One of the major components of any home loan is the interest rate. Some clients have realistic expectations and others do not. With so much volatility in the market place right now I thought I would touch base on what factors affect the interest rate you could receive on a mortgage loan.

1) Credit Score: Anything below a 740 will get "hits" to their interest rate. Meaning you will get a higher rate if you have a credit score below 740.

2) Loan-to-Value / Down Payment: All things being equal someone putting 5% down will get a higher rate than someone putting 20% down.

3) Loan Amount: Any amount below $140K (at least with most brokers) will get a higher rate than someone borrowing more than $140K.

4) Escrow Account: When lenders quote a rate they are assuming you will establish an escrow account (taxes and insurance included in your payment). However, if you would like to pay them separately and "waive escrow" you will get a higher rate.

5) Occupancy Type: A "primary residence" transaction type will get a better rate than say lending on an "investment" property.

6) Documentation: The ability to document your income (i.e. pay stubs, W2's, taxes) will warrant you the ability to get a better rate than someone you has challenges doing this.

7) Loan Program: The type of loan program you are eligible for will help determine your rate. FHA, USDA, Conventional, VA all have different rates and qualifying factors.

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Your Columbia Missouri Mortgage Broker