What are interest rates today?
When I get that question, I have to help clients understand that there are 26 components that are taken into consideration to determine what rate the individual qualifies for. But trying to get my borrowers to understand the complex formula is much easier said than done.
A typical converation goes like this, "What are interest rates today? I just heard on the radio that the rates are _____%. Why can't I get that?" There so many adjustments to rate, that even the slightest movement on product can change a rate.
If you do not know what adjustments on a rate are, here is the list:
Here are the 26 components that are taken into consideration when determining an individual's interest rate:
1. Loan Size
2. LTV
3. CLTV
4. Credit Score
5. Credit History
6. Escrow Preference
7. Closing Date
8. Loan Type
9. Property Type
10.Occupancy Type
11. Residency
12. Available Assets
13. Asset Seasoning
14. Co-borrowers
15. Debt Ratio
16. Housing Ratio
17. Improvements Needed
18. Employment Type
19. Employment History
20. Documentation Available
21. Transactional DI
22. Re-castable
23. Relocation
24. Seller Contributions
25. Gifts
26. Cash-out
This discussion will also allow me to uncover more of what's important to my client. I try to turn this question into an opportunity to build a relationship with a client and earn their trust.
So the next time you want to know, "What are interest rates today?" and the lender doesn't ask you any of the 26 items indicated above, be prepared for a surprise!
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