Quoted rates have no real meaning - unless the consumer is in a position to lock prior to a market change.
All rates begin as a 'base' rate. The final rate is based on pricing adjustments determined in part by the credit of the borrower, the purpose of the loan, the loan program, etc The following list contains some of the many factors that can affect final mortgage rate pricing for the individual borrower. Please understand that each listed item is combined with all other applicable items for final pricing - making each scenario borrower specific:
Consumer Credit Score (this is where we always start).
Type of Transaction (Purchase, Refinance, Cash-out, etc.)
Type of Loan Program (Conforming, Government, etc.)
Type of Rate (Fixed, Adjustable, etc.)
Loan Term (ie: 30 year, 15 year, etc.)
Loan-To-Value (Loan Amount vs Value of Property)
Loan Amount
Taxes and Insurance Escrowed
Occupancy
Type of Property
Type of Zoning
Location of Property (programs can vary by State & zip code)
Type of Income Documentation
Type of Employment (Employee, Self Employed, Commissions, etc.)
Time on Job (or same line of work)
Customer Debt-To-Income Ratio (Income vs Expenses)
Amount of Reserves & Assets
Lock Term (ie: 30 days, 60 days, etc.)
Points or Fees Paid By Borrower (aka: pre-paid interest)
As you can imagine, a quoted or published mortgage interest rate could
not have possibly considered all the above listed factors into the single posted or quoted "Rate."
If you choose or refer somebody to a lender based solely on the "Best Rate Quote", you are very likely to get a big surprise later. Make sure you shop smart - not just rate!
Bottom Line: There is absolutely no guarantee that the published or quoted rate will be honored because the program and final rate are 'borrower specific' (Don't try to compare your rate with your neighbor ... even if they really did get a better rate - their program, fees and/or attributes may be different - with or without their immediate knowledge).
Don't gamble with something as important as your mortgage. Choose someone that's competitive, works on Your behalf, makes the process easy and that you can trust!
Q: Where can I find accurate, up-to-date mortgage rates on the web?
A: Unfortunately, there is no consumer web site or any other source with accurate up-to-date "mortgage rate" information. The only up-to-date sites are password protected wholesale bank sites ... like the ones we use to lock and fund loans
Published rates and rate quotes are inaccurate or at best ancient by the time they are read. These rates are simply an advertisement to get the borrower into the loan process with no guarantee of accuracy. Even if they were accurate at one time, conforming mortgage rates change at a moments notice. The key for consumers is to be in a position to lock with a trusted/competent mortgage professional working on their behalf.
What we do: Even with access to 'current' wholesale mortgage rates, the important thing to do as a mortgage professional is to monitor the market for indices that affect final mortgage pricing. The goal of our office is to secure the best possible program for the customer. Market indices give us a sense of direction as to whether we should "lock" today or "float" for a probable improvement in pricing.
We monitor the Fannie Mae 30-Year Mortgage-Backed Security bond and keep another eye on the stock market during the work day. As mentioned in most every edition of our FREE Market News e-letter, the very general rule of thumb is that when stocks are happy, bonds are unhappy and when bond prices decrease, mortgage rates increase and vice versa.
The real-time coupon pricing we keep on our computers is provided via a subscription/password protected service. Unfortunately, we have been unable to find a site that offers exactly what is needed to predict/review indices that affect long-term mortgage rates on any non-subscription service. For very general information and an extremely basic overview of current market conditions, consumers and real estate professionals can always watch a stock or bond ticker on CNBC, Bloomberg, etc.
Monitoring the market is not the most exciting thing to do on a daily basis. However, it is extremely important! An informed decision can save our customers thousands of dollars over the term of their mortgage - this we take seriously. We provide the extra service of monitoring the market on our customers behalf so that they can attend to the business of their own lives!
Q: Where are rates going? What affects mortgage rates? When should I lock my rate?
A: All good questions!
As a unique part of our service, State Street Mortgage actually monitors the market for our customers in an attempt to lock in-house files when most advantageous based on market conditions and proven indices - instead of always locking loans at the time of application like most lenders. We get great satisfaction in actually getting customers a better rate of interest if there is a market improvement after application.
To better inform our customers, State Street Mortgage publishes an
e-letter discussing the current market several times weekly. If you are interested in a FREE subscription to our Market News e-letter, simply send a request to
Q: What does my mortgage payment include?
