[ad#Left-Align Content Ad]When you buy a home, chances are that you will need to get a mortgage; few people have enough money to purchase a home outright. Of course, any time you borrow money, you have to pay interest. Because a mortgage loan lasts so long, and is so large, the mortgage rate you end up becomes very important. It can mean a difference of tens of thousands of dollars in your final repayment amount.

There are two main parts to determining your mortgage rate. Rates are figured on a national level and on a local level. Here are some of the basics related to mortgage rate determination.

2011 National Mortgage Rates

[ad#Left-Align Content Ad]Average national mortgage rates are determined with the help of financial markets. The secondary mortgage market is one of the main influencers of mortgage rates. When you get a mortgage loan, it is most likely to be sold to someone else. The idea is to sell mortgages to investors so that the loans can be moved on bank balance sheets, freeing up money so that the banks can lend to more people. It keeps the whole mortgage market moving.

Mortgage investors can keep the loans in their portfolios, or the loans can be made into securities that are traded similarly to the way bonds are traded. Returns from these investments, which are often held in different funds, fluctuate based on market conditions. Demand for the investments, economic conditions and other factors all influence returns on the secondary mortgage market – and the rate that is set for new mortgage loans.

10-year Treasury notes are looked to as indicators of what mortgage rates might do. These long-term investments are thought to offer insight into whether or not mortgage rates could rise or fall. As Treasury yields rise, so do, often, mortgage rates.

2011 Local Mortgage Rates

National mortgage rates are often starting points for local mortgage rates. Because markets are local, real estate and mortgage conditions in your area can affect whether or not the mortgage rates you are offered are lower or higher than the national average. If there is strong demand for home loans in your local area, mortgage lenders may not feel that they need to offer low rates. If your local area is ailing, though, lenders may lower rates to entice borrowers.

Your own credit history also influences the mortgage rate that you get. If you have a good credit history, you are more likely to see the best rate offered by the lender. Those with poor credit, though, are considered higher risks for default and the lender may set a mortgage rate that is higher than the national average – and even the local average.

You can increase the chances that you will get the best available interest rate by engaging in responsible money management. If you pay your bills on time, pay down your debt, and show that you have a reasonably long credit history, you are likely to find that your good credit score results in a low mortgage rate.

Mortgage Rates by Lender or Bank:

• Hudson City Savings Bank Mortgage Rates
• Bank of America Mortgage Rates