Interest Rates – One Size DOES NOT Fit All
“What are the current interest rates?” This is a very common question from real estate agents and buyers. Answering the question of what’s today’s interest rate is as difficult to answer as “What’s the price of a four bedroom home in the Atlanta area?” The answer to both of these questions is, “It depends!” There are many factors that impact both of these numbers.
The price of four bedroom homes in the Atlanta market area ranges wildly based on location, actual size of the home, amenities of the subdivision, quality of construction and construction materials, and a very long list of other factors.
Interest rates also vary wildly based on the individual borrower’s credit score, loan to value, borrower’s assets, borrower’s income, borrower’s debts and loan options such as waiving escrows, and if the property is a condo.
Interest rates are like ice cream. The price of a plain vanilla cone is one price, but if you add hot fudge, nuts, fruit and cherries, the cost goes up!
The rate we publish each day on the Metro Brokers Financial website is a “Market Indicator” rate. It’s never the lowest rate available that day or the highest rate, it’s a fair market indicator rate. If we did post the lowest rate available, some would view this as “bait and switch”, since so few borrowers really do want a 30 year fixed rate at par and have a 720 or higher credit score and do not want to waive escrows.
Varying borrower differences (toppings) increase the interest rate!
While we don’t publish the lowest rate, our competitors DO, and this teaser rate lures customers and they end up getting the “bait and switch”.
The rate is based on so many factors that vary from borrower to borrower and loan type to loan type that it’s always best to get a rate quote from your Metro Brokers Financial loan officer for each individual borrower and their specific needs.
Many borrowers don’t have the funds to cover their down payment and closing costs. In today’s limited housing inventory market place, many sellers are unwilling to pay closing costs. Buyers need to know that they can have the lender fund their closing costs by adding the price into the rate. A slightly higher rate can allow a borrower with limited funds to be able to buy a home where the seller is unwilling to pay closing costs.
The moral of the story? Don’t take an interest rate at face value. Always have your buyer pre-qualified before assuming they’ll qualify for the published rate.