Hey, Kyle here with WintheHouseYouLove.com in this video,
I'm going to show you three tools.
You can use to estimate your interest rate before you apply for a mortgage.
And so you can have peace of mind knowing that you got the best possible interest
rate instead of getting ripped off or that feeling of getting ripped off.
When you don't really know, if the interest rate you got is good and
mortgage rates can be pretty secretive.
Lenders usually don't show you their daily rate often
And when you do see rates online, they're are often.
Too good to be true.
There's a ton of companies that dangled low rates to entice
you, and then you apply and you find out that's not true at all.
And it makes sense why lenders don't often show the rates up front it's
because mortgage interest rates depend on a bunch of different
factors based on your situation.
For instance you have some external factors.
So you have things like what's happening currently in the market.
So what's happening with stocks, what's happening with bonds.
What's happening just in the economy in general, what's happening with inflation.
So as inflation increases, so do mortgage interest rates
And then also the lender that you apply with each lender is going
to have a different structure of what their rates look like.
So you might apply with one lender who has lower rates than another lender
who might have slightly higher rates.
Also, based on your situation, things like your credit score, the lower your credit
score, the higher interest rate, you're going to get the higher credit score.
You have the lower interest rate, you're going to get your loan to value ratio.
So this is things like how much money did you put down that can change your interest rate
The type of loan is a conventional, FHA, VA, and USDA, the loan
term, is it a 15 year loan?
Is it a 30 year loan?
The occupancy.
So you're going to live in the home or it's going to be an
investment or a second home.
And then if it's a fixed versus an adjustable rate.
So there's all these different things that impact your mortgage
interest rate, which makes sense.
Why lenders?
Normally, aren't going to show those.
The problem is since mortgage rates are tailored to you and lenders don't show you
them often, it's difficult to estimate.
Okay, what would my interest rate be?
What's a good interest rate because otherwise you get a rate
from somebody and you're like, I don't even know if this is good.
Am I getting ripped off as this is what I should be getting.
And so I want to introduce you to a couple of tools to help
clarify this a little bit.
First of all, this link is going to be in description.
This is Freddie Mac's mortgage interest rates survey.
And so what they do is they serve.
Lenders to see what the average rates are on conforming conventional loans.
The only issue with this is it's done as a survey.
So it's basically self-reported by lenders and it tends to lag behind
because it's usually done once a week.
And so the issue here is it's not always super accurate.
However, these are most of the time, the rates that you're going to see
in the news, when they're talking about interest rates in the news, they
usually use this Freddie Mac survey so we can see right now it's 3.05.
For 15 years, 2.3 and for a five, one arm it's 2.37.
So this is an okay indicator, but a better one for you.
Is I have one on my website.
If you go to when the house you'd love.com/rates with this one, then do.
And show you the rates, not just for conventional loans, but for other
different types of loans as well.
What I like about this tool and the reason why I've used this kind of data is because
it doesn't pull just based off the survey once a week, it's actually updating based
on actual mortgage rate locks that are happening, that are actually being given
to clients from a variety of lenders.
And then you can see how all of this is being put together on my website.
Again, that's when the house you love.com/reeds, and the
link is in the description.
If you want to look.
But we can see, this is quite a bit different.
3.05 versus 3.3, four or 5%.
And what I've found is pulling this data tends to be more accurate
than just the Freddie Mac numbers.
You also have jumbo loans in here, FHA VA, USDA, and
conforming for a 15 year as well.
And here you also have a chart for with the interest rate will look
like depending on your FICO score and how much you're putting down.
LTB is just loan to value.
It's the opposite of your down payment?
So 5% down is a 95% LTV, 10% down is a 90% LTV.
And then it also shows the trend of rates as well.
And you can see these with the different types of loans, and
we can look at a bigger scale.
If we want to.
So this is going to be a really good tool here to get an estimate of, okay.
If I'm getting a, let's say a 30 year conventional loan, which for
most people, that's going to be true.
You're going to be expecting around 3.34.
At the moment.
