Why is my interest rate higher than going interest rate
Why it that the TV and newspapers say the mortgage rate is 4.85% for a fixed 30 year loan but I am getting 5.25%? It seems like that is false advertising.
I contacted my Everett mortgage lender and he said that interest rates for a fixed 30 year loan were 4.85%. Then we met at his office and all of a sudden I am at 5.25%.
What I didn’t know was that rate is for a fixed 30 year mortgage with certain parameters. They are;
- At least 20% or more equity in my home. So if my home has a value of $300,000 and my loan amount with costs is less than $240,000 I just might get that 4.85% rate.
- But wait there are a few more hooks involved. How is my credit? If my credit score is under 620 I might not get any mortgage. If my score is between 620 and 680 there will probably be a few “hits”. What do you mean hits? Usually these are charges to the borrower because of a higher risk involved. There will probably range around .25% to .5% of the interest rate you receive.
- If I have had late payments on my credit I will probably have a combination of increased interest rate and additional fees.
- Even if I have these “dings” on my credit I can still get that very low rate but I may have to “buy” my rate down. If I have enough equity in my home I can use that equity to pay the fees and then I will get that super low interest rate.
Unless my credit is 720 or better and my total loan amount is less than 80% of the value of my home I can expect a few extra charges. So the next time I contact my Everett mortgage lender I will need to remember a few things. Do you have a comment?
Jim Johnson
