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Mortgage Trends
The Great Interest Rate Chase.
Interest rates can be found all over the Internet and in your weekend newspapers. However, obtaining an accurate interest rate quote is a bit more complicated than getting a price for a book on Amazon.com. There are many factors that can affect your rate and loan program. In order for me to quote you an accurate interest rate, I will need answers to many crucial questions.
A. When is the loan going to close? Interest rates and points vary by the length of time needed to either process the loan or if you are buying a home, close the escrow.
15 day pricing is the lowest rate
30 day pricing is next best
45 day pricing follows 30 day
60 day pricing is worse
90 day pricing is among the highestB. What is your credit score? How many credit lines are reflected on your credit report? How long have you had credit established?
On many loan programs the interest rate and points may vary according to what your credit score is.
A 720+ credit score gets the best rate on most programs. 680-720 is next best
620-680 follows.
C. How much down payment are you able to make? (Loan to value ratio?)
81%-90% loans are costlier than loans where the buyer puts a 20% down payment.D. Are you going to occupy the home? Non-owner occupied loans are substantially more expensive than owner occupied.
E. How big a loan are you applying for? Since it costs a lender as much to service (collect your monthly payments) a $100,000 loan as it does to service a $250,000 loan, loans under $125,000 often cost more than loans above that. Also, loans over $417,000 are classified as Jumbo loans (except in high cost areas) and carry higher interest rates than loans below $417,000.
F. Are you going to pay your own taxes and insurance? If you establish an impound account with the lender to handle your tax and insurance payments, you may save up to ¼ point in loan fee.
G. If you are refinancing, are you taking cash out? If you are and you are borrowing more than 75% of the value of the home, the interest rate/points may be higher than if you were just refinancing to lower the interest rate.
H. How well can we document your income? Lenders rarely do stated income loans any more, so income documentation is crucial.
I. Will there be a second mortgage combined with your first mortgage? If so, what are the loan to value ratios for each loan?
J. Will you be receiving any gift funds to help you purchase your home?
K. Will you have cash reserves available after the close of escrow?
L. Are you a U.S. citizen, permanent resident or non-permanent resident?
As you can see, an interest rate quote without knowledge of your personal situation may not be accurate. It is like a doctor giving you a prescription without an examination. Interest rates change on an hourly basis in today's turbulent financial world. Although there may be general trends in interest rates, no one can predict the short term volatility caused by random events. Please call me any time for an up to date, accurate interest rate quote.
Warning - Many people who shop for the lowest interest rate through the newspaper, the Internet or random calling of different lenders end up feeling that the lender has used a bait and switch tactic on them because the rate and points at the end are not the same as they were originally quoted. Usually the problem is that the original loan officer didn't ask the right questions or enough questions before quoting an interest rate.
A newspaper quote - the rates quoted in the Sunday newspaper are at least 4 days old because the deadline for most rate charts is the past Wednesday.
A quote on the Internet- very few interest rate quotes on the Internet are updated daily. In fact, interest rates can change hourly. Plus, most Internet lenders don't employ experienced loan officers to consult with you. Often, you will only interact with clerical staff and never consult with a loan officer.
A quote by calling different lenders - again, most lenders have their newer loan officers and clerical help take interest rate calls and questions. The quotes you get may not be accurate because the person doesn't ask you the appropriate questions to supply you with the answer that's correct for your personal situation.
Remember, whether you use my services or not, you should always use a lender to whom you've been referred by a reliable and trustworthy source. That is your best opportunity to be sure you receive everything you expect from the mortgage process, and that you can expect 100% accountability from the loan officer you are dealing with.
Cherry Creek Mortgage
4301 Hacienda Dr. Ste. 120
Pleasanton, CA. 94588
Phone 800-325-2062
Fax 925-520-0231
