HERE’S WHAT GOES INTO YOUR HOME LOAN RATE QUOTE!
Mortgage Broker
Chris Carter
Published on May 31, 2022

HERE’S WHAT GOES INTO YOUR HOME LOAN RATE QUOTE!

You want to borrow a large sum of money to buy a home, and while the home acts as the lender’s collateral, giving them a safety net in case of loss (missed payments etc.), there are still several factors that go into a rate quote. Of course there are many economic factors which sway rates over time. We’ll cover those in another article.

Here are some of the most common LLPA’s:

Credit History
Consumers with higher credit scores will get better loan pricing than consumers with lower credit scores. Lenders look at the lowest of the borrower’s mid-FICO scores to determine how the rate is priced.

Loan Size
The bigger the loan, the more revenue a lender can make, which equates to better loan pricing.

Loan-to-Value (LTV)
Typically, the higher the down payment, the better the loan pricing.

Loan Type
Adjustable mortgage typically come with better loan pricing but may have higher up-front costs. Also, shorter term loans, like 15-year fixed will have better loan pricing than a
30-year fixed.

Property Type
A single-family residence will typically have better loan pricing than a condo.

Debt-To-Income Ratio
Debt-to-income ratio (DTI) measures total credit debt (including proposed mortgage PITI) divided by total gross income (before taxes). The lower the DTI, the better loan pricing.

Closing Date
a 30-day lock is the industry standard. If you want a shorter lock period, the pricing may be slightly better, while a longer lock period may be slightly worse loan pricing.

Occupancy Type
Typically, rental or investment properties have higher interest rates than a primary residence or even a second home.

Cash-Out Refinance
A cash out refinance will have higher pricing adjustments than a rate reduction refinance, or even a purchase loan.

Combined Loan-to-Value (CLTV)
This ratio includes not only the current loan you are wanting, but any additional loans on the property, such as a home equity line.

Mortgage Broker
Chris Carter Mortgage Broker
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(916) 794-8042