A: For most homeowners, the monthly mortgage payments include three separate parts:
Principal: Repayment on the amount borrowedInterest: Payment to the mortgage holder or end lender for the amount borrowedTaxes & Insurance: Monthly payments are normally made into a special escrow account for items like hazard insurance and property taxes. This feature is sometimes optional, in which case the fees will be paid by you directly to the County Tax Assessor and property insurance company.
A fourth part may include:
Private Mortgage Insurance: Monthly payments sometimes required to maintain an insurance policy protecting the end lender when the borrowed amount is over 80% of the property's purchase or appraised value.
Q: What is the difference between a fixed-rate loan and an adjustable-rate loan?
A: A fixed-rate mortgage has an interest rate that stays the same during the life of the loan. By contrast, an adjustable-rate mortgage (ARM) interest rate changes periodically, typically in relation to an index and margin set at the time of the loan. While the monthly payments that you make with a fixed-rate mortgage are relatively stable, payments on an ARM loan will likely change. There are advantages and disadvantages to each type of mortgage. The best way to select a loan product is by discussing your overall goals with one of our State Street Mortgage specialists.
Q: How is an index and margin used in an ARM?
A: An index is an economic indicator that lenders use to set the interest rate for an ARM. Generally the interest rate that you pay is a combination of the index rate and a pre-specified margin. Three commonly used indices are the One-Year Treasury Bill, the Cost of Funds of the 11th District Federal Home Loan Bank (COFI), and the London InterBank Offering Rate (LIBOR).
Q: How do I know how much house I can afford?
A: The amount that you can borrow will depend upon your employment history, credit history, income, current savings, current debts, and the amount of down payment you are willing to make (if any). You may also be able to take advantage of special loan programs for first time buyers, gift or grant programs to purchase a home with a higher value. Feel free to visit our
Prequalification Calculator in the
Loan Center section of this website for a general idea of how much house you can afford based on general lending guidelines.
For a formal Pre-Approval please feel free to
"Apply Now" via our VeriSign(TM) secure web based application . . . or simply give us a call!
We can help you determine exactly how much you can afford and have you approved as a 'cash buyer' before you even begin looking at available properties. This way, you can place a solid offer to purchase the house that says "Home."
Q: Do I need great credit to buy a home?
A: This is a common fallacy. You don't need any specific type of credit to purchase a home. We have loans for almost every type of situation; great credit, good credit, no credit, poor credit, bad credit, etc.
Don't let your credit deter you from trying to pursue your home purchase dreams. Contact one of our mortgage specialists today to explore your purchase financing options.
Q: How much cash will I need to purchase a home?
A: The amount of cash that is necessary depends on a number of items. Generally speaking, though, you will need to supply:
Earnest Money: The deposit that is supplied when you make an offer on the houseDown Payment: A percentage of the cost of the home that is due at settlementClosing Costs: Costs associated with processing paperwork to purchase or refinance a house
We strongly advise discussing this issue directly with one of our mortgage specialists. There are many programs and options that can reduce the amount necessary for home buyers to pay out of their own pockets (ie: Gift Funds, Seller paid closing costs, etc.).
Q: What if I don't have a realtor that I'm using now?
A: This is an easy question to answer. We have many proven and trusted realtors available at your disposal. State Street Mortgage has a policy of only working with competent real estate professionals that truly have the best interest of our customers as their goal.
Talk with your State Street Mortgage specialist about matching you with the right realtor or visit the
Resources section of our web site for a complete list of recommended Realtors.
Q: What documentation do I need when I apply for a mortgage loan?
A: There are variations to all types of loan products as to what type of documentation will be required from the borrower. Your State Street Mortgage specialist will provide you with a detailed list for your specific loan program.
The following is a basic list of requirements for most of the loan products available:
Paystubs: 2 most recent showing YTD earningsSigned Federal Tax Returns: 2 most recent years 1040'sW-2's: 2 most recent yearsBank Statements: 2 most recent months ALL accountsAsset/Investment Statements: most recent ALL accounts (ie: 401k, IRA, Mutual Funds, etc.)
Q: What is a bi-weekly payment program?
A: Mortgages are typically paid once every month or 12 times a year.
A bi-weekly accelerated payment plan differs in that half of the normal payment is paid every other week, resulting in the same monthly payment. However, a bi-weekly contains 26 (52 weeks divide by two) half payments – amounting to 13 full payments each year.
That extra money applied toward the principle can do some very important things.:
Build equity 200-300% faster with no payment increases!
