How Are Mortgage Rates Determined?

Most people don’t understand how mortgages work. Why would they? It isn’t something you learn in school or that comes up in everyday conversation. Understanding the process, however, can help a prospective homebuyer feel more confident with the process. Armed with this knowledge and a dedicated team of experts, homebuyers are putting themselves into the best position to buy the home of their dreams.

Mortgage lenders, like Accunet, cannot directly control the interest rates they can offer. This is because shortly after a mortgage is closed by Accunet, or a similar mortgage lender, it is sold to a secondary market. This allows the lender to recoup their money and lend it again to another borrower.

The secondary market exists primarily for two reasons:

  • Government-sponsored enterprises like Fannie Mae and Freddie Mac exist to keep money flowing in the mortgage system and to allow lenders to have the ability to lend to more borrowers.
  • Other investors purchase mortgages as a long term investment with steady payments.

Lenders can only provide interest rates at which secondary market investors are willing to buy. These investors use different factors, like credit scores and down payment amount (or equity in the home) to judge the likelihood that a borrower will make timely payments.

At Accunet, we cannot control the interest rates at which investors will purchase a mortgage. But time and again we deliver options to borrowers that would allow them to reduce costs. By working as efficiently as possible and not charging processing, underwriting, or even nonsense “paper-pushing” fees, Accunet’s closing costs are typically $1,000 to $3,000 less for the same rate you’ll get at the big banks or the nation’s largest lender—you know the one whose name rhymes with “Schmicken.”

Have any further questions? Want to find out how our rates compare to your bank or other lenders? Contact us today by clicking the blue button or calling 262-781-1100 to speak to a loan consultant today. No commitment required.