Advertisements all over the internet say that you can get a mortgage for an interest rate in the 3.8% range. It that so? It is for some buyers but not for others. The average current rates are 4.18% for a 30 year at a fixed rate and 3.38% for a 15 year fixed rate. For those that don’t know:
Fixed Rate – is a mortgage rate that is “fixed” or set at a specific rate for a specific period of time other wise known as the “term”.
Variable Rate – is a mortgage rate that “floats” or changes as the prime interest rate fluctuates.
The reason that not all consumers might be able to get those really low rates have to do with your FICO or credit score, if you pay points or the type of property you are buying. Mortgage lenders will review your credit, employment and history and determine how much of a risk they perceive you to be and they will then adjust their rates.
For instance if your FICO score is between 740-850 or higher you could get that 3.38% rate but if your FICO score is in the 620-639 range you might be able to get a rate of 5.5%. If your credit score isn’t as high as you would like to can buy down the rate by paying points. A point is 1% of the loan.
Condominiums and multi family properties will be a higher interest rate than a single family house and if you do not intend to live in the house but it is an investment that will also be a higher rate.
I am not a mortgage broker or banker and this is just an overview of some of the things to look out for when shopping for a mortgage. Please consult a mortgage professional for further information.