Ever Wonder How Rates are Determined?

Last week we blog on why lenders ask so many questions during the pre-qualification process. Ever wonder why each lender have different rates and how interest rates are determined?

Below are a few things lenders look at when determining an individual’s interest rate:

Is the subject property a single family home or a condo? The cost to get a better rate increases by .75% if your down payment is less than 25% on a condo.
Type of Loan: Rates differ for VA, FHA and USDA loans
Type of Borrower: if your credit scores are higher your rate will be better
Purchase or Refinance: If you are purchasing a new place, the rate is better by .5%.
Extended Locks: If you lock in a rate, there is an increase to the cost if you do a 45 day or longer.
Each lender’s rate may differ because that bank’s cost to borrow the money may have been higher.
Timing: And last but not least, the day you lock in plays a key part to the rate. You may lock in one day and the next day the rate may either go up or down. It’s a daily (and sometimes hourly) gamble.

Remember these items when you wonder why your rate is different from someone else’s rate. To get a quote for today’s rate, give me a call at 808-561-5943 or email me at lle@pacificaccessmortgage.com. – Linda Le, Loan Officer, Pacific Access Mortgage