New Hampshire Mortgage Rates
What is a Mortgage/ mortgage rates?
A mortgage is an agreement between you and a lender that allows you to borrow money to purchase or refinance a home and gives the lender the right to take your property if you fail to repay the money you've borrowed. Mortgage rates is the cost to borrow that money over time.
local rates https://www.zillow.com/mortgage-rates/nh/
national rates consumerfinance.gov
Understanding Mortgage Rates
The prevailing mortgage rate is a primary consideration for homebuyers seeking to purchase a home using a loan. The rate a homebuyer gets has a substantial impact on the amount of the monthly payment that person can afford.
Mortgage rates are highly sensitive to economic conditions. Since 1980, average mortgage rates for a 30-year fixed-rate mortgage have hit a high of 18.3%, during a period of runaway inflation in 1981, and a low of 2.6% in 2020, in the early days of the Covid pandemic. In mid-July 2023, the average national rate was 7.2%.1
How much does the interest rate matter? Say you want to buy a house that cost $436,000. That's the nationwide average price as of mid-July 2023. You put $87,200, or 20%, down. You need to finance $348,800. A mortgage calculator makes this easy.
Mortgage Rate Indicators to Keep an Eye on
Given their impact on monthly living costs, people who are considering buying a home are wise to keep an eye on the direction of interest rates.
There are a few indicators to follow. The prime rate is one indicator. This rate represents the lowest average rate banks are offering for credit. Banks use the prime rate for interbank lending and may also offer prime rates to their most creditworthy borrowers.
The prime rate tends to follow trends in the Federal Reserve’s federal funds rate. It is usually about 3% higher than the current federal funds rate.
Another indicator for borrowers is the 10-year Treasury bond yield. This yield helps to show market trends in interest rates. If the bond yield rises, mortgage rates typically rise as well. The inverse is the same; if the bond yield drops, mortgage rates will usually also drop.
Even though most mortgages are calculated based on a 30-year timeframe, many mortgages are either paid off or refinanced for a new rate within 10 years. Therefore, the 10-year Treasury bond yield can be an excellent standard to judge.
And, of course, you can keep an eye on the trends in mortgage rates. Freddie Mac updates mortgage rate changes on its site weekly.
Determining a Mortgage Rates
A lender assumes a level of risk when it issues a mortgage, for there is always the possibility a customer may default on the loan.
There are a number of factors that go into determining an individual's mortgage rates, and the higher the risk, the higher the rate. A high rate ensures the lender recoups the initial loan amount at a faster rate in case the borrower defaults, protecting the lender's financial investment.
The borrower's credit score is a key component in assessing the rate charged on a mortgage rates and the size of the mortgage loan a borrower can obtain. A higher credit score indicates the borrower has a good financial history and is more likely to repay debts. This allows the lender to lower the mortgage rate because the risk of default is deemed to be lower.
Is a Fixed-Rate Mortgage or a Variable Rate Mortgage Better?
A fixed-rate mortgage rates gives you security. Your payment will never go up, no matter what happens to interest rates in the world outside. If rates go down, you can refinance.
A variable rate mortgage usually has a slightly lower interest rate to start, keeping your costs low at a time when you might be squeezed for cash. That's because the bank is betting that interest rates will go up, while you're betting they'll go down.
If you lose that bet, your monthly payment will go up, and you won't have the option of refinancing until they go down again.
