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Getting an interest rate quote is not as simple as calling up a mortgage broker and asking what the rate is.

Credit score.
The higher your credit score, the lower your rate will be. Typically, those who have a score over 700 will have an interest rate that may be as much as 3 points lower than someone who has a 540 score.

Loan to value (LTV).
The higher the loan as a percentage of the home's value, the higher the risk to the lender in case you default on the payments. Thus, if your LTV is below 80%, you will get a lower rate than if you financed 95% or 100% of the value of your home.

Mortgage payment history.
Most lenders will look at your most recent 12 or 18 month mortgage payment history, which is clearly stated on your credit report. If you show 1 or more 30 day lates, you will be penalized with a higher interest rate. If you have one or more 90 day lates, you application will come under more scrutiny.

Size of the loan.
In the mortgage business, size matters. A small loan, less than $75,000 will have a higher interest rate than will a loan up to about $300,000. Loans over that amount will have a higher rate than the normal size loans. Check with me to see what breakpoints my lenders have.

Combined LTV (CLTV).
If you are getting a first and second mortgage to get 100% financing, the combined loan to value will have an impact on your interest rate.

Rate lock period.
If you lock in your rate for just 15 or 21 days, you will get a slight discount on the rate than if you extend the lock period for 30 or 60 days.

Primary residence or non-owner occupied.
If you are going to rent out the home, or have it as a second home, you may pay up to 2 points more in the rate compared to refinancing a home in which you are living.

Level of documentation.
If you go "full doc", you will pay a lower rate than if you go "stated income" or "limited doc".

Pre-pay penalty period.
A pre-pay penalty is a fee, usually 6 month's interest, that you pay on any amount of principal that you pay over specific lender limits within a 1, 2 or 3 year period. Basically, a pre-pay penalty keeps you with that lender for at least 2 years. These penalties usually apply only to sub-prime borrowers.

Yield spread to the lender.
Just as you work to make a living, so does your mortgage consultant and the company he or she works for. The fee that a mortgage company makes is often paid out by the lender, and to pay this money, a slight increase is added to your interest rate over their wholesale cost (about a half percent on average). Sometimes this is a bit higher, but should reflect the degree of difficulty involved with getting a loan approved. Trust me, some loans are VERY difficult to get done!

Tax/insurance escrow or no escrow.
If you wish to pay your property taxes and homeowner's insurance on your own, you may pay up to a quarter point higher than if you include the taxes and insurance in your monthly payment. Some lenders do not have any difference in the rate.

Fixed vs. adjustable.
Fixed rate mortgages usually have a higher rate than the start rate on an adjustable rate mortgage.

Pre-paid points.
A pre-paid point is 1% of the loan amount. Often, you can get your rate lowered by paying 2 or 3 points up front. For this to make financial sense, you should have me do a break-even analysis to see how long you need to stay in your home or keep your mortgage to reach break-even on the higher dollar amount. usually this works out to about 4 years. If you are confused here, call me for a clarification.

So you can see how hard it is for any mortgage consultant to simply quote you an interest rate! My best advice is for you to give me a call so we can sit down and go over all these items to see what your rate will be.

In my next article, you will learn about a very confusing term, the Annual Percentage Rate, or APR. Stay tuned to your email, as this is a confusing number and it helps to understand it. closing costs and how they affect what you need to bring to the settlement table. Thanks for staying on my list.

About My Services

I would like to help you with the task of refinancing your mortgage. To do this, I am able to do the following for you:

• Evaluate your credit and mortgage payment history
• Advise you on the various types of mortgage programs
• Resolve any issues on your credit report that can affect your mortgage.
• Provide you with a complete refinance savings analysis
• Make sure you have all the required loan documents
• Provide you with a Good Faith Estimate of closing costs
• Keep you informed as to changes in mortgage interest rates
• Get copies of all your mortgage and other loan pay-offs
• Co-ordinate all aspects of settlement or escrow, including title search, appraisal, paperwork and other services

At Your Company Name, we offer mortgages for most buyers, including ones who are self-employed or who have damaged credit. We have lenders who offer 100% financing meaning no down payment for qualified buyers.

We also offer mortgages with start rates as low as 1%, making it easier to pull cash out of your home.

If you have any questions about how I can help you purchase your home, please call me at Company Phone #.