What factors influence mortgage rates?

Mortgage rates are determined by the pricing of Mortgage-Backed Securities (MBS), which are constantly traded in real-time by conventional and government lenders. These rates can fluctuate throughout the day due to various political and economic events. When MBS pricing increases, mortgage rates and fees tend to decrease, and vice versa. While some factors that affect mortgage rates are beyond your control, others can be managed, leading to daily rate changes.

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Here are key factors that influence mortgage rates:

• Economy: Global economic conditions impact all interest rates, including mortgage rates.
• Income: Your debt-to-income ratio can impact the rate you receive.
• Property location: Lender costs can vary based on different state laws.
• Home use: The purpose of the property, whether it's a primary or secondary residence, vacation home, or rental, can influence rates.
• Property type: The type of property, such as single or multi-family, condo, or mobile home, can affect rates.
• Loan-to-value: Borrowing less and making a larger down payment can lead to better rates.
• Credit score: A higher credit score typically results in a better interest rate, while a lower credit score may lead to a higher rate.
• Loan features: Factors like the loan term (30, 20, or 15 years), documentation type, and adjustable rate can impact rates.
• Points: Paying additional upfront fees for "discount points" can lower your interest rate.
• Loan amount: Extremely high or low loan amounts may result in higher rates.