fixed rate mortgages in this country.

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