When dealing with mortgage rates, at times I have heard a client say “Why is my rate different than theirs?”. The “their” being a friend’s, coworkers or even an advertised mortgage rate online. So I got to thinking…. It would be good for someone getting a mortgage to know the factors that go into the calculating of their interest rate. So here are the major items that make up your specific interest rate:
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Credit Score- This is the obvious one, as your credit score will determine your interest rate. As an example on a conventional the mortgage rate can differ at a credit score of 660,680,700, 720 and 740+.
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Condo- if you are getting a mortgage on a condo your rate will be higher vs getting a mortgage on a regular home or townhome. This rate increase is due to the mortgage industry’s feelings that a condo can be a riskier property to finance. This is because there is a HOA and that HOA has a lot of control of the property and common areas.
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2-4 Units- if you are buying a property that has 2 to 4 units, your rate will be higher vs buying a regular one family home(one unit). A 2 unit is considered a duplex.
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Loan Type- Your loan type can also affect your interest rate. As a VA or FHA loan may have a different mortgage rate then a USDA loan, as an example.
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Down Payment- Your down payment can also affect your interest rate.
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Mortgages Rates- Can Change Daily and even some days hourly. So a rate from a week ago may not be your rate today.
When getting a mortgage rate it is good to know the factors that can affect your rate. I hope you found this list helpful.
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