Today's Interest Rates: 3%*

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

Interest rates can range 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.  Hopeful, 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!  

 Here's the "Catch!"

 The rate YOU get will depend on many factors and the interest rate YOU end up with will be higher than advertised.  You have a low FICO score, they will charge you an Arm and a Leg....that's "The catch!"

Some of the adjustments that may be added to your interest rate can include:

Your FICO score: the lower your score the higer your rate;

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 your 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 now, 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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Dora Griffin
D A Griffin Financial.LLC - Fort Thomas, KY
NMLS 6380

I just had a conversation with someone this week. He was offered a 4% interest rate. He told me his credit score, that appears to be the only thing the LO did right he is talking to (sent his credit scores). Other than that he had no idea if (a) he was paying off one loan or two  (b) what his projected loan amount would be  (c) what his closing costs are  (d) whether he has a fixed interest rate.

Clearly the rate quoted was not a 30 yr fixed he thought he was getting, not without a big buydown. I wrote a blog about this a few days ago about how borrowers don't understand what they are being quoted. Mostly this is a fact because a LO does not go over the details.

Jul 20, 2011 07:43 AM #1
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Aida Pinto

Real Estate Broker (562) 884-6196
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