How Interest Rates Are Determined

Ever wonder how rates are determined? Below are a few things: • The cost to get a better rate increases by .75% if your down payment is less than 25% on a condo. • Type of Loan: Rates differ for VA, FHA and USDA loans • Type of Borrower: If your credit scores are higher your rate will be better • Purchase or Refinance: If you are purchasing a new place, the rate is better by .5% (This is applicable to some lenders that are currently running a special pricing on purchases). • Extended Locks: If you lock in a rate, there is an increase to the cost if you do a 45 day or longer. • Timing: And last but not least, the day you lock in plays a key part to the rate. You may lock in one day and the next day the rate may either go up or down. It’s a daily (and sometimes hourly) gamble. Remember these items when you wonder why your rate is different from someone else’s rate.