Mortgage refinancing interest rates are connected both to the banking and housing markets. What makes mortgage rates different is the fact that they are also tied in to the borrower and their status. Here are a few things that determine mortgage rates.

The Mortgage Lender or Bank
Often, a mortgage lender or bank can lower their interest rates in order to attract new customers. This is caused by a lot of competition, especially these days, in the home loan market. However, the competition in this market is for customers with good credit and who are not considered a risk. In fact, many banks and lenders are hesitant to help homeowners who have a shaky credit history.

When a homeowner has a good credit rating and mortgage payment history, odds are they will qualify for rates close to the lowest offered by that particular mortgage lender or bank. Homeowners who do not have a great credit history can still get approved, but their mortgage interest rates will generally be higher the worse their credit is.

The Market Conditions
The current market conditions will play a big role in the interest rates available. If the Federal Reserve decides to cut mortgage borrowing rates, the lenders and banks are often quick to lower their rates in an effort to attract customers. However, if things change, rates can rapidly increase to account for market changes and differences. While the changes seem minor, only a percentage point or less, they really add up on a 30 year home loan. Just like anything else, supply and demand decide the rates. As the lenders or banks get more customers, the rates go up. When business is slow, rates will be cut to increase awareness and activity in the market.

The Homeowner
The homeowners credit history and rating play a big role in determining mortgage refinance rates. While getting the lowest rates is easy for homeowners in a good financial position, it is a much more difficult task for homeowners who just meet the minimal requirements for refinancing. However, there are some plans available through sub prime refinancing that may offer lower interest rates than a traditional mortgage lenders rates.

-M Petrone

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