Quote:
Originally Posted by nowhereman427
What is the percentage rate now with the Federal Reserve?  |
Remember that the Federal Reserve rate is what the banks and other lenders pay for their loans.
It's like they are the wholesalers.
The money they borrow from the Federal Reserve is then loaned at 'retail' rates to the home buyers, and this rate is always higher than the rate the Fed charges them.
How much higher it is depends on the particular bank, but they all need at least a couple of more points to stay in business.
Non-profit lenders often charge lower rates, such as some Credit Unions, but not all Credit Unions are non-profit, and some of the non-profit unions aren't large enough to handle home loans.
Some of these small outfits do make home loans, but they immediately sell the mortgage to a larger lender big investment, acting like agents for the large outfit.
A borrower can end up paying off their mortgage to a big investment bank, often in another state. Sometimes, this second bank can float the interest rate a bit up or down, which can mess with the homeowner's budget.
So it pays to look around if anyone wants to keep their loan as local as possible. The local loan may cost a bit more than a loan from a big multi-state bank, but more of the payments will stay in the local economy.
I like to use a local bank, because the folks who work in it have all gotten to know me. Because they know my financial history, I have less trouble borrowing a short-term loan than if I borrow from one of the interstate banks.
But my mortgage is held by Chase, a very, very large bank. I chose them because they were one of very few of the big boys who never messed around in all the hanky-panky that brought on the Great Recession in 2008.
I don't know if my mortgage is more protected or not, but dealing with both a good local bank and a big national bank has worked out well for me.
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