• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer

Sonoma County Mortgages

Contact Us About Mortgage Financing

All financing provided by New American Funding

(707) 217-4000 | Prequalify Now

Search Sonoma County Mortgages

  • Home
  • Purchase
    • How Much Down Payment To Buy A Home?
    • How Much Income You Need To Buy A Home
    • How Much Should I Save For Buying A Home?
      • How Rates Affect Payment
    • No PMI Mortgages
    • FHA Loans
    • Sonoma County Disaster Loans
    • Jumbo Loans
  • Refinance
    • Mortgage Rates
    • Does It Make Sense To Refinance?
      • Get Your Refi Paperwork In Order
    • How To Pay Off Your Loan Faster
    • How To Remove PMI
    • How Lenders Price & Quote Loans
  • Loan Programs
  • Payment Calculator
    • Mortgage Affordability Calculator
  • Blog
  • Videos
  • About SCM
  • About Scott Sheldon

Primary Sidebar

Sonoma County Mortgages is a part of New American Funding

New American Funding - NMLS #6606

Get Your Latest Rate Quote Now!

The Way Lenders Price & Quote Mortgages

August 12, 2015 by Scott Sheldon

Share on Facebook Share on Twitter Share on Pinterest Share on LinkedIn Share on Email

Here is why your interest and fees may be different than you what you saw in the news. How rates and risk based pricing affects your loan….

Mortgage Ads & The Media

When you see ultra attractive loan offers or hear the media touting the latest development in interest rates, take it with a grain of salt. Lenders price your loan with adjustments commensurate with the risk Fannie Max & Freddie Mac set. Always remember to read the fine print.

Here are most common margin adjustments lenders, banks, brokers and use to provide a rate and fee offer:

  • your specific middle credit score
  • your loan to value
  • your loan size
  • your loan term
  • your loan product
  • your lock time frame
  • your occupancy
  • your purpose
  • your property type

When you go to apply for a mortgage or request a rate quote, the mortgage company’s pricing and rate will be reflective of these nine pricing adjustments.

The more risky your loan is the more loan level pricing adjustments come into play (layers of cost as a function of lender’s risk) which can make the pricing and rate much different than the national average mortgage rate you’ll see or hear about in the news.

For example on Freddie Mac.com, the average national 30 year fixed rate mortgage as of August 8, is 3.91% with .6 in discount points. Let’s say for example your loan scenario looks like this:

  • your credit score is 700
  • your loan-to-value is 80%
  • your loan size is 418,000
  •  conforming 30 year fixed rate
  •  30 day rate lock
  •  $40,000 cash out
  •  single-family home
  • primary residence

The following pricing adjustments would apply:

  • credit score > 760
  • 80% loan to value
  • loan amount > 417,000
  • cash out

It would not be uncommon to see a scenario like this containing a rate at 4.125% with .5% in discount points for example.

* It is always optimal to review mortgage rates based on the national average rather than comparing countless lenders. The reason being is because the national average rate from Freddie Mac.com already takes into consideration the overall aggregated mortgage market in terms of rates and points anyway.

How Mortgage Pricing Moves With Economic News

Mortgage bond prices move in the form of basis points.

Quick lesson in finance- 100 basis points equals 1%.

Certain economic factors change the direction of stocks and bonds, things like domestic and worldly happenings and more specific indicators e.g. jobs report, retail sales data, consumer confidence, Federal Reserve meetings to name a few (there are many more).

On any given day the market is negative, unchanged or improved in the form of basis points. If you have your eyes on 4% mortgage with no points on a 30yr fixed rate after the lender takes into consideration all of pricing adjustments, and you’re hoping for something better by floating your interest rate i.e. not locking in, and the market worsens 25 basis points, your 4% rate would still be available, but it would come at a cost of 25 basis points of your loan amount. If you’re looking at a loan of $400,000 that’s $1000 in the form of a discount point based solely on market forces. Such a change would come in a closing item in the form of discount point.

If the market improves by .25% and you’re looking at that 4% interest rate, now the 25 basis point is a credit towards fees.

