Blog with MAE Capital

Mortgage Update and Interest Rates

May 27th, 2020 10:50 AM by Gregg Mower

Ok we are a little over 2 months now since California shut down (March 16) so what is going on with interest rates?  Interest rates are great let’s just start there.  Interest rates are in the low 3’s and high 2’s currently.  So what is driving interest rates, you would think the answer would be easy, however it is far from easy.  There are many different factors that will determine what your interest rate will be and it will vary from person to person based on there credit scores, down payment or equity, cash back verse no cash back, loan size, loan program, fees waivers, and list goes on.  If you hear an advertised interest rate that is really low it probably does not pertain to you or what you would want from your home loan. Interest Rates are also geographical meaning that depending where you live in the United States will determine your base interest rate. So how are rates calculated and how do they vary from lender to lender.

First lenders across the nation give California a little higher interest rate than the rest of the nation to begin with.  This is due to the fact that California home loans tend to pay off faster than other parts of the nation.  This affects interest rates in that the longer a borrower will hold on to their current mortgage the more interest a lender can accumulate over time.  In California people tend to move more often that other parts of the country making the amount a lender can make on interest over time less so in order to compensate they raise the initial interest rate a bit.  So if you are hearing, on the news, that interest rates across the nation have come down and they give you an average rate you can rest assured that California will be on the high side of the curve. 

The next determining factor or factors that determine the interest rate you will get is your credit score(s).  When a lender is pricing your loan, they have to use the low mid-score of a married couple and the mid credit score if you are single.  When your Loan Officer (MAE Capital Mortgage)  prices your loan with lenders across the country we will have to have your credit score and the amount you are putting down and other factors in order to get the rate that fits you specifically then we will shop for the best loan scenario.  It also makes a difference if you are choosing a mortgage that will pay off bills in other words if you take cash out of the equity of your home on a refinance it will also increase the interest rate a bit.  When you hear a lender advertising that they will pay off all your bills with a refinance know that is costing you a little bit more to do that.  I would not discourage this just be aware of the increased costs even if you have 800+ credit scores the interest rate will be a bit higher.

If you are one of those who love to shop around to find the best interest rate you had better be prepared to give your exact credit score, down payment or equity position that is accurate as a bare minimum.  Here at MAE Capital that is exactly what we do on every one of our loans as we are Mortgage Brokers that hold both a California Department of Real Estate License as well as the National Mortgage Licensing System (NMLS) license in order to be able to offer rates from lenders across the nation.  Not all lenders are created equal so be aware that rates will vary from mortgage company to mortgage company and that has to do with their overhead requirements.  The more people a lender has to employ the higher the cost for that lender to originate a home loan.  A Mortgage Broker will have less overhead, in most cases, than a Mortgage Banker or a Bank who will underwrite and fund their own originated loans.  The reason why a Mortgage Broker will have lower rates is the fact that they can shop the entire nation for lenders with the best rates and programs where Banks and Mortgage Bankers will only have their own set programs offered by there company.  Mortgage Brokers also get what is called a wholesale rate verses a retail rate and that low rate is pushed to their/our customers. 

The type of loan you choose will have a different rate than other loan types.  A loan type is a FHA Loan, Conventional Loan, VA Loan, Jumbo Loan, Non-traditional loan, Private Money Loan, USDA Loan, CALHFA Loan, and more.  All of these loans will have different rates associated with the risk they carry the higher risk loans, such as Private Money or Hard Money Loans carry the highest rates.  Again, if you hear an advertisement for an interest rate or program know that what you hear is not what you will actually get, in most cases.  For example; we have a lender that we sell loans to that has a program out now that has interest rates in the 2’s, but you have to have the perfect scenario in order to qualify for that program such as 750 mid credit score down payment or equity greater than 20% of the value or purchase price of that home, if you fit the parameters you win and get the rate.  But if you are trying to take cash out of your home to pay bills off then suddenly you don’t and most people only hear what they want to and when they hear rates are in the 2’s they tend to pick up the phone and call around.  Another factor that is currently changing the interest rates is the fact that many people have listened to the media and have stopped making their mortgage payment during the pandemic this not only hurts them but it hurts those with good credit and never being late on a mortgage.  With people not making their payments during this pandemic it is hurting those that are, and are making higher interest rates.  You see lenders have priced in the profit from collecting mortgage payments for the origination of a new loan before the pandemic and now they simply are not so we are experiencing higher rates because of this.  One phone call to MAE Capital Mortgage Inc. and we will be able to run your credit while we have you on the phone and will be able to give you an accurate interest rate.  I hope this blog helps people to navigate through all this and we are here to help.  Give u a call to get your pricing today at 916-672-6130. 



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MAE Capital Real Estate and Loan

CA DRE #01913783|NMLS #806170

4940 Pacific Street Suite A
Rocklin, CA 95677