Does Your State Determine Your Mortgage Payment?

Kind of a catchy little head line there, but it’s true. If you want a cheap mortgage then you need to pick a state that is going to benefit you to get a better interest rate.

As Les Christie from CNNMoney.com says in the article below, “Where you live can also have a big impact.” This means your monthly payment on your mortgage and your interest rates. The reason for this is that in certain markets, if people have lots of job loss or are struggling and fewer people that have jobs, the lenders have to lower their rates. Lowering the rates creates payments that are suitable to the current market and the affordability index based on what homeowners can buy and afford.

It has a lot to do with where you live, believe that or not. I know it sounds a little ridiculous but it’s just the way it works. Also, it goes back to the bond yields. The U.S. mortgage rates are in tandem with the Bond Market. As the Bond Market moves, the rates move. They also take into consideration what the average homeowner’s median income is based on the Affordability Index and they offset the rates too.

You might want to take a look at this article. You may be deciding to move right now.  Picking the state could have a direct reflection on what your monthly payment is going to be. That’s my 2 cents. I look forward to hearing yours!

See original source:

Want a cheap mortgage? Move to these states

By Les Christie  @CNNMoney August 7, 2014: 4:19 PM ET

NEW YORK (CNNMoney)

Your credit score isn’t the only thing determining whether or not you get a good rate on your mortgage. Where you live can also have a big impact.

In fact, interest rates can vary dramatically from state-to-state.

States with the best (and worst) mortgage deals

State Average Rates

Lowest mortgage rates

  • Rhode Island 3.40%
  • Connecticut 3.41%
  • Nevada 3.46%
  • Pennsylvania 3.55%
  • Maryland 3.59%

Highest mortgage rates

  • Nebraska 4.10%
  • South Dakota 4.07%
  • Wyoming 4.06%
  • Vermont 4.02%
  • Oklahoma 4.02%

Source: GoBankingRates and RateWatch

Methodology: GoBankingRates surveyed mortgage rates for all 50 states and the District of Columbia using data from RateWatch. The study looked at more than 102,000 15-year fixed, 30-year fixed, and five-year adjustable-rate mortgage products to find the weighted average for each state and the District of Columbia.

Borrowers in Rhode Island are benefiting the most, according to a survey by loan information sites GoBankingRates and RateWatch. Borrowers there paid an average rate of just 3.4% on mortgages in July, about 0.35 percentage points below the national average.

Nebraska’s residents weren’t so lucky. They paid an average of 4.1%, the highest rate in the nation!

Over 30 years, that seemingly tiny 0.7 percentage-point difference means that a $200,000, 30-year loan would eventually cost $28,800 more in Nebraska than it would in Rhode Island.

So what gives?

On a national level, mortgage rates move in tandem with U.S. bond yields. Yet, several local factors, like property values, competition, and risk can impact rates as well.

In areas where the economy is struggling and fewer people have jobs, lenders need to lower rates in order to attract borrowers. If the economy is booming, then they can afford to bump rates higher.

Borrowers also tend to see lower rates in places where home prices are higher. That’s because lenders incur many fixed transaction costs. It can be just as expensive to process a $100,000 mortgage as a $300,000 one so lenders make up for that by charging higher rates for the smaller loans.

Don’t count out millennials

Risk is also a factor. The lower the average credit score in an area, the higher the rates. Also, states that make it easier to foreclose on delinquent buyers tend to be cheaper, according to James Zussman, a business development associate for RateWatch.

 

http://money.cnn.com/2014/08/05/real_estate/state-mortgage-rates/