Why aren't rates posted in this web site?

We feel that it is disingenuous to list interest rates in a web site. The reason is that in order to accurately quote an interest rate we need the following information: Credit score, down payment, property value, property zip code, loan purpose, number of years, amount of money you have in your account after closing(a.k.a reserves), loan purpose, amount of liabilities(for debt ratio determination), number of units, condominium or PUD approval type, etc. There is no such thing as "30 year rate" anymore. Companies that quote rates often have out of date information or rates based on assumptions that might not exist. The difference in cost because of one point on a credit score can be as great as 1.5% of the loan amount. That's why we spend a lot of time analyzing your credit and using our credit score analyzing software to help improve your credit score- it can save you thousands of dollars, and this is done at no cost to you.

Today credit and down payment have a large impact on the rate. The table below shows what is referred to as loan level price adjustments (LLPA) that are required for all conventional loans that are sold to FNMA or Freddie Mac.  The first table shows adjustments(or add ons) that need to be made to all 30 year loans. The second table shows and additional adjustment for refinance transactions where you are pulling out over $2,000 cash from your home. Paying off a 2nd mortgage(unless the mortgage was acquired when you bought your home) makes your transaction a "cash out" regardless of whether you get any money at settlement.

Example 1: If you are buying a home and you put 20% down and have a credit score of 700 you will have to pay .75% of your loan amount as an additional fee. For a $200,000 loan that equates to $1,500. Now for the same home, lets say your credit score is 660. At 660 you would have to pay 2.5%. That is $5,000.

 Example 2: Buying a home with 15% down. Your score is 679. The add on cost would be 2.25%. If your score can be increased one point, your add on would be 1.0%, a savings of 1.25%. For a $200,000 this additional cost would be $2,500, or conversely a savings of $2,500 if we can work on your credit score.

Example 3: You are doing a cash out refinance. Your property has 20% equity and you have a 690 credit score. The first add on from the first table is 1.5%(your score is between 680 and 700). Now you also have to add the cost from the cash out refinance table which is 1.375%. The total add on costs is 2.875%. On a $200,000 the cost is $5,750.

As you can see, the combination of credit score and down payment can have a large impact on rate. If you score is over 740 you get the best rates, and the negative .25% shown in the table results in a credit for the combination of high credit score and large down payment or property equity in the case of a refinance.

While the examples above show the loan pricing adjustments being added as a cost, you can usually absorb some of these costs, which can also be referred to as points, into the rate. Typically on a 30 year loan, one additional percent or one point will increase the cost of the rate by .25%. In other words, if a borrower wants a "no point" rate and there are loan level price adjustments that need to be absorbed, they will not be getting the best rate available.  

It may be unusual for a lender to share with the public how the now government agencies who purchase the vast majority home loans determine rates. The only reason we share this information with you is that you can get the sense of two of the factors that go into determining your rate. Bottom line, spend 5 minutes with a loan professional and we can help determine how to structure the transaction so that we can help you obtain the best possible rate for your personal situation. To get started, give us a call at 215 355-5626 or request information below.