Now, if we want to dig a little bit deeper, we can go into the
CFPB rate checker tool and Lincolns and description for this as well.
What I really like about this is it allows you to put in your state and your
unique situation, and it's going to show you on average, what other people are
seeing in your area for interest rates.
First we choose our credit score range.
So let's say we're at a seven 40 to 7 59, and let's say,
we're looking in, we will go to.
Let's say California for our home price.
Let's put in a $600,000 for now.
And let's say we're doing 5% down and we'll choose just a general county here.
Of course, it's not going to work while we're doing this as it.
Let's see.
There we go.
Let's say we're doing 5% down.
So $30,000 down fixed rate 30 year, we'll do conforming jumbo.
And so showing us that in California, most lenders in our data are
offering rates at or below 3.2, 5%.
So then this is a really good estimate that you can use in online calculators
to see what your payment might be.
But then also, if you do apply for a mortgage and you're seeing maybe
you have this exact situation, but you're getting a quote for 3.625.
This might be interesting to give you a note of, okay.
Maybe I need to shop with a couple more lenders to see if I can get somewhere
closer to this 3.2, 5% that most people.
Or I can ask my loan officer, could you help me understand why is this higher
than maybe what the average would be for people in this unique situation?
And when you do talk to your loan officer, keep in mind that the rate that.
Isn't the only rate that you have the option of usually loan officers are
going to show you one rate, but there are actually rate charts on the back and you
can actually choose your interest rate.
So this is how this works.
Let's run through a quick example of, let's say we're buying a
$500,000 home with $25,000 down.
So for $475,000, and if this isn't your situation, that's perfectly fine.
This will still apply to you.
When I was talking about interest rates, it's not just one number that you get.
You're actually, you actually have a rate chart.
So there's various different rates and they all have either
a point cost or a credit.
Okay.
And so think of points like prepaid interest.
It doesn't work exactly like that.
But think of it very similarly, where you can get a lower
interest rate and pay money.
Or you can get a higher interest rate and potentially get credit
towards your closing costs.
So for instance, in this scenario, what most loan officers would
do is they would see, okay, 3.2% interest rate is the closest to
$0 in points, $0 in extra costs.
This is usually what a loan officer might show to a client and say,
we're going to offer you 3.2%, but.
You could get a rate of 3.15% for $1,500, or you can get a rate of 3% for $4,200.
So see, you're, we're paying down the interest rate with what are called points.
So everything red here is.
And then here in the green, these are credits.
These would actually offset your closing costs.
So in the same way, if a loan officer says your interest rates 3.2%, if you want
some extra credit, you could talk to that loan officer and say, actually, could we
look at a higher interest rate so we could get credit towards our closing costs?
So 3.5% might give us 5,000, 50, $200 in credit.
So if our total cash to close the money that we need for
closing, let's say it's $40,000.
We could reduce that down to $3,500.
If we increase the rate and receive a credit.
Now this is all going to depend on what you want to do,
how long you're in the home.
And you probably want to talk with a loan officer to get a cost analysis.
Long-term to see what these differences look like, but especially with.
From 3% to 3.5% is a difference in $130 per month in the
principal and interest payment.
So something, when we want to keep in mind, if we're going to increase the
the rates, it's also going to increase the payment that we have as well.
And then something interesting to notice that.
PMI when you do have it on loan is going to stay consistent
no matter what the rate is.
So the PMI isn't based on the interest rate, it's always going to be the same.
So when you are looking this, when you're applying for loans, keep all these
things in mind, use a CFPB rate checker.
Look at average rates to see, is this a good deal?
Is this on par with what you should be expecting?
And if not, that's when you want to talk to a loan officer about, Hey, can
you help me understand why this is.
And then also ask your loan officer, can you show me a sample of a couple of
different rates, some of the points, some of the credit that you way you can see
which one's going to work best for you.
And if you want to connect with a helpful loan officer, who's going to
help guide you through this process.
You can go to when the house you love.com/referral, and I
connect you with a helpful loner.