I have been hearing a lot of talk about Mortgage Rates below 6% in the past few weeks. So, what does that mean to the Average Joe Homebuyer? It means homes are cheaper because monthly payments are cheaper than if the average is 7%…. But just because the news says they are 6%, does that mean you get a rate at 6%? NO, I AM SORRY YOU DO NOT. You might get 6.125 or 5.85.
Mortgages are not a gallon of milk. A gallon of milk at Kroger is the same price for everyone and mortgage varies from person to person, lender to lender and home to home. There are a lot of factors that go into the average rate. But they are just that: an average.
These averages are normally averages as of the last full business day, for new purchase loans with a down payment of at least 20% and a credit score of 680–739. Not everyone fits that box. They tend to focus on conventional loans as well. And they are nationwide. Did you know that some states have higher averages than others? On top of these factors, not all loans require 20% downpayment or these credit scores. You can buy a home with 0% down or even a credit score of around 581.
EVERY MORTGAGE A PERSON GETS IS AN INDIVIDUAL MORTGAGE.
There is a reason the loan application is so long. That reason is because the lender will customize a mortgage for each application. Some lenders can make better deals than others when it comes to interest rates, but they may have higher fees at closing. It is always important to compare Apples to Apples and not Apples to Oranges…
What goes into your Mortgage Rate:
o Credit Score – They will factor in all three agencies.
o Debit to Income – This includes loans you have and the income (on tax records or W2’s) that are current.
o Loan to Value – How much are you putting down? Or are you buying a $400,000 home for $390,000?
o Property Type – There are different types of properties or homes like Single Family, Condo, Land, Muli-Family. And the rates for each of these are different as well.
o Loan Type – Are you doing a portfolio loan? A Conventional Loan? A VA loan? A USDA Loan? An FHA loan? Again, there are a lot of types of loans.
On top of this Mortgage interest rates vary from lender to lender, and so do fees such as closing costs and discount points. Which is why it is important to shop around, but to do it quickly. All mortgage applications made within a 45-day window will count as just one credit inquiry.
