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How do mortgage companies determine your interest rate?
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"your" interest rate can be determined by a number of factors. Most commonly your credit worthiness, i.e. your credit score.
"the" interest rate is determined by the prime lending rate.
If you have good credit you will get "the" rate. If your credit is not so good you will get "the" rate plus X%. "the" plus X% = "your" rate.
When I bought my first house I got "the" rate. I had good credit and 20% down.
The prime lending rate and current mortgage rates are widely available on investing web sites and on most home pages of lending institutions. If you have good credit you will get a pretty good ballpark figure as to what your interest rate will be.Brian -
I am very thankful to you for giving me your valuable time for answer this question.Originally posted by bjl584 View PostComment
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the offer on interest rate is very subjective. With interest rates so low, banks and brokers are seeking as much 'spread' as possible. That is the difference between what banks borrow from their central agency and what they collect from clients. The higher your score [over 800] the better you can negotiate a rate by checking the published rates in newspapers and on-line, having your FICO score, agreeing to carry many different products like car loan, affiliated investment program, savings account, chequing account, automatic deposit and CCs. It's acceptable to ask for a lower rate than the lender offers if based on fact and supported by documentation confirming employment and annual salary, house price and salary ratio, 20% DP, credit to income ratio etc.Comment
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