A mortgage can be a wonderful thing when you are buying your first home and while you won’t be paying full price, you might wonder why Sunrise mortgage rates are set the way they are. Sometimes they can be more expensive and sometimes they can be considerably cheaper. The first thing that you need to know, is that the prices are not set by the lender. In fact, these rates are far outside of the lender’s control, generally set by a secondary market.
Fannie Mae and Freddie Mac – The Driving Forces Behind Sunrise Mortgage Rates
As we mentioned before, the rates on Sunrise home loans are not set by the lender, so where do those prices come from exactly? The first thing that you need to know, is that the interest rates are handled by two financial institutions: Fannie Mae and Freddie Mac. These are huge institutions that purchase mortgages and bundle them into securities. These securities have many of the same qualities as bonds, and they are sold to investors.
Keeping the Money Flowing
These two institutions exist to simply keep money flowing throughout the mortgage finance system; without them, the lower rates would be impossible, and loans would be nearly impossible to obtain. So, to recap, when a lender sells the loan, the buyer is more often than not going to be Freddie or Fannie. Here’s the big question: why would a lender sell their mortgage? Essentially, they do this so that they can get their money back quickly, and then lend the money to another borrower. Have you ever wondered how banks seem to have enough money to lend over and over? Now you know.
Understanding the Secondary Market
The secondary market, upon which mortgage packets are bought and sold, is what allows you to obtain your loan at a lower rate, and in fact allows you to obtain a loan at all. If the secondary market did not exist, the lender would not be able to resell your loan and recoup their money quickly. That being the case, lenders are more willing to loan to you even if you have a subpar credit score. If the secondary mortgage market did not exist, then lenders would not be able to resell your loan and with that being the case, your money would be ties up with them for years. Instead, they have turned your mortgage into a type of currency that continues to flow through the market and keeps the entire thing alive.
Determining the Interest Rates
Those who invest in the secondary market will collectively determine the interest rate of the loan that you have taken out. It all depends upon what the investors are willing to buy, and this is the number that you will see when you are purchasing a loan package. If you want to get more information before you speak to a lender, then you can always look online for the current mortgage rates. For example, Wells Fargo keeps an up to date list which will reflect the current Sunrise mortgage rates.
Bond Fluctuation on the Secondary Market
The price of bonds on the secondary market will change significantly depending upon what the market is doing. For example, if the economy is doing well, then investors will ask for higher yields on their mortgage bonds. If, however, the market is in a downswing, they will not be able to demand higher rates as people will be unable to afford them. It is a simple case of cause and effect, and one that affects you directly.
Different Types of Loans
While basic home loans are the most common, there are other types of loans that are controlled by the secondary market. A Sunrise reverse mortgage or a Sunrise FHA loan are two great examples and you will want to investigate all of your options to ensure that you are getting exactly what you need. Investing in a home is a huge decision, to put it mildly, and buying when the market is right will save you a lot of money while granting you significant peace of mind. Study the market and invest at the right time – it’s not something that you will regret!