How Are Mortgage Rates Determined?

It's impossible to find accurate mortgage rates until all factors of your transaction have been considered. Mortgage Lenders have all implemented risk-based pricing to determine mortgage rates for each individual borrower. Actual mortgage rates will take into consideration a host of factors from credit scores, down payment, property type, occupancy, loan purpose, etc. Your actual mortgage rates will be decided by the sum of the risk of default that all the characteristics of your mortgage transaction represents to the investor.

Don't waste your time shopping for  that may be misleading or "pie in the sky". Instead, find the right mortgage lender that will provide you a transparent transaction without surprises and will address all your questions and concerns.

Once we've established all the parameters of your transaction, you will be provided a written estimate detailing your rate, payment, closing costs and cash necessary to close the transaction. I'll help you understand the relationship between mortgage rates and closing costs, so you can make a smart borrowing decision for you and your family.

What is a "rate lock period"?

A rate lock is a lender's commitment to guarantee mortgage rates rate for you for a specified period of time while your application is processed, approved and closed. This protects you from mortgage rates going higher during your loan process until your closing date. Mortgage rates are typically available with lock periods of 15, 30, 45 and 60 days.

A rate lock period can vary in length, and longer ones usually cost more. A lender will agree to "hold" your interest rate and points for a longer period, say 60 days, but in exchange the  mortgage rates and maybe discount points are higher than with a shorter rate lock period, for example 30 days.

There are other ways besides opting for a shorter rate lock period to get lower mortgage rates. Sometimes, a larger down payment will result in lower mortgage rates than a smaller one. That's because you're starting out with more equity and there's less risk to the lender of default.
 

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