Jake's Lending Tip of the Week

Have you ever wondered why your interest rate is different than your neighbor? In today’s day and age, there are numerous variables that dictate what “your rate” is, and how it can be different than the market rates. Some of the most common variables are outlined below:

·????????Credit Score – This is the most significant factor in determining “your rate.” The higher your credit score, the lower the rate.

·????????Discount Points - In a higher interest rate climate, more and more people are purchasing discount points. Discount points lower the interest rate, but they increase the closing costs.

·????????Market Volatility – Mortgage rates are dictated by the mortgage-backed security’s (MBS) market. The higher the MBS market is, the better interest rates are. Since the early days of the pandemic, this market has experienced extreme intraday moves that have caused rates to shift upwards of .5% at a moment’s notice. ?

·????????Type of Mortgage – Different loan types and structures have different rate floors and ceilings. For example, an adjustable rate mortgage (ARM) will typically have a lower interest rate than a fixed rate mortgage.

If you have questions about what “your rate” would be, reach out today!??