1. Let’s take this a step further and say that they are same as Michigan’s mortgage rates, Ohio’s mortgage rates, Texas mortgage rates, New Jersey mortgage rates, and the rest of the states that make up the United States of America. One state does not get better mortgage rates than another. There is nothing written in the Constitution that says one state is better than the next so why would we think that one state should get better treatment financially than the next.
2. Mortgage rates come from the stock market and are traded like a commodity on the secondary market. Mortgage companies originate the loans and package them with all of their other loans and sell them for a quick profit. The companies that buy them are usually larger banks that run mutual funds, hedge funds, and their company’s pension. The earn the interest off of what the mortgage makes.
3. There is only one stock market and it is located on Wall Street in New York City. Sure there are other stock exchanges but they focus around the same market in which they use the same numbers.
4. If the stock markets all use the same numbers to calculate everything that they trade then why would they have different mortgage rates to offer to a home owner? The answer is that they do not. Mortgage rates typically are based off of the 10 Year Treasury Bond (usually you can take that number and add 2%-3% on top of it to figure out what the going 30 year fixed rate mortgage is).
5. There are some other factors that weigh in on what mortgage rates are going to do. With the mortgage mess continuing on for what seems to be quite awhile the investors say that they are no longer going to purchase mortgage notes unless they get a certain rate of return. During the refi boom years of 2002-2006 every mortgage company out there just wanted to originate the home loan and sell it on the secondary market for a quick profit. How it works is the company that originates the mortgage sells it for a profit of 2%-4% to a larger bank that pays them the full value of the loan plus the premium. An example would be Quicken Loans does a 30 year fixed $100k mortgage for a home owner and then sells it to Citi Mortgage for $102k. Quicken Loans would get $2k in revenue for selling the loan and Citi Mortgage would collect the interest off of the loan until the home is either sold or the home owner refinances.
6. Many people think that they are going to find better mortgage rates if they deal with companies within their state. This is just not the case. On any given day mortgage rates for a normal 30 year fixed rate loan are going to be about .125% higher or lower than the next mortgage lender. Do not spend a lot of time talking to more than 3 mortgage companies because you are just wasting your time.
7. Since it does not matter where you look for interest rates you are free to shop with whatever mortgage company you are going to want to go with. All of the major mortgage lenders can close a home loan in any state regardless if they are located in that state or not. What they do is talk to you over the phone and send all of your application documents to you via fax or email for you to view. If everything is just as you discussed they set up an appraiser for you from your local area who in turns comes to your house and appraises it. The appraiser faxes or emails back the appraisal to the mortgage company. If everything is fine the mortgage lender contacts a title company in your area and has them handle the closing of the loan with you. Many times you can arrange it for them to come right to your house.
8. The only time mortgage rates might be better in your state is if you work with a credit union. Credit Unions are the only lending institution that might be able to give you a better mortgage rate. The reason is that their local mortgage rates favor people that keep their money with them. Some local credit unions and banks can offer you up to .25% less of an interest rate on your mortgage if you open up a savings account or checking account with them.
9. Going back to the stock market, you can see how spending a lot of time trying to find the best deal in your state usually ends up being a waste of time. Mortgage rates are the same in Florida, California, New Jersey, Michigan, Ohio, and the rest of the United States.
10. Knowing that your state is not anymore special than the next state is great information to know. The reason is that if you are serious in refinancing your mortgage or buying a home is to not get so focused on shopping for the best rate. If what you are hearing from all of the different mortgage companies is the same then you should know that you have done your homework and proceed with picking a mortgage company and closing your home loan.