Here are 12 factors that affect almost every borrower’s interest rate:

#1 – Property Type

Condos, high-rise condos and multi-unit dwellings (2 – 4 units) usually have higher interest rates associated with them, as compared to single-family dwellings.

#2 – Property Use

Investment properties have higher rates than owner-occupied properties.

#3 – Credit Scores

Credit scores significantly affect rates. A borrower with a 750 mid-score might have a rate as much as 1% lower than a borrower with a 670 mid-score.

#4 – Down Payment

The bigger the down payment, the lower the rate, in most cases.

#5 – Loan Amount

Very small loans (under $150,000 for example) can have higher rates, as can very large jumbo loans (over $3 million for example). In addition, “Low Balance” conforming loans under $484,350 will have lower rates than “High Balance” conforming loans (from $484,350 to $726,525).

#6 – Loan Type

FHA and VA rates are usually lower than conforming (Fannie/Freddie) rates, and our jumbo rates are currently the lowest of all for very strong borrowers.

#7 – Rate Lock Period

Interest rates can be “locked in” or guaranteed prior to close of escrow for 15, 30, 45 or 60 days in most cases. The longer the lock period, the higher the rate. Many lenders quote rates associated with very short 15 day lock periods, even though most escrows require longer lock periods.

#8 – Fixed Period/Loan Maturity

The longer a rate stays fixed, the higher the rate. For example, a 7/1 ARM (fixed for seven years) will usually have a lower rate than a 15-year fixed-rate loan, and a 15-year fixed-rate loan will have a lower rate than a 30-year fixed-rate loan.

#9 – 1st/2nd Combo Loans

Loans with a concurrent 2nd mortgage can have higher rates too, depending on the loan-to-value ratio.

#10 – Points/Fees

Lenders often have hidden points and fees in their quotes that they are not disclosing up front when they just quote a rate.

#11 – No Cost Refi’s

“No cost” refinances have higher rates than refinances that have fees built in. This is b/c lenders have to charge higher rates for a “no cost” loan in order to generate enough extra “commission” to be able to pay for closing costs on behalf of borrowers.

#12 – Cash Out Refi’s

When refinancing borrowers increase their loan amounts in order to pull “cash out” against their home, rates are usually higher depending on the “loan to value” ratio.