The higher the rate you choose to pay the lower the fee tied to that specific rate chosen or credit towards fees applies. Conversely, the lower the rate you select, called no points, where no lender credit is awarded, but here is not also no points paid either, is a very popular middle of the road option as many opt for.

Market Timing Is Hindsight

There no such thing as a nonprofit mortgage lender. All mortgage companies regardless of brokers, banks, credit unions any financial entity that offers mortgage loans have a profit motive.

Securing the lowest possible interest rate is impossible because you’ll never be able to borrow money at the lender’s cost of funds, ever. Moreover, there is no way to time the market, all you and your lender can do is make an educated decision about the rate and the pricing tied to your mortgage transaction in lockstep with the market.

Generally, mortgage companies are going to be priced out in close proximity to each other on any given day as lenders have to be competitive just to be in business as a profitable entities, expect .125 to .25% in rate amongst loan providers. It is up you as an informed consumer to choose the mortgage professional/company whom you feel will best give you a competitive rate and pricing for your specific scenario.

The number one separator between companies/loan originators that goes far beyond rate and pricing is service. Unless you have the capacity to watch rates, pricing trends and compare various lenders daily leave it to professional. Working with an experienced mortgage loan originator who has their finger on the pulse of what’s going on with mortgage rates on any given day can properly advise you about locking in particular rate of interest and pricing, you desire is a safe bet.

Looking for a loan? Get a free online quote now…

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Related Mortgage Advice from Scott Sheldon

  • Refinancing Now Takes Longer Than 30 Days

    Homeowners refinancing their mortgages will now come to learn the refinance process is taking longer…

  • The Truth About The Media’s Reporting On Interest Rates
    The Truth About The Media's Reporting On Interest Rates

    Have ever heard about mortgage rates in the media only to then call a mortgage…

  • ideal mortgage loan scenario
    The ideal mortgage candidate

    When it comes time to purchase or refinance a home lenders are look for a…

  • 2017 mortgage rate environment
    The 2017 Mortgage Rate Environment

    The mortgage industry has gone through some changes in the last three months. If you…

Filed Under: Loan Qualifying Tagged With: cash out refinance, home buying in Sonoma County, qualifying for a mortgage, sonoma county refinancing

Get Sonoma County Mortgages News and Updates in Your Inbox

Footer

SCM on Facebook

SonomaCountyMortgages.com

Connect on Facebook

SCM On Instagram

Follow Sonoma County Mortgages on Instagram

Follow on Instagram

SCM on Zillow

Zillow Reviews for Scott Sheldon, New American Funding

See Reviews on Zillow

Location & Contact

Sonoma County Mortgages and New American Funding are an Equal Opportunity Housing Lender

Scott Sheldon, Senior Loan Officer
NMLS ID# 287389
2455 Bennett Valley Road C107
Santa Rosa, CA 95405
1-707-217-4000
View SCM Map | Email Us!

Map of Sonoma County Mortgages New American Financing Office

View Map on Google

Copyright 2010–2023 SonomaCountyMortgages.com · About Us · Sonoma County Loans · Privacy Policy · Terms Of Use · Legal · Site Map

NMLS Consumer Access © New American Funding. All rights Reserved. NMLS ID#6606.
Corporate Office 14511 Myford Road, Suite 100, Tustin, CA 92780. We at New American Funding take great pride in our customer service and make it our number one priority. We encourage you to contact us for complaint resolution or any post-closing questions you may have regarding the servicing of your loan. We strive to have your experience with New American Funding a stellar one. In the rare case that our service did not meet your expectations, please call our customer care hotline at 1-800- 450-2010, ext. 7100 or you may contact us by email customerservice@nafinc.com. Please leave a detailed message and we will follow up with you no later than the end of the next business day. If you are using a screen reader or other auxiliary aid and are having problems using this website, please call 800-450-2010 Ext. 7100 for assistance.

State Licensing (Opens in New Window) | Privacy (Opens in New Window)
Terms of Use (Opens in New Window) | Electronic Consent Agreement (Opens in New Window)
Opens in new window Opens an external site Opens an external site in a new window