FreddieMac Weekly Mortgage Rate Average Explained
It was reported by FreddieMac this past week that for the week ended July 9, 2011 mortgage interest rates fell compared to the previous week and the rate on the 15-year loan dropped to its lowest level of 2011.
But what exactly does that mean to you when looking for a mortgage loan? FreddieMac takes an average of mortgage rates from lenders across the country that they collect Monday through Wednesday of each week.
One of the issues with this data collection is that often rates can change more than once within a day.
This has been especially true when economic data has been released on those days.
The average rate that FreddieMac discloses does not include any fees paid known as points.
One point is equal to one percent of the loan amount.
By paying these fees a client can lower their interest rate.
For the recent week published, the average fee (points) paid on a thirty year loan was.
7% (or $700 on a $100,000 loan) and.
6% for the fifteen year loan.
As a customer shops for a mortgage loan this is important to realize.
In some markets, such as the Chicago area, often loans are quoted with no points.
This would mean that rates quoted would most likely be higher than that of what FreddieMac has published as the weekly average.
There are also regional differences in interest rates.
A potential home buyer in Texas will probably find better interest rates than someone looking for a mortgage in California or Florida.
Lenders have the ability to price loans based on geographical risks.
The higher the number of foreclosures - the more likely the interest rates on current mortgage loans will be above the national average.
To add to all the confusion over rates, there are also adjustments made to your particular interest rate depending on the level of risk the lender is taking with your file.
Loan-to-value, credit score and type of transaction all influence your final interest rate.
What does this all mean to you? Post-2008 it has become even more important that you have a good understanding of the process of obtaining a mortgage loan.
Shopping for your loan can be confusing and frustrating.
The FreddieMac weekly average is just that - an average.
Although it is important to shop for your interest rate when you are looking for financing, it is also important to understand that you may not be quoted those specific rates disclosed by FreddieMac.
Instead, its weekly report should be used as an indicator of the direction of rates and current trends.
By shopping for a professional, qualified loan officer who offers competitive interest rates, you will find the process of obtaining a mortgage loan a little less complicated.
But what exactly does that mean to you when looking for a mortgage loan? FreddieMac takes an average of mortgage rates from lenders across the country that they collect Monday through Wednesday of each week.
One of the issues with this data collection is that often rates can change more than once within a day.
This has been especially true when economic data has been released on those days.
The average rate that FreddieMac discloses does not include any fees paid known as points.
One point is equal to one percent of the loan amount.
By paying these fees a client can lower their interest rate.
For the recent week published, the average fee (points) paid on a thirty year loan was.
7% (or $700 on a $100,000 loan) and.
6% for the fifteen year loan.
As a customer shops for a mortgage loan this is important to realize.
In some markets, such as the Chicago area, often loans are quoted with no points.
This would mean that rates quoted would most likely be higher than that of what FreddieMac has published as the weekly average.
There are also regional differences in interest rates.
A potential home buyer in Texas will probably find better interest rates than someone looking for a mortgage in California or Florida.
Lenders have the ability to price loans based on geographical risks.
The higher the number of foreclosures - the more likely the interest rates on current mortgage loans will be above the national average.
To add to all the confusion over rates, there are also adjustments made to your particular interest rate depending on the level of risk the lender is taking with your file.
Loan-to-value, credit score and type of transaction all influence your final interest rate.
What does this all mean to you? Post-2008 it has become even more important that you have a good understanding of the process of obtaining a mortgage loan.
Shopping for your loan can be confusing and frustrating.
The FreddieMac weekly average is just that - an average.
Although it is important to shop for your interest rate when you are looking for financing, it is also important to understand that you may not be quoted those specific rates disclosed by FreddieMac.
Instead, its weekly report should be used as an indicator of the direction of rates and current trends.
By shopping for a professional, qualified loan officer who offers competitive interest rates, you will find the process of obtaining a mortgage loan a little less complicated.
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