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Understanding why you get a different interest rate from what was advertised

Your interest rate is not what you see online…

While you must have been exposed to tons of mouthwatering mortgage advertisements on various forms of media, it would surprise you to find that these adverts are not as rosy as they appear. The explanation below helps clarify the situation.

Exploring the process of interest rates

For a proper insight into the processes of interest rates, we must begin from the foundation. Mortgage interest rates are unstable and will change every day by increasing or decreasing. You, Freddie Mac, offers adequate insight into mortgage interest rates with consistent weekly reports on American rates for widely held mortgages following a study of financiers from all over the nation. When you get information on interest rates, it is most likely about the aforementioned category of rates and news on such interest rates often come when there is a dramatic decline.

Mortgage banks desire your business

Most mortgage companies have sites and platforms where they advertise their own interests. While these ads might seem very appealing and suitable, you may be wondering why you get a different interest rate from what is advertised. The reason is that the ads are merely an average. For an insight into the actual rates, it is imperative that you look closely at the contract to know what it entails.

Mortgage banks provide numerous interest rates with some being favorable and some being expensive. It is advisable that you refrain from taking a big leap.


There 6 following factors will influence the rate you get:

  • Credit Score: Having a great credit score is a major plus when it comes to getting a favorable interest rate. Credit score offers insight into your financial credibility. Expectedly, having an high credit score will trigger a reduced interest rate. This is applicable if your credit score is not exactly excellent but merely okay. Conversely, having poor credit scores will attract unfavorable interest rates. This is because creditor see you as not being financially credible.


  • Initial downpayment: While most people are oblivious to this, making down payment is a great way to influence a favorable interest rate. When you offer some money, the creditor perceives you as being more financially credible. This effect can be likened to having a solid collateral for a loan. When you offer as much as one quarter of the loan, you will dispel any form of doubt while increasing your chances of having a favorable interest rate in cases where you don’t have that much for a down payment, you can offer PMI as well. Nonetheless, there are chances that you will get a favorable loan for less than 20%. It all comes down to the creditor.


  • Kind of Assets: the kind of asset is also a major consideration that determines the kind of interest rate you get. For instance, a building complex would attract a little more interest than detached houses. Even the difference between buying a house or condo can effect your interest rate!


  • Diverse Product: factors that may influence the interest rate includes the mortgage product. Mortgage product comes with diverse offers, stipulations and interest rates. More so, when you are seeing low interest rate it doesn’t mean that mortgage program is beneficial for you. Sometimes, it is better to get a bit higher interest rate and better program for a long term that’s why it’s better to select a reliable good mortgage banker and provide all details about your goal and overall financial situation. This way you can get a better service and right program for you. 


  • Period of loan: just like you guessed, loans that last for brief periods will attract much lower interest rates. It is expected that the interest rates rises commensurately with the timeframe. The growing pervasiveness of adjustable-rate mortgage is because they offer very minimal mortgage.


  • Amount of loan: The logic behind this is very simple. If you request big loans, you will attract a higher interest rate. We recommend sizable initial payments for better interest rates.


All of the abovementioned considerations will influence the interact rate on your loans. When any of the aforementioned variables are in play, it is expected that there a will be a hike in your interest rates as well.

Find the actual rate of a loan with APR

For those who are unable to identify a loan that is well-suited to them, it is best that you use Annual Percentage Rate. APR numbers offer a clear insight into the rate of a loan. It encompasses charges sustained for the cost of getting the loan. Closing costs, any points, and an upfront fee are integrated to figure out the APR, in addition to the main mortgage rate that was given.

When all of these considerations are computed, you can be sure that you know that you know the total fee. When you scrutinize the mortgage estimates closely, you’ll be able to identify your closing costs. As lower the closing costs are as lower your APR.

There are instances where a creditor give seemingly reduced the interest that comes with two points. Similarly, you could get higher interest rates that come without points. This could present a very confusing scenario for most people. However, APR would help clarify more, of course, if it’s accurate. 

When you consider all of the intricacies involved in ascertaining the real value of a loan, you will come to the conclusion that a great deal of scrutiny is required.

While a loan may seem very appealing and favorable when advertised, the reverse might be obtainable in reality.

The following week’s article offers insight into ways to obtain the most favorable interest rates in Florida. We will explore all of the facts that you should evaluate when trying to secure a mortgage. Don’t miss out this fantastic read!

Apply for mortgage today for the best interest rate in Florida!


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