Today’s Interest Rates: 3%*

Real Estate Broker/Owner with Independent Real Estate Broker DRE#00972295

Interest rates can START from 3% to 5.875% + Plus adjustments....and that’s where the fun starts!

So, you’ve been hooked by those advertisements that promises you a 3% interest rate! Being the smarty-pants that you are, you’re a bit skeptical! So you do a little research. Hopefully, you’ve come across this blog to learn a little bit more about “how interest rates work!” I am going to share a little because, frankly, I don’t know it all. But here’s what I know:

“The Hook!”

That low interest rate that you see advertised is just to get YOU to call THEM—that’s The Hook!

The “Catch!”

The rate YOU get will depend on many factors and the interest rate YOU end up with will be higher than advertised.


So 3% is the starting point then "they" will add to it a certain amount each adjustment.  Some of the adjustments** to the interest rate can include:

Your FICO score: the higher your score the better the rate. For instance on an FHA 30 year loan, if your fico score is between 620-639 they will add 1.75% to that 5.875.  So your rate will be7.625% (5.875 + 1.75 = 7.625) 

Term of the Loan: the shorter the term the lower the rate – 30 vs 15 year;

Fixed Vs. Adjustable: Fixed rate is higher, you have to pay for security that you loan rate will never go up during the term;

Amount of your down payment: the lower your down payment the higher your rate;

Type of Loan: how many different types are out t here: a lot! I don’t think anyone knows exactly how many;

“Lock in” Rate: you have to pay for the security that your rate won’t go up by the time you get to the closing table. You can lock your rate in for 15 days, 30 days, 45 days....the longer the “lock in,” the higher the rate;

*Interest rate is subject to change and is not available to all borrowers. This is for informational purposes only and it is not financial or legal advice. **this is not an all inclusive list of adjustments, there could be more.

In the future, I will write a more detailed blog on “how interest rates work!” For know I hope this information has been helpful. Please feel free to leave a comment or call me.

Posted by

Aida Pinto (562) 884-6196
Los Angeles County
Real Estate Broker

The Real Estate Maven :


Short Sale, Probate and standard real estate expert.


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Melba Baquero
Melba Baquero, Ascent Home Loans - Temecula, CA

As a lender myself, I can understand the frustration with what may seem to some as "bait and switch" lending tactics.  I find that the educated consumer is the best consumer and so I like spell it all out for my clients.  I think that maybe the larger fluctuations in rates occurs more within the wholesale lending market because different banks have different programs.  As a direct lender, my clients don't see such large variances...which makes everyone happier. In my book, happy clients + happy realtors= referral business. Thanks for the post!

May 19, 2011 09:29 AM #1
Aida Pinto
Independent Real Estate Broker - Los Angeles, CA
Real Estate Broker (562) 884-6196

Hi Melba....thanks for comment....yes it can get frustrating even for us Realtors.....but I like simplifying complicated things.

May 19, 2011 11:18 AM #2
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Aida Pinto

Real Estate Broker (562) 884-6196
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