Why Are Mortgage Rates Different For A First And Second Mortgage?
By Bob RedtreeWhen dealing with mortgage rates, being in first position, above everyone else, offers not only protection, but safety in case the borrower runs into financial trouble.
What Factors Determine The First Mortgage Rates? Is The Stock Market Involved In This too?
When dealing with banks the first mortgage rates you get are determined, for the most part, by the 10 Year Treasury Bond. It’s an index that frequently changes along with the stock market.
What Or Who Determines The Second Mortgage Rates?
The prime rate is the determining factor in second mortgage rates and interest rates will be higher because of another determining factor called risk. Lending in a volatile real estate marking like we have been seeing for several years can be a crap shoot for all lenders. Putting second mortgage money behind a large first mortgage is why mortgage rates are much higher. Of course, there is the exceptional borrower with a FICO score on the north side of 790 who might get a mortgage rate of their choosing. But not often.
If I’m A Borrower In Need Of A Second Mortgage What Kind Of Mortgage Rates Will I Get?
Several factors will play a part in your new interest rate. What the prime rate is, your credit score, your debt to income ratio and your loan to value (LTV). In most cases that value will not exceed 80 percent of the total of your first and second mortgage combined.
In the final analysis that nasty little four letter word risk always seems to be hiding behind a bush somewhere ready to jump out and scare you, the borrower. That word will become standard practice from now on.
Related posts:
- What Does The Bank Look At To Determine My Mortgage Rate?
- Do I Pay A Higher Interest Rate On A Fixed Rate Mortgage?
- Why Aren’t All Mortgage Interest Rates The Same?
- What Is Mortgage Pricing Based On?
- How Can I Be Sure I Have Found The Best Mortgage Rate?