Interest rates and real estate go hand-in-hand. After all, the real estate market largely goes through highs and lows based on interest rates. And interest rates are impacted by a variety of factors.
Interest rates, which are defined as the portion of a loan that is charged in the form of interest to a buyer as a percentage of the overall amount due on a loan, are pretty competitive throughout the mortgage industry because they are determined by the markets. However, the interest rate for each home buyer may be different for a variety of reasons.
Interest rates on mortgage loans are largely determined by three factors: financial markets, your loan scenario, the type of property you are buying and how you intend to occupy it. Below is a breakdown on the aspects that come into play under each of these factors.
Financial Markets:
- Bond prices
- Inflation
- Employment or underemployment
- Nonfarm payroll
- The stock market
- The Federal Reserve
- Government policies
- Stimulus plans
- Geopolitical events
Loan Scenario:
- Credit score
- Loan amount
- Purchase price
- Down payment
- Loan product
- Loan term
- Loan type (Rate & Term or Cash out)
Occupancy and Type of Property:
- Primary residence
- Second home
- Investment property
- Single-family residence
- Multi-family
- Town home
- Condo
- Manufactured
If you have any questions about any of this, please contact us.