Somewhere
between 0.25% and 17%.
There is no "Rate"
that is the one number on which all programs are based. Most programs
are loosely based on the Yield of the 10-year T-bond. However, I can be
more helpful than that:
All
residential loans are primarily based on...
LTV
- Loan to Value. The Ratio of equity you have in your home.
If you have a home worth $200,000 and owe $200,000 (e.g. 100% financing),
if problems occur, you'd be more tempted to just hand the keys back and
be done. If you owe only $50,000 on that home, the bank is pretty certain
you're not going to walk away from your $150,000 in equity ($200,000-$50,000,
for an LTV of 25%). The closer you get to 100% (or over that) the higher
the rates.
Credit Score. Your FICO
Score tells the bank how you manage your finances. In addition
to the score, banks also look heavily at your housing obligations. Obviously
Bankruptcy and Foreclosure are serious, though we have many programs to
deal with those.
Ability to repay the loan.
This is your Income Documentation.
If you make $8,000 a month and all your debts total only $2200, that's
a Debt Ratio of 27.5% ($2200 / $8000)
- perfect. If you make $4,000 a month and your debts total $2800,
that's a DR of 70% - leaving too little room for error if anything should
happen to you or your income. In addition, someone that can prove their
income on their taxes is lower risk than someone who expects the bank
to simply take their word for it (stated).
Recently, there are many variations on income documentation, including
bank statement programs on which the bank will average your 12-month deposits.
Collateral. The property - you need to own it and be on title. We can work
with lease options and other situations, but as the risk goes up, so does
the rate. Risk of foreclosure varies between a Single Family Residence,
High-Rise Condo, Co-op, or multi-family housing (e.g. a 4-plex).
Terms.
If the loan is Adjustable, the bank doesn't have to commit to a
rate and hold it. Adjustables are lower than Fixed. The loan program
should match your goals. Fixed rates are higher because rain or shine,
the bank holds that rate.
These are
the most significant factors- though obviously there are many more.
Higher
Risk = Higher Rate...
Lower Risk = Lower Rate
Let's
make it simple: 5 questions, and I'll get you YOUR rate!
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