January 13, 2014

Excellent Credit Score? Expect Lower Mortgage Rates

For conventional loans, Fannie Mae and Freddie Mac have a series of adjustments that are typically charged to the end lender and then passed along to the borrower. These are called loan level price adjustments and are charged for a variety of reasons. For some items, there is an increase to the interest rate; and for others, there is a decrease to the interest rate.

As an example, if you have a credit score of 740 and a loan to value of 60% or less, you will qualify for the lowest interest rates offered through lenders that sell loans to Fannie Mae and Freddie Mac, which is just about every mortgage lender in the United States. However, if you have a credit score less than 680 and a loan to value ratio above 80%, you can expect to pay at least .5% more in rate than the borrower with the higher credit scores and a 40% equity position.

In addition, there are loan level price adjustments for property types. For a condominium, rates are typically .25% higher if you are putting down less than 25%. Multi unit properties and investment properties typically carry higher rates as well.

Contact United Home Loans below to help you navigate the interest rate maze. We will explain all costs, adjustments and what mortgage loan programs might work best for your situation.


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