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Adjustments when pricing your loan.

Most interest rates you see advertised are at a par rate. You have to take into account that there could be adjustments to your rate that could raise and sometimes lower your rate. These will vary from lender to lender and but are for the most part uniform.
One common hit to your rate is for having a high loan-to-value.

Another adjustment is made if you don't want to have a prepayment penalty. These vary in length of time from 0 to 5 years. Also, they come in flavors of soft and hard. If you plan on staying in your house for the prepayment phase and you are happy with the rate and payment you have, then having a loan with a prepayment penalty is not an issue. Ask your mortgage specialist for more details.

Another rate adjustment is based on your credit score. If your score is in the upper 700's, your rate will get better. If your score is in the high 600's to mid 700's, your rate will remain on par. Lastly, your rate will more than likely increase if your credit score is lower than the mid 600's. The lower your score is the higher your rate will become.

There may also be an adjustment to your interest rate if you are unable to utilize a "full doc" loan, where you are required to submit proof of your income and assets. If you need a loan that requires less documentation for any reason you will typically have to pay a higher interest rate.

Additional adjustments can include things such as Loan to value (LTV) and which state that the home is located in. Many lenders have different pricing for different states which could raise the amount of interest you pay monthly.

If you have a very low Loan to Value ratio then you can often avoid many price adjustments simply because of the equity position of the lender. If your Loan to Value ratio is 65% or less you can often avoid rate increases commonly associated with loan features such as escrow waiver, reduced documentation, or excess acreage.


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