Today’s economic climate has made even the most liberal spender thriftier. People are driving a little
further to save on a tank of gas. We are eating out less and opting to eat at home more. Overall we are finding ways to save money. Above all else, we want to be sure that we are getting the best possible deal. These days, whenever my family and I eat out, we try to find restaurants that have "KIDS EAT FREE" nights. When it comes to buying groceries, we shop several different stores during the week, making sure that we are stretching our dollars.
I understand that and as a loan officer, I understand that borrowers today want to be sure that they get the best deal possible. However, many people construe that to mean the lowest rate. The price of the loan encompasses many things such as lender fees, broker fees, the interest rate, and third party closing costs. Furthermore, many borrowers are trying to get a deal "as good as" if not better than one their friends, family, or co-worker got. However, each loan and borrower is different and many factors go into the actual rate that is available. There are many different factors involved in getting a loan such as:
- Credit – Lower credit scores equal higher interest rates.
- Down payment/Equity – Putting money down or having more equity lowers your risk factor thus creating more lending avenues with lower rates.
- Loan Program – Rates vary from program to program. Government backed loans and conventional loans have different rates. Fixed rate mortgages have higher rates than adjustable rate mortgages. 30 year loans have a higher rate than shorter term mortgages.
- Sales Price – Certain lenders base pricing on the loan amounts, thus equating to a difference in rate.
- Time Lapse – One of the most common factors is passage of time. Rates go up and down daily, weekly, monthly. Certain rates and programs have changed and this could equate to a higher payment or rate.
The preceding is only a handful of reasons why rates differ from borrower to borrower. If you want to be sure that you get the best in service, rate, and price, contact me so I can help tailor a loan that will suit the needs of you and your family.