“What is your rate?”
As a Mortgage Advisor for almost 15 years, this is the #1 question many of my clients ask when they call to look for mortgage financing. Since the rate affects the monthly payment amount, it’s not surprising that this is a popular question. Failure to get a lower interest rate could cost you thousands of dollars over the life of the loan. But what is difficult to convey is that it isn't as simple as looking at a rate sheet to give "today's rate". There are up to 28 factors that go into determining what interest rate any one home buyer will receive.
They are:
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1. Loan Size 2. Loan to Value (LTV) 3. Combined Loan to Value (CLTV) 4. Credit Score 5. Credit History 6. Escrow Preference 7. Length of Rate Lock 8. Loan Type (Conventional, FHA, VA, USDA) 9. Property Type 10. Occupancy Type 11. Residency 12. Available Assets 13. Co-Borrower(s) 14. Asset Seasoning |
15. Debt to Income Ratio (DTI) 16. Improvements Needed 17. Employment Type 18. Employment History 19. Documentation Type 20. Interest Only or Amortized Payment 21. Relocation 22. Seller Contributions 23. Gifts 24. Cash-out (if a refinance transaction) 25. Lender’s Fees 26. Lender’s Credit 27. Loan Term (10 year, 15 year, 30 year) 28. Discount Points Paid |
There are some other facts to note as well: Interest rates change daily. Mortgage interest rates have nothing to do with Federal Reserve activity. Banks and lenders do not huddle up once a week to decide what to offer. And the government does not dictate that rates be better some months and not so good other months.
As always, the best option is to call your mortgage loan officer to discuss your specific financial situation to best determine what your rate will be. It is our goal to always find you the best loan program and interest rate to fit your needs.
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