interest rate articles

[Patricia Luna]

I am 2 days from closing a cash out $250k refi on my 2 family. My bank is offering 4 5%. I am disappointed, as the recent articles I am reading about the Fed's position are referencing rates much lower. My lender is telling me that those interest rates in the article are based on ONLY one family homes. Is this true?

[Guifre Mora]

Originally posted by @Patricia Luna:

I am 2 days from closing a cash out $250k refi on my 2 family. My bank is offering 4 5%. I am disappointed, as the recent articles I am reading about the Fed's position are referencing rates much lower. My lender is telling me that those interest rates in the article are based on ONLY one family homes. Is this true?

 Don't believe everything you read or see online. 

The Fed doesn't actually set mortgage rates. Instead, it determines the federal funds rate, which generally impacts short-term and variable (adjustable) interest rates. This is the rate at which banks and other financial institutions lend money to one another overnight to meet mandated reserve levels.

The lender has to consider such risk, despite your stellar credit rating. So, in simplistic terms, interest rates are determined based on how much of a risk the lender thinks it's taking on you and the economy. ... (A mortgage is simply a loan on a house, and a mortgage rate is the interest rate on such a loan.

Investment property mortgage rates are higher than those for primary residences because they are viewed as higher risk. Still, rental properties are usually a great investment in the long run, and a slightly higher rate might not make that much of a difference in payment