Many Things Affect “The Rate:” Fico; LTV; 80/10/10; Condo vs. SFR
We have a borrower with a 703 FICO bidding on condos with the intention of using 80/10/10 (1st and 2nd combo) financing. He needs a high balance loan too.
There are four factors that increase this borrower’s rate (with ALL lenders):
1. Property type (condo vs. SFR): 3/4 point
2. FICO (703 vs. 740+): 1 point
3. Subordinate Financing (80/10/10 structure): 1 point
4. High Balance Loan (over $417,000): 1/4 to 1/2 point
All these factors combined increase the borrower’s rate by as much as 1/3 to 1/2 percent.
It is extremely important for borrowers to understand all these factors when they are shopping or comparing interest rates.
If a borrower just asks “what’s the rate” without conveying all these factors, he could be misquoted by as much as 1/2 percent.
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