Why Is My Mortgage Rate On My New Loan So High?

In short risk-based pricing, the higher the risk the lender incurs the higher the mortgage rate you will be quoted on the new mortgage. This  is especially true with conventional mortgages, not so much on the FHA variety. FHA unlike conventional loans does not discriminate to the degree conventional does based upon credit score.

Following credit score ranges are indicative of  risk-based pricing on conventional loans…

620- 639 – highest mortgage rate/ pricing

640-679-  higher mortgage rates and pricing although not as high  as a score between 620-639

680- 700- pricing continues to improve as does mortgage rate

700-725- substantially  lower priced mortgage

740-760- best priced mortgage rate and/or cost

The other factor influencing mortgage rate besides credit score is of course loan-to-value. The higher the loan-to-value, yep  you guessed right, the higher the interest rate. The  lowest and best possible mortgage rates and terms  are awarded to consumers whose credit scores were 740 or higher and have it least 30% equity in their home on single-family primary residence transactions. That’s  not to say  if you don’t meet that criteria you will not get a competitive interest rate,  but expect the pricing to be different than if you met the major linchpin criteria.

If  You have a mortgage scenario we can give you an accurate rate quote on, send us your loan data, we will respond fast with accurate rates and terms.

 

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