The most frequently asked question by a consumer to a mortgage professional is, “what’s your rate?” After all, it is what we have been conditioned to ask. Look online and you can get an instant quote as well as see published mortgage rates everywhere….but be cautious about mortgage rates advertised for the masses.
Many people don’t realize mortgage companies get their mortgage interest rates and mortgage money from the same place – mortgage backed securities and Wall Street.
Mortgage interest rates are derived from the pricing of mortgage backed securities which are traded daily, throughout the day, on Wall Street…and behave very similar to stocks. And Bonds can move just as quickly as stocks. Somedays it is downright volatile. The market is constantly moving – and so goes mortgage backed securities.
Aside from the pricing of mortgage backed securities, there are many other factors that are unique to each scenario that weigh in on the mortgage interest rate. There can be as much as three eights (3/8%) of a point difference depending on just your lock term and having (or not) an escrow account!
But YOUR mortgage interest rate? Well, that’s personal. Speak with a mortgage professional about your specific situation and have them run the numbers to determine which rate and closing cost structure works best for your specific transaction.
Here are some of the criteria involved in quoting a mortgage interest rate:
- Loan Size
- Loan to Value
- Combined Loan to Value
- Credit Score
- Debt Ratio
- Housing Ratio
- Escrow Preference
- Lock Term
- Loan Type
- Cash-out
- Property Type
- Occupancy Type
- Residency Status
- Gift Money
- Seller Contributions
- …And more…
So the next time you ask a mortgage professional, “what’s your rate?”, perhaps you’ll understand their reluctance to throw a rate out there in mid air.