Other Free Encyclopedias » Online Encyclopedia » Encyclopedia - Featured Articles » Featured Articles: Melissa And Doug Puzzle - What Are Melissa and Doug Puzzles? to Panasonic Mini Dv Camcorders - Panasonic Mini DV Camcorder Great Choice for Pro or Amateur

Mortgage Bank Rate - How a Bank Determines Mortgage Rates

federal funds rate the prime rate the consumer rate find accurate mortgage bank rates

Where the federal funds rate is concerned, there is a federal overseer of the American banking system. The federal overseer is the person that sets all of the rules and regulations that all American banks have to follow. An example of the rules and regulations that the federal overseer will make is setting interest rates. The interest rates will be based on current economic changes. The interest rates will lower or raise based on these changes. This is often known as the key interest rate, the federal funds rate, or even the discount rate.

The federal funds rate does not really affect customer mortgage rates. However, it does affect other banks that borrow from the Federal Reserve funds. The banks always have to meet mandatory federal deposit rules. The federal funds rate will also affect the prime rate. The prime rate will usually raise or lower based on federal funds interest rate cuts.

The Prime Rate

Although many banks help determine what the prime rate is, the prime rate does not affect consumer mortgage interest rates. The prime rate is usually what the banks will charge to other banks or other corporate clients. Even though the prime rate is more stable than the federal funds rate, it is still influenced by the economy’s position. The prime rate will eventually react to the changes made to the federal funds rate.

The Consumer Rate

The consumer rate is the rate that all banks will charge clients. It is usually known as a mortgage interest rate. The prime rate is normally used as a basis for individual consumer interest rate. In addition, the consumer rate is removed twice from federal funds rates that the federal overseer raises or lowers. The consumer rate will rise and fall with the federal funds rate soon enough, but it may not be affected at all. Banks usually create the consumer rate by adding two percent to the prime rate. However if a customer has an amazing credit score the final interest rate will be slightly lower than the typical consumer rate. In addition, if a customer has a low credit score the amount added will be significantly higher than the average consumer rate. The formula for the consumer rate is different for each bank. There may not even be a set formula for each bank. The consumer rate for each bank is determined by that individual bank. It is typically safe to assume that if you have horrible credit your rates will be more than double the prime rate amount.

Find Accurate Mortgage Bank Rates

There are many different ways for you to find accurate mortgage bank rates. A very easy way to find an accurate mortgage bank rate is to visit the bank’s official Web site. At the official Web site, you may be able to find a mortgage rate calculator that is provided by the bank. You can use this calculator to figure out what the rate is for your current home or for the home that you plan to purchase. After you have figured out the consumer rate, you may want to call the bank. By calling the bank, you are making sure that the consumer mortgage rate is actually accurate.

Another way to find out if your consumer mortgage bank rate is accurate is to locate and call the branch of your local bank. You should ask to speak to the mortgage loan officer after you make the call. The mortgage loan officer of your bank can normally give you the accurate mortgage rates that you are looking for in your area. The mortgage loan officer may even be able to offer you guidance and more information about the mortgage options that are available to you. This can give you an idea of what mortgage plan would work best for you.

You can also visit bankrate.com. This Web site allows you to look at the average rates for different banks in your area. Of course, you may need to call the bank to make sure that the rate posted on the Web site is accurate. This is mainly because a lot of different banks might advertise a special rate in order to draw attention. This is simply a precaution.

Mortgage Calculator Insurance - Mortgage Calculators that Calculate Insurance [next] [back] Free Classes Online - More and More Schools Offer Free Classes Online

User Comments

Your email address will be altered so spam harvesting bots can't read it easily.
Hide my email completely instead?

Cancel or