• 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 factors that determine your loan fees

January 5, 2017 by Scott Sheldon

Share on Facebook Share on Twitter Share on Pinterest Share on LinkedIn Share on Email
why your mortgage goals why not happen

Costs to secure your financing are a big factor when it comes time to getting a mortgage. Knowing why your loan costs (X) dollars is critical in being able to better understand how lenders price loans in the marketplace. This is what you need to know…

All loans have fees. All fees are paid for by someone. You can have the perfect loan, completely clean, and there will still be fees. The old saying that there is no such thing as a free lunch remains. That being said, there are two situations where you might not pay all closing costs. The first way is for a seller to credit the closings costs when you purchase your home. The second is to select an interest rate that generates an overage/credit which is applied towards your loan fees. For the purpose of this discussion we are going to be focusing on factors that determine your interest rate and any points associated with that rate.

Two factors that determine your loan fees above anything else is your loan-to-value (LTV) and your credit score. Your loan-to-value (LTV) is the difference between the loan amount you are looking for and the value of your home. Your credit score is particularly important to how your loan is priced because it determines the risk associated with your loan. The following things play out in terms of how your loan is priced:

  • Higher Loan-to-Value (LTV) loans – loan adjustments start happening at 65% LTV in increments of 5% all the way up to 95% LTV on Conventional loans. For example, if you’re looking for a Conventional mortgage and you have 20% equity in the home (80% LTV), your loan will be priced worse than someone who has 30% equity/70% LTV.
  • Credit – your credit score is the barometer for the lender to use as a gauge of future risk potential for payment default. The higher your credit score, the less likely you are to default, and the less risk the lender assumes by granting you that mortgage. Credit scores breakdown like this:
    • 740+ excellent,
    • 720-739 great,
    • 700-719 good,
    • 680-699 fair,
    • 620-679 poor.
  • Occupancy – if the property you are looking to purchase is a second home or a rental property, you might end up paying an additional pricing adjustment in the origination of your mortgage loan. Rental properties are especially known for this pricing adjustment. This change can influence an interest rate by as much as .375 when compared to a primary home loan.
  • Property Type – if your property is a condominium and/or a multifamily property, you can generally expect to pay more. Specifically, this is because both types of properties contain more risk to both Fannie Mae and Freddie Mac than a single family home. Condominiums have rules and regulations/limitations that single-family homes do not. A multi-family property, such as the duplex, is more risky because there is another unit involved and more potential liability when compared to a single-family home.

If you are looking for a mortgage with a high loan-to-value and a great credit score such as a 95% financing…
Then you can expect to be paying interest rate .375-.5 more than what you might see advertised online or in print media.

If you are financing a triplex as either an owner or a non-owner-occupied transaction…
Then, if the property is a primary home, you can expect to pay about .5% in the form of a discount point based on the rate chosen. If you will be renting your property out for investment purposes, you can expect to pay as much as .5% more in rate with up to one discount point based on the rate chosen.

The moral of the story is that not all mortgage rates and pricing are equal to one another. If you are pricing out a loan with a lender and your scenario falls into any one or more of the intricacies outlined in this post, you can expect to be paying more for the type of financing in which you are seeking based on these characteristics.

Looking to finance a unique home? Begin by getting free quote online now.

Related Mortgage Advice from Scott Sheldon

  • how to make your mortgage fit the box
    Make your credit fit the mortgage box

    If you have some credit challenges preventing you from getting mortgage with competitive rates and…

  • Little lending nuances to get a mortgage
    How to figure out closing costs on a mortgage

    Closing costs are a factor you must account for consider when taking out a mortgage…

  • Does Improving Your Credit Score For A Mortgage Pencil Out?
    Does Improving Your Credit Score For A Mortgage Pencil Out?

    Credit is the biggest hot button topic in mortgage lending by far. Most would probably…

  • 2 Most Crucial Factors For Securing A Low Mortgage Rate

    It's not surprising interest rates are on the rise as the fed has committed to…

Filed Under: Economic News, First Time Home Buyers, Interest Rates, Loan Programs, Loan Qualifying, Popular, Pre-Approval Tagged With: BAD CREDIT MORTGAGE, buying a house, home buying, home loan refinance, mortgage comparison shopping, mortgage rate quote, preapproval to buy a home, SONOMA COUNTY LOANS

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