October 23, 2009

Interest Rate Headlines ... What They Don't Tell You

Are you a rate shopper? Have you gotten sucked into the media ads touting 4.875% with an APR of 5.125% or something similar? How about the online offers that will quote you a rate if you just supply your name, address, phone number and email? Do you really want someone who buys your contact information to also manage your loan origination?

Here’s a brief list of variables that go into determining an interest rate whether it’s a purchase or refinance.

Loan Amount – conforming, high balance conforming or jumbo
Property description - single family residence or something else
Occupancy – primary residence, second home or investment
Loan to value – more than 80% or less
Loan period – 30 year fixed, 15 year fixed or something else
Loan program – conventional or government
FICO score – qualifying FICO 720+ or below
Rate lock period – 15, 21, 30, or 45+ days
Points or No Points

These are the biggies but there could be other things that determine your interest rate. We all want the lowest rate possible but which one are you really interested in … the teaser rate or the rate you actually qualify for? The next time you decide to shop for an interest rate, make sure you know all the variables that apply to your financial transaction and shop accordingly.