How FHA, VA, Jumbo Mortgage Interest Rates are determined in Alabama
It isn't easy anymore in determining what Jumbo, FHA or VA mortgage interest rates are available for your purchase or refinance in the United Sates or in Mobile, Alabama. You can no longer look at a newspaper, an ad or pick up the phone to get an exact interest rate quote.
In today's environment, you need to actually provide the lender with a lot of information to get more than a general range of interest rates. Since 2007, interest rates are now based on what the mortgage industry calls "Risk Based Pricing". The lower the risk in making the loan, the lower the mortgage interest rate. So..... be prepared for a lot of questions when you place your call to your mortgage lender. Here are the seven main categories used in determining an interest rate.
1. Loan Types in Alabama
- Jumbo mortgage loan (above $417,000) = higher risk
- Conventional Mortgage loans (up to $417,000) = normal risk
- FHA Mortgage Loan amounts up to $271,070 = moderate risk
- VA Loan amounts up to $304,000 and must be a veteran = moderate risk
- USDA: 100% financing in designated areas for low to moderate income households = higher risk
- 203K: FHA renovation loan = higher risk
- Construction: Interim financing used to construct a new home = higher risk
- Renovation: Interim financing used to remodel an existing home = higher risk
2. Loan Purpose:
- Purchase: Financing used to purchase a property = lower risk
- Rate Term Refinance: Financing used to pay off a single mortgage with no cash proceeds to the borrower = lower risk
- Cash Out Refinance: Financing used to pay off more than one mortgage and/ or allows the borrower to receive cash from the transaction = higher risk
3. Loan Amount:
- Over conforming loan limits, currently $417,000 (Jumbo) = higher risk
- Down Payment/Equity: The larger the down payment/equity the lower the risk
4. Credit Score:
- Credit scores range from 640 - 900. The higher the score the lower the risk
- Owner occupied: Home will be occupied as your primary place of residence = Less risk
- Second home: A vacation property used by the borrower in a resort area = higher risk
- Investment: Home will be rented or lived in by someone other than the borrower = greatest risk
6. Property Type
- Single Family = lower risk
- Mobile Home = higher risk
- Vacant Lot/Land = greatest risk
- 30 year mortgage loan = higher risk
- 15 year mortgage loan = lower risk
There are many other factors, but these probably the first questions you will be asked.
So be prepared to answer questions, be as accurate as possible to get the most accurate quote for your new mortgage loan. But keep in mind the only way to get an accurate quote is to apply for the mortgage.
For more answers to your questions contact me for assistance.
Licensed in Alabama (20316.031) Alabama Banking Department Bureau of Loans
Subscribe to CommentsComment