What Interest Rate Can I Get on a Mortgage?
Multiple times a day, I hear the question ...
Oh boy ... Sounds like an easy question to ask a lender, doesn't it? But in reality, it's not. And that's a good and bad thing for consumers.
The good part: Mortgages have increasingly become more personal in nature. The interest rate earned and mortgage program utilized are tailored to the individual client and more reliant on the specific borrower asking the question.
The bad part: Consumers can experience a bit of frustration when they don't receive an immediate and simple answer.
In fact, NOT receiving a quick answer is actually a good sign for the consumer. It means the lender they are working with is genuinely trying to provide them solid reliable information on which they can make decisions.
However, it does mean that the lender must conduct a bit of research prior to answering their question. And that means the consumer will need to answer some questions of their own and provide some information to the lender too.
I often find that when I receive an inquiry such as this, the consumer has recently seen or heard something about interest rates that caught their attention. Whether it was through media, a friend, a relative, or co-worker, the topic has been raised or discussed.
But were the interest rates they saw and discussed "current"?
That's important and here's why ...
Let's start with interest rates that have been posted via media sources. When it comes to the education and sharing of interest rate information, it's no surprise that media figures in heavily.
Interest rates are now posted, marketed, and shared everywhere in a myriad of ways. Consider these outlets:
- Social media
- Websites
- News articles in magazines and newspapers
- Radio
- Texts and Emails
- Newsletters and Blogs
- Letters and Postcards
- More ...
But what contributes to making this specific question so hard to answer for consumers is the fact that the rates they saw or heard are likely already "old". They no longer reflect current (and available) interest rates.
The fact of the matter is that interest rates change and fluctuate quickly. In the swiftly moving modern mortgage world, what is true, available, and "quotable" at the beginning of the day may no longer be available to borrowers by lunch time. The speed with which the changes take place can be confusing to a borrower.
Also contributing to their confusion can be the fact that even if the interest rates heard or seen were current, those interest rates may or may not apply to the borrower asking the question. Interest rates aren't a "one size fits all" thing ...
If you look and listen carefully, you'll note that the interest rates posted are typically accompanied by a host of asterisks, either written or spoken. Industry compliance demands that and is pretty strict regarding this matter. Rightfully so.
Beyond the sharing of information, there is a hint of "marketing" being conducted with these rate postings however. Those extremely attractive rates posted? They're meant to catch your attention.
But the asterisks accompanying them will tell you that those rates are (typically) only available to those consumers that hold top-tier credit scores or placing larger down payments on their property purchase.
Unfortunately, those rates don't reflect the personal finances or needs of individual borrowers. The borrower I'm talking to credit scores, savings, down payment ability, (and myriad of other personal financial details) have not been taken into consideration, nor are they reflected, in those rates.
It's important to point out that each of these personal details should be considered by a lender prior to them offering any answer regarding interest rates. If the answer provided is to be a reliable and sound one, the effort must be made and the time must be taken to weigh each. The consumer needs an answer based on fact and an answer that they can actually base life decisions on.
So what information do I as a lender need to attain from my hopeful borrower? What are some of the things that impact the interest rate you will be quoted and receive?
Here's some of the information that's needed for a reliable quote:
- Credit Scores: (Middle Score of the 3 main Credit Bureaus is used)
- Loan to Value %: (Down Payment/Equity Percentage)
- Loan Type (FHA, VA, Conventional, Non-QM, etc.)
- Property Type: (Single-family, Condo, Investment)
- Length of Transaction: (Time period between Application to Closing. The longer the lock term, the (slightly) higher the interest rate or quoted closing costs may be)
- Occupancy: (Owner-occupied interest rates are lower than Investment Property rates)
- Number of Units: (Single-family rates are typically lower than 2-4 unit properties)
- Purpose of Loan: (Purchase transaction's interest rates are lower than Refinances. Rate/Term refinances are lower than Cash-Out Refinances)
- Other Outstanding Loans: (Secondary Financing. This is a transaction where a 2nd Mortgage or HELOC are involved, increases the combined Loan-to-Value Ratio and results in higher interest rates)
- More ...
There are some actions that a borrower can do to make the questioning easier and seem less painful. A little preparation helps immensely.
If a hopeful consumer wanting to inquire about interest rates or a mortgage pre-approval, it's helpful to have your basic financial information at your disposal during our call. I suggest having the following items:
- A pay stub from your employer
- Your tax return
- Bank statement(s)
- If you already own a home, have your mortgage statement available
- Know your Social Security number
- If you have already viewed homes and have a specific home in mind for purchase, please have the address/info on the home available
Bottom line, the accuracy of the answer you receive from me (or any lender) matters greatly. Your decisions ... your future ... depend on it.
Having the above information at your fingertips when we speak will get you the answer you need much more quickly and easily. And it will be an answer that you can rely on ...
