A common question I receive: "What is Your Interest Rate?". That is a wonderful question, but it depends on a number of factors, let me explain.
First, there is an assessment of the risk of loaning you money. This is done by pulling your credit scores from Experian, Trans Union, & Equifax. The scores are simply a numeric representation of risk as defined by the mortgage model your credit is applied through, (credit history, balance of accounts, length of accounts, percentage of usage of credit accounts, late payments, judgements, liens, collections, etc.). The more favorable your risk appears, the lower the interest rate will be. Let us assume you have excellent credit.
Second, your LTV or (Loan to Value) which is the percentage of down payment to the purchase price. Different loan options require different minimum down payments. I will review this in detail as we examine different loan options.
Third, the loan type, such as Conventional, FHA, VA, USDA, Jumbo, Non-traditional, etc. Interest Rates varies by the loan type.
Fourth, the investors’ appetite for your paper, given the above information. For example, in today’s market, Fannie Mae and Freddie Mac want 700's+ credit for better rates. You can purchase with low six hundred scores, but the higher, the better the rate will be.
Lastly, rates vary by the rate lock period. For example, with everything equal, a shorter lock term such as 15 or 30-days would provide a lower interest rate, than a longer lock term such as 90-days+. We can lock your rate 6-months in advance of the closing, but you pay for that security with a higher rate.
There is much to consider when purchasing or refinancing, I shop your rate to assure you have a competitive rate no matter what your credit score is, the loan type chosen, or lock period needed. Thank you! Ray