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:
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.
The bigger the loan, the more revenue a lender can make, which equates to better loan pricing.
Typically, the higher the down payment, the better the loan pricing.
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
A single-family residence will typically have better loan pricing than a condo.
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.
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.
Typically, rental or investment properties have higher interest rates than a primary residence or even a second home.
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.