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Why You Might Not Get Advertised Interest Rates


Not Getting Advertised Interest Rates: Intro

Given the current state of the mortgage loan market and the historically low interest rates, everyone might have a preconceived notion that they are going to get the best interest rates out there for the fact that all lenders are advertising them.  As more and more potential borrowers are seeing appreciation in home values and record-low interest rates, a lot of people are finally deciding to pull the trigger on purchasing a home.  This really does make sense as individuals who can lock in a lower interest rate now, will end up paying less over the term of the loan.  For example, on a $200,000 30-year fixed-rate loan, the difference between 3.75% and 4.25% is over $20,000 for the life on the loan.  Just waiting a few more months in this market can potentially cost you THOUSANDS.  So you are ready to get the home buying process started and the first thing you will do is go and get prequalified.  Now there might be some surprise that the rate that you are quoted at significantly differs from the rates that the lender is advertising.

Now you were probably caught off-guard by the varying interest rates from what you had hoped.  Understanding why this happened will go a long way to determining if there is anything you can do to truly get the lowest rate possible.  In the following reasons you will see exactly why the interest rates weren’t what they appeared.

Interest Rate Fluctuation: Credit Score

If you interest rate is higher than you had anticipated, one of the first factors you need to look into is your FICO credit score.  This is one number that can skew interest rates rather quickly just by that 3-digit number.  Unless your credit score is 740-780+ there is no way that you are going to get the lowest possible interest rate possible, at least from a conventional loan standpoint.  Another item that is taken into consideration is your debt-to-income ratio and if you have at least 50% of your open credit used, this will affect your score negatively.  Any of these items that may affect your credit score or put doubt in the lenders mind will have them tentative to give you the best rate available.

Purchasing Vacation/Investment Home

If you aren’t purchasing a primary dwelling, chances are you are not going to get the best interest rates available.  In terms of investment and vacation properties, the banks know you are stretching out to additional mortgages and they historically aren’t too comfortable with you taking on so many loans.  You can have great credit, but in this case you will need great credit and a 20-30% down payment in order to get that best rate.

Lender Isn’t Competitive

When trying to obtain the best interest rates, it is helpful to know the type of lender you are dealing with.  Normally, if you are dealing with a corporate bank or other large lending institution, you might be hard-pressed to find the most competitive interest rates.  The large lending institutions are household name and like all other lenders they make money on a higher interest rate as well, so if everyone knows them and their applications aren’t suffering, why offer a competitive rate?  Why give someone lower interest rates when the next person in line will take whatever rate is given to them.  Some people are impressed by the name, but it is the smart person who will go to another lender for the rate they deserve.  If you are looking for a competitive lender, do your homework or shop around until you find a lender that gives you the rate you deserve.

In conclusion

When you’re in the market for a loan and want to ensure you get the best rate possible, look for the lending team that can take you there and that is us here at  We are here 24-7 to help you every step of the way so feel free to call me at 888-900-1020 or by email at  I look forward to helping you get the best possible mortgage.

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