Why Interest Rates Can Vary

500079742.jpg

Getting a loan in the olden day was easier since it did not involve a lot of considerations. No questions asked. Just “boom”, there’s your answer. It certainly made interest rate comparison much easier.  However it is not that easy today.

For instance if you have two customers buying identical homes. Each customer can be quoted completely different interest rates for different reasons. Despite them having similar credit score ratings. This is majorly possible because of being assessed with different cost additions and being given different discounts.

There may be a difference in the loans that is one may be taking a federal housing loan while the other may only be taking a conventional loan. A lender has no additions or discounts added to it if the FHA loan has a credit score of 620. However, when one has that has a credit score of below 620, the pricing differential will be bigger. When it comes to a conventional loan, the higher the credit rating, the higher the discounts. A client with 720 credit score, has a higher discount than the one with a credit score of 620.  Nowadays, a lender has to understand how to read a chart in order to be able to place a conventional loan quote.

Another big factor is loan size. Again, you’ll probably pick up a discount if you’ve got a healthy sized loan. However, if you’re financing a smaller amount, it may cost you a bit.  Know these rates here!

Another big difference in interest rates available is the buyer’s intention for the property.   An investment property tends to give poorer rate as compared to if the property was used as a second home or residence.   It is often very unlikely for an individual to stop paying for a personal use property from an underwritersperspective. Grab some related loan information at http://www.encyclopedia.com/topic/loan.aspx.

The type of loan taken is also a major determinant factor.  Conventional rates are different than FHA rates, which are different than VA rates, which are different than Rural Housing rates.  Despite the fact that the two people may be buying the same house. Of course, you can’t get a VA loan if you’re not a veteran or the spouse of one buying a loan. And you can’t get a rural housing loan if you’re in the wrong zip code and make too much money. So, at times, your choices are limited for you.

The payments may differ even when the interest rates at www.emetropolitan.com are the same. For those mortgages that require insurance, the monthly premiums also differ.

I guess the best advice is to be patient when considering loan programs and payments. Make sure you explore all your options